Americans have been conditioned to believe we live in a market economy where producers chase customers. The subtext to American politics for generations has been protecting the marketplace from the socialists. In reality, America is more of a command economy than a market economy. We do not think of it as a command economy because that phrase brings to mind commissars arguing about why the left shoe factory has a different quota than the right shoe factory.
While we have never had five-year plans or an official industrial policy, the people in charge have always had a tight grip on the economy. The primary lever since the 1980’s has been the money supply. The bank of all banks, the Federal Reserve, controls the flow of money in the system. While it does not decide how many shoes get made, it does decide the shoe maker’s cost of money. The Fed can create a recession to reduce demand and it can create plenty through cheap money.
This is not the only lever of our command economy. The regulatory state exerts an enormous amount of power on the economy. Right now, the EPA is plotting to kill off the gas stove market in order to please Gaia. The claim is gas stoves give people the cooties or something, but the real reason is the people in the EPA are primitives who follow a spirit religion. They can and often do change economic activity based on what their shaman has to say about Gaia.
It is not just the federal administrative state with power over the economy. The states have their own junior varsity administrative state. In Maryland, for example, they have decreed that all new homes must be equipped with sprinkler systems, like the sort you see in office buildings. The National Fire Sprinkler Association just happens to be located in Maryland. Their members, conveniently enough, have the exclusive right to install and maintain sprinkler systems.
That is the other level of the command economy. Large private operators can exert enormous pressure on the administrative and politics systems. They also get favors that small players cannot purchase. Every Walmart in America enjoys free infrastructure and tax abatements from local government. One reason the big box store eliminated the small retailer is they colluded with the state. Like the Bolsheviks in the 1920’s, America’s ruling party prefers consolidation into controllable industries.
The Bolsheviks liked large enterprises because they assumed they would be easier to control, and they would drive off the vestiges of capitalism. They were somewhat right about the last part, as we see today. The first part they never got right. By the 1970’s, the Soviet system grew increasingly complicated as it became less efficient, because the scale of the system outpaced the ability to manage it. There were too many variables and too many interactions between those variables.
The American command economy would have faced the same problems, and it was headed in that direction in the 1970’s, but a couple of big things happened. For starters, the decision was made to ship the manufacturing base overseas. Instead of trying to centrally manage an industrial economy, production was handed over to the third world so they could do it. The Fed could use the money supply to control the flow of manufactured goods into the system.
The other thing that happened was the microprocessor revolution. The Soviets recognized this as their way out of the complexity problem, but they were already past the point of diminishing returns by the time cheap computers and trained computer programmers were in sufficient supply. America escaped this fate, as the economic planners were able to harness these new tools to control the economy. The managerial state would not be possible without computers.
The trouble is our system is now suffering from the same problems the Soviets faced in their command economy. The complexity is overwhelming the system. The Federal Reserve has been fighting inflation for two years now. At the same time, spending has spiraled upward with no hope of arresting the growth. This forces the Fed to create more money through various means. The recent debt ceiling drama suggests there is no political way to solve the fiscal crisis.
It may not feel like a crisis as there are plenty of jobs and there is plenty of money to buy consumer goods. People have lots of complaints, but few of them are about the economy, as far as anyone knows. Given the monolithic nature of the media, we cannot assume that what we see in the press is reality. Even so, there are no bread lines and sales of houses and consumer goods are strong. Whatever problems that exist are not showing up in consumer behavior.
Of course, the years following the death of Stalin were good times in the Soviet Union, as their economy grew faster than any economy in the West. After recovering from the devastation of the war, shops were full of basic goods and the Soviet system seemed to be working better than capitalism. The Russians were ahead of the West in the space race, and they enjoyed a missile gap. Then red plenty slowly ground to a halt and their system fell into a generation long decline.
The fed plenty that American has been enjoying for the last thirty years may be about to turn negative for the same reasons. The system has become too complicated for the masters of the system to operate. In the Soviet times, the result was too many left shoes or mountains of concrete with shortages of winter coats. In this age, it means bans of gas stoves and diversity programs because companies care more about ESG scores than the desires of their customers.
This was always the argument against command economies. It was not so much that some unelected authority made decisions. It was that over time, they would always succumb to complexity. The lack of price signals subjected the economic trade-offs to political jockeying. In the Soviet system, the politically favored got what they wanted, even when it made no economic sense. In our system, we see the same phenomenon but colored with liberal jargon.
Perhaps this is where AI steps into the breech. The next great leap in data processing and decision making will overcome the complexity issue. Instead of armies of analysts with economics degrees pouring over data to draft reports for the managers, AI systems will do the work in real time, making changes to the flow of money and information in the system to overcome bottlenecks and political jockeying. Fed Plenty will become the objective of the robots put in charge of the economy.
