Category Archives: Economics

The New Zeros

Posted on by

In the coming decades, Western nations are going to be faced with a number of problems stemming from the technological revolution. We are now post-scarcity societies, where we have more than enough food, medicine and housing for our citizens and even some non-citizens. The pruning force of scarcity is no longer doing its magic to keep the population fit or even sensible. The next big problem is what to do with the tens of millions of extra humans, no longer needed to contribute to society.

The hardest part of the automation wave will simply be language. What do you call people who no longer have any purpose, in terms of producing goods and services through their labor? For as long as anyone has been alive, the small slice of the population that has fit this definition could simply be dismissed. The underclass is assumed to be lazy or anti-social. Trying to fix this has been a good way to keep the useless off-spring of the middle classes busy in social work.

When the numbers swell as automation eliminates the need for human labor in wide swaths of the economy, it will be impossible to dismiss the idle. When many of the idle are people who formerly occupied office jobs or semi-skilled laboring positions, blaming their condition on a lack of ambition is not going to be possible. The current labor participation rate is about 63% right now. In the coming decades, that number will fall below 50% due to automation and demographics.

The other challenge is how to support the swelling ranks of the useless in a way that keeps them from causing trouble. The hot idea currently is the universal basic income, which is being experimented with in Finland. In the US, some states are talking about how to replace their welfare programs with something simpler like the UBI. Libertarian economists like the idea of the UBI, because it theoretically allows the under classes to participate in the market economy, unencumbered by the state.

The trouble with this idea is math. If all citizens have a floor, in terms of their basic income, whatever that floor is, will be the new zero. The only possible way to have a negative income, in real terms, is if someone is paying their employer. There may be some bizarre situations where that exists, but in the main, zero is the smallest number that can appear in box #1 of your W2. If that number is bumped up by the UBI, that becomes the new zero, the lowest possible.

Imagine the government decides to help BMW sell more cars, so they offer every citizen $5000 if they spend it on a BMW, rather than some other car. BMW is now facing a wave of people coming into American dealerships toting a $5,000 check. The logical thing for BMW to do is raise the price of their low end models by $5000. That way, they do not increase production costs, but they increase the profit per car. In effect, the floor for entry level buyers was just raised by $5000 by the government.

There is a fairly good real world example of this. The government decided to do something to help working class people get into college. Since many need remedial help, before taking on college work, the scheme was to offer a subsidy to be used for community colleges. The students would use the money to prep for college then head off to a four year university, presumably using loans and aid at that level. The result, however, was the community colleges just raised their tuition.

The UBI would most likely follow the same pattern. By guaranteeing that no one would earn less than some amount, in lieu of traditional welfare payments, the absolute floor becomes the subsidy level. In effect, the new zero becomes the subsidy so all other wages would be based off that number. It is really no different than printing up money and dropping it from helicopters into the ghetto. The UBI would be as inflationary as debasing the currency.

The truth is the zeroes that our rulers will be forced to address are zero population growth and zero TFR among the surplus populations. For example, you could fix Baltimore in a generation with mandatory Norplant for the underclass. A generation of childless females means the last generation of 80 IQ residents. The reason Baltimore is a violent city is not an excess of hard working, college educated STEM workers, but a surplus of violent stupid people.

It also means zero immigration. When 80% of today’s immigrants end up on public assistance, the immigrants of tomorrow will be nothing more than useless people to police, feed and house. Japan is the model to follow. They have no immigration and their population levels are about to drop in the coming decades. They are the only nation on earth that is truly ready for the automated future, as they have the demographics to meet a shrinking demand for labor.

There is one other zero and that is zero participation. The fact is the free-market and democracy work when the right answer is not obvious. As automation takes over more and more tasks, the number of issues that need to be hashed out collectively will diminish. Rule by robot means exactly that, which means voting and popular government will have to be reconsidered. What is the point of being mayor when there are no more patronage jobs to dole out to friends and family?

The River’s Edge

Posted on by

Reorganizing a bookshelf, the other day, I found a book that I was sure I had read a few years ago, but I had no memory of it. Looking it over, I realized I never did read it, so I put it in the queue. For some reason, I read a lot more in the winter than the summer, so I can knock out a book every few days. The book in question is Why Nations Fail, by economists Daron Acemoglu and James Robinson. It was a big seller back in 2012 when it came out. That is probably why I bought it, but for some reason I never read it.

The book starts out describing the city of Nogales, which straddles the border between Mexico and the United States. The authors point out that the part of the city on the US side is fairly safe, well organized and reasonably prosperous, for that part of the country. The part of the city on the Mexico side is riddled with corruption, rocket high crime rates and grinding poverty. They quickly point out that the demographics of both halves are about the same, so the only possible explanation for the difference is the institutions.

What they do not mention is that the Mexican half of Nogales is attached to Mexico, a land full of Mexicans. The American side is attached to a country not full of Mexicans, at least not yet. Nogales is an hour south of Tucson, which is more than 50% white. Arizona is now 60% non-Hispanic white and only about 4% black. Further, the Hispanic population is mostly the El Norte variety. In other words, it is good demographics that results in those good institutions. They do not go there. In fact, they never go there.

The book runs through a bunch of examples of how institutions can make or break a society. They even travel back in time to examine how events like revolutions or wars broke old bad institutions, allowing for good institutions to flourish. The English Civil War comes up multiple times, to explain how the Industrial Revolution started there first. They spend a considerable amount of time talking about colonialism, to explain how the bad institutions created by the West, forever crippled their former colonies.