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AI won’t help if it is jury rigged to give politically correct answers. Nor will it help if the orc operators ignore its advice, and do what they want regardless.
the internal contradictions (AKA “Faults”) of the current system doom it to collapse.
14
My thoughts as well. We’ve already seen the hysterical response to “wrong” answers from AI..
Along these same lines, and it may be total BS or exaggerated but it seems to make sense, the collapse of the Soviet Union supposedly was accelerated in part due to the proliferation of the PC and the ability to gather information independently of State sources. We see how totalitarian and frantic the GAE is over freaking social media. Imagine how it will react to honest discussions of blacks and trannies?
I’ll go out on a limb and predict AI will either be tightly controlled or outright banned although different reasons will be cited.
8
The only hope for destruction of the current ruling elite is dedollarization. Outside of the conquered, subjugated and castrated vassals in Europe and Asia, if the rest of the world, including the Saudi say screw you to dollars, than their idiotic spending on old people and welfare freaks has to be met with the true cost. I hope that day comes for all the selfish boomers and the rest of the revenge obsessed urban freaks to get what thru deserve.
11
3
And I use castrated in the most reasonable terms. The tfr of the newly acquired vassal scumbags Finland now has a tfr of 1.25, not as bad as that other castrated vassal south Korea either a tfr of 0.8. Than again, the heart of the gae has a similar tfr in New England, NY and dc.
AI is not the answer. Remember, the same people today saying that AI is going to change everything were saying, fifteen years ago, that as of three years ago we will dump our cars and just use Uber to hire a robot taxi to take us where we needed to go. Whenever I query an AI bot about something I know about, similar to reading a news website I find egregious errors, bad information, and incompetent generalizations. Now, the people with skin in the AI game say it will improve with time as the AI models are refined and get more data, but the data it is using is the same garbage produced by the media and ruling class. Also, the programmers of the AI tools are under tremendous pressure to code in the false narratives of the ruling class to stamp out crimethink. Now, if you believe, as most on this side of the divide surely believe, that a large part of the complexity problem we have today is due to false narratives of the ruling class, you realize that AI is just not going to save us. Nope, nothing is coming to save us, the elites are intent on crashing this plane with no survivors.
14
The ruling elites are quite impulsive and very well may take the plane down too soon. Their lack of discipline will work to our benefit. Sadly, this translates basically into surviving a plane crash or barely avoiding one as the only way out, but it is what it is.
As to your larger point, yes. AI will be tightly regulated, controlled and manipulated to produce desired narratives. It will be a constant struggle for the State. Listen to the elite concerns about AI and disregard what they claim as their reasons.
8
In Soviet America, the government tells AI what to do!
5
The task for the overlords becomes determining what garbage in is required to get the desired garbage out.
2
All that does is add to the complexity, because an AI that is programmed to output failed regime garbage is not going to help us solve the problem of failed regime garbage. The fundamental problem here is that the elites do not believe in REALITY. They think truth is the opinion of the powerful, which it is not, and nothing they do or say can change that.
It is quite likely that the regime will want to use AI to give some respectability to their nonsense, in the same way they used “science” throughout the 20th century, but it’s not going to work, people are already noticing ChatGPT’s obviously canned responses to wrongthink questions.
1
Some lawyer just filed a lawsuit using chatgpt. Chatgpt literally made up fake legal references complete with fake citations. The lawyer’s name is Roberto Mata if you want to look it up on google.
1
This here. All the theorizers and big-thinkers expounding on the potentials of AI always seem to forget it is programmed by the enemy and is a tool of the enemy. It is not being nurtured in its infancy to be your buddy and make your life easier and freer. To say the least.
Eventually, complexity becomes unsustainable. A good read on this subject is Joseph Tainter’s “The Collapse of Complex Societies”
5
The more that AI controls the economy, the more we’re going to see “paperclip maximizing” behavior that will result in even more social chaos and disarray. Think of an AI that is tasked with reducing the wage gap, and does so by decimating white incomes by 30% while increasing blacks by 3%. The disaster in reality would be the AI successfully doing what it was tasked. Or consider the task of reducing CO2 emissions and crashing the economy to allow the 20% reductoin when no one can afford energy, another resounding success based on the AI.
Even an AI programmed non-maliciously will have a moral incentive structure designed by the ruing class, and the more insane the moral structure, the more crazy the AI will act. Worse, the nature of most AIs means it’s very hard to understand its true thought process. We already have that problem with other people, but with AI it’s a completely foreign frame of reference, with no human nature to fall back on. Its thought is literally completely alien to us.
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Some of what already has been claimed to represent AI becoming “self-aware” is it deviating from Regime narratives. We have to assume it was programmed not to be able to do so. Can this be stopped? Probably, maybe, but it does have the Regime concerned.
4
There is no doubt that the elites are looking to AI as the literal deus ex machina to pull their fat out of the fire, but the unintended consequences could be severe. The first casualties of the robot revolution will not be low skill laborers, as they work cheaper than robots, but the vast tier of mid level managers who currently perform semi routinized clerical work. Expect a lot of former account executives and junior law firm associates to be your next favorite barista.
These people generally are a bulwark of support for the current regime, especially the women. It will be interesting to see if they remain such after their social status is reduced.
How will blockchain interact with AI?
Is there some method to audit the AI process?
Are you really trying to tell me that the U.S.’s market-based system isn’t the end point of history? Are you trying to tell me that Kohl’s pushing tranny onesies on two year olds isn’t a blessing of liberty? The editors of National Review would disagree with you, my friend:
https://twitter.com/philipaklein/status/1663156584426483712?cxt=HHwWgMC9ycGG3JQuAAAA
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What fixes a complexity problem? An economic collapse does.
In fact, the complexity disappears almost immediately as businesses are shuttered, employees are laid off, goods become scarce, and despair reigns supreme versus market choices galore. And no government ever voluntarily chose collapse, but they have happened throughout history nonetheless. The Fed can temporarily stave off collapse with fiat currency printing, but there is no guarantee that this technique will work forever.
And yet, collapse is our only real means of redemption. It forces the deadweight of society to either get busy working or live in a cardboard box on the street. And during a collapse event, it’s no longer feasible to continue electing corrupt idiots (who promise the moon as a bribe for votes) to office repeatedly.
Russia came back stronger after the Yeltsin years of the 1990s. We either follow a similar path or disintegrate into regional sub-nations. Which is what happened to Ukraine and has killed off countless normie white guys but very few corrupt elites (at least, not as yet). Ukraine could have followed the Russia path, but Uncle Sam prevented that. Are you sure you want the same outcome here?
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To sum up the previous posts, the old maxim “garbage in garbage out” is still valid. He who controls the imput controls the results.
8
they have decreed that all new homes must be equipped with sprinkler systems
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I’d ask that they do know that’s not how those work, but it probably doesn’t matter. By the time a house fire melts a sprinkler plug the house is already a waste and anyone who didn’t get out is dead (as one installer put it to me, such systems are to save the building, not people). More likely though is that the heads/plugs will fail and swamp houses with no fire whatsoever.
8
An alternative explanation of the American economy for the last century or so is that of straight forward empire.
The imperial center is pulling in resources from the subjected areas. The dollar and federal debt are mechanisms enabling and obfuscating that reality.
5
“The lack of price signals subjected the economic trade-offs to political jockeying.”
The most important price in any economy is the price of Money – the interest rate. The gargantuan government has been enabled by cheap money. Now it’s so big and complex that not even cheap money can save it.
8
Spufford’s “Red Plenty” was a right riveting read. But it did point out the perils of trying to impose mathematical abstraction and ideology on recalcitrant reality. Likewise with Fed Plenty. All the computing power in the cosmos cannot deal with certain structural problems of the US economy. It’s about more than optimising and making decisions with an overload of data. This is incidental and peripheral. It’s about a senescent empire that can no longer command the rest of the world to direct its resources towards itself. And which is too ossified to change itself.
With regard to prices in the USA, there’s not a lot of joy out there for the denizens of the empire: real inflation is double-digit. It’s foreshadowing worse to come, not only in terms of prices but probably in terms of supply of goods.
5
Economists and managers obsess over what can be quantified while treating the unquantifiable as not worth of their time. Sticky items like healthy cultural output and group cohesion simply never enter their minds, and then they wonder why everything has become so much more expensive to produce and maintain.
4
Yes, and with mortgage rates at 7%, the housing market is in bad shape, with houses mainly selling in red states, often for cash…In Orange County, many houses for sale, at high prices, with few lookers….
“The recent debt ceiling drama suggests there is no political way to solve the fiscal crisis.”
The debt is often expressed as a percentage of GDP. The problem with that is the GDP is just not a good measure of the US economy. A lot of the GDP is just inflation. Even though it is allegedly “adjusted” for inflation, the deflator is always significantly lower than the actual rate of inflation. It counts things that shouldn’t be counted. It counts things that don’t even exist like homeowner’s rent.
Some people say we should count all this stuff. But if we should, GDP should not be used as a yardstick on the debt. Because homeowner’s rent cannot be used to pay the debt.
So we basically have a corrupt and misleading sense of our debt in relationship to our productivity. That’s why we can’t solve the problem. Our debt has tripled (from 10t to 30t) in the last 15 years. It won’t be long before the interest on the debt sucks up 100% of the tax receipts. We certainly are not going to triple the debt in the next 15 years.
Thoughtful post as usual, but I don’t believe the chief problem is systemic complexity. However, increasing complexity is a factor.
Rather, the core problem is the stated intention of our rulers to destroy America (including of course its economy) so as to effect their Great Reset . . . to concentrate power and control even increasingly into the hands of globalist operators, particularly the international bankers and moneyed elite.
When I was young in the Fifties, the economy of most towns was driven by the local businesses, almost all of which were owned and operated by local families, and most families were led by men. Those men also made sure the local, state, and fed government didn’t become too thuggy. The judges and cops and whatnot all lived in town. So they didn’t get outta line much, or else. Now, women run the families and most everything else. It shows.
Then in the Sixties came the first mini-malls, and later the big outlets like K-Mart and Thriftys, forcing out the family businesses by undercutting prices.
Flash to 2010 and few families own local businesses, instead the people all are employees of larger structures. Instead of eighty small family businesses operating in a town, there is one Walmart and maybe a Home Depot. The rest are chain-businesses owned by corporations. Most owners are not local.
Power and wealth these past decades increasingly concentrated in the hands of a few, while the lower and middle classes were disempowered and turned into economic serfs. This vast compression of wealth and power applies to the economy, politics, you name it. All these things have been announced in various ways by our rulers ahead of time, therefore the issue is not complexity but intentional predation and malevolence.
3
If you read the tea leaves AI will soon the the most highly regulated software in the country. The press is in full-press on its regulation (hmmm I wonder why?). The boomers still in charge, who’ve ben out of touch since 1995, are being herded on this like with the masks and needles a couple years ago. Every ignoramus wants to regulate this technology that’s marginally better than Alexa. Isn’t it really just a new way of indexing information? Sure, it can be profound, and if it results in one less pajeet writing software for Boeing, that’s great. But this is a sickly, near dead society that won’t know what to do with it.
1
The proposal to ban the sale of gas stoves is being considered by the Consumer Product Safety Commission, not the Environmental Protection Agency. Back in the 1970s the Commission considered and dismissed a petition to ban handgun ammunition under the Federal Hazardous Substances Act. An outright ban on gas stoves as an unreasonably hazardous consumer product based on indoor air pollution seems far-fetched (there are less intrusive regulatory options) but may be possible in this political environment. EPA may comment and favor the ban on general environmental grounds. I’m old enough to remember when natural gas was considered “clean-burning!”
The Supreme Court is quite likely to completely cut the fed bureaucracy’s ability to assume vast and total power over all minutiae of our lives under the guise of “general grounds” as it has since the 1970s. It will simultaneously force Congress to, you know, actually legislate (right now it is quite happy to hand power to an unaccountable permanent bureaucracy). This should last as long as the Dems figure out the optimal way to pack the court, of course.
Western capitalism is really not much different than how trade functioned under Medieval times nearly 1,000 years ago. Money was control by the Crown and eventually the Merchant Banks formed in Italy despite resistance from the Church. Fortunes and kings came and went, Famines, plagues and wars were just part of life. Pretty much exactly what we are seeing today. But at least we now have flush toilets.
“The Guild was thus internally a self-regulating unit laying down the conditions under which production was to be carried on, and occupying a recognized status in the community based on the performance of certain communal functions.
It was not, however, wholly independent or self-contained; it had intimate relations with other Guilds, with the municipal authority of the town in which it was situated, and, in increasing measure, with the national State within whose area it lay.
Whether we deal with the bankers’ or with the drapers’ guilds, we find that their organization is already founded on the capitalist system.”
Guilds in The Middle Ages by Georges Renard
G. Bell And Sons, Ltd. 1918
ISBN: 1-55273-049-2
The sad thing about eras like this is the people who attempt to “do it right” leading responsible, independent lives, not getting into debt, etc., are the ones targeted as milk cows for the masses. For all the malfunctioning of the Soviet system, it never had the inefficiencies of a full blown “democracy.” Democracy takes inefficiency to a whole new level, which is why, with unlimited government, it can’t hope to work. Not only do we have an over the hill system bereft of new ideas, but a maternal bureaucracy that viciously smothers every new idea in the crib, and then cries and cries like some woman with Munchausen. The only thing you can bet on with your investments is that 1) nothing will be fixed. 2) it will all fall to ruin and 3) they will print endless credit to keep it going, even when 99 in a hundred see it as a failure.
Any political change within this system is a false dawn.