Again and again, the authors work backwards from present economics, through politics and history to arrive at institutions as the first cause. As a survey of world history, it is interesting. The authors even accidentally make the point that serendipity has a huge role in history. They call this “critical junctures” and use a bunch of examples where a country’s elite chose poorly, but they can never ask the question, why did they choose poorly? Instead, they just treat that as the river’s edge, never bothering to go further.

In fact, that is the reason for the title of this post. The image that kept coming to mind while reading this book is of a group of explorers trying to find their way out of a valley. They keep ending up at the edge of a river. Instead of wading over to the other side, they wander around, sure that there must be some other way out. In this case, the river is culture. The authors stop at culture, never wondering what is beyond it, not because they fear what is on the other side, but because they do not seem to think there is another side.

That is what is so weird about this book. Usually, there is at least one section where the author goes to great pains to acknowledge the arguments from biological realism, but vigorously dismiss them as bad-think. That never happens here. Instead, it is as if the authors have never considered the possibility that Africa is the way it is because it is full of Africans. Instead, they just repeatedly make the point that poor countries have corrupt institutions, while rich countries have more open public institutions.

For instance, the authors write stuff like “World inequality exists because during the 19th and 20th century some nations were able to take advantage of the Industrial Revolution and the technologies and methods of organization that it brought, while others were unable to do so.” The implication of this is that the Industrial Revolution just happened by magic in England, instead of Botswana. The best they can muster is to point out that the English Civil War accelerated the end of feudalism in England, compared to the Continent.

One of the more comical bits is how they try to explain why Western nations did not fall back into despotism, like European colonies after independence. The answer is what they describe as a virtuous cycle, which is a special brand of magic that makes sure only white countries maintain open institutions. The serendipitous magic creates the inclusive institutions and then the magic of virtuous cycles keeps the magic flowing. Of course, there are the vicious cycles that work the opposite, but only on non-white countries.

It is tempting to think that the people on the blank slate side of the river know the truth, but they just prefer to carry on with the blank slate fantasy. In individual cases, which may be true, but a lot of people honestly believe that all people are the same everywhere, despite the mountain of evidence to contrary. Instead of reality causing doubts in their beliefs, they do like Acemoglu and Robinson. They invest all of their time and energy looking for the magic cause that explains reality, without contradicting the blank slate.

The result is we have this great divide in the West. I use the image of a river separating two groups of people. On the blank slate side of the river, they will come to water’s edge, but they never look across it, much less contemplate crossing it. On the other side, the biological realism side, the people wait patiently for the others to cross over, shouting words of encouragement to them. Every once in a while, a ferryman reaches the blank slate side and then picks up some people and brings them across the river.

We could use more ferrymen.

Family Friendly

Posted on by

If science suddenly noticed that birds were laying fewer eggs, they would ring the alarm and warn of a coming bird-apocalypse. The assumption would be that humans were doing something to make the birds unable to reproduce. The same would be true of any species that saw its fertility decline. The starting assumption of biology is that all living things are built primarily to reproduce. That is the biological imperative. With one exception, a drop in an animal’s fertility must be due to some exogenous factor. That exception is humans.

In the West, human fertility rates have steadily fallen for over a half century. This is celebrated by our betters as the hallmark of human progress. Anytime the subject of fertility rates is raised, the knee-jerk response is to start hooting about women being more educated and having more options. The underlying assumption is that stupid people have lots of kids while smart people have few children. The implication of this is that the people who built Western Civilization were stupid, because they had high fertility rates.

The whole “women are more educated” argument is not really an effort to understand why fertility rates, especially white fertility rates, have fallen. Rather, it is an effort to not understand it. It is a deliberate distraction, a way of shifting the focus from a problem that cannot be addressed by the Left, whether it is the materialist Left of Europe or the spiritual Left on America. To even acknowledge that the purpose of women is to have children gnaws at the extreme egalitarianism that animates the Western Left.

To some degree, efforts to level off fertility in Europe make sense. There are lots of people on the Continent who do not always get along with one another. Generations of warfare pounded home the message that stable societies, respectful of national borders, is the way to keep the peace. Keeping fertility rates at something just above replacement was an understandable goal. In America though, that is not an issue. The country is mostly empty space with lots of room to expand. Americans should be breeding like Africans.

It really is an odd thing that has happened in America over the last fifty years. Starting in the 1960’s, motherhood became something close to a badge of shame with our cognitive elites. This rather quickly oozed into the upper classes and then the middle class. As a result, public policy has been altered to discourage childbearing. Just look at the hysterics from Progressive women anytime they do not get their way. They immediately start howling about how they will not get easy access to abortions and free prophylactics.

This came to mind when I saw a tweet by the left-wing political science professor George Hawley, commenting on the GOP tax bill. He linked to an essay he posted about public policy and fertility rates. For those familiar with this territory, the points he makes and the errors he commits are all familiar. France may have a TFR of 2.08, but the French people do not have that TFR. The invader population has rocket high fertility rates, but the French, well, not so much. Steve Sailer touched on one aspect of this in a Taki post.

A similar pattern, though less pronounced, is seen in the US. White fertility rates are below replacement, while black fertility is still above replacement. Although the homicide rates among blacks probably requires a different definition of “replacement.” Hispanics have the highest fertility rates. In other words, simply looking at TFR for a country that is slowly being overrun by a third world population will lead to errors. In majority white countries, the salient issue is not TFR, but white fertility rates, relative to the whole.

Putting that aside, we return to the original question. Two questions, actually. Is it simply that whites are choosing to die out or have whites simply wandered down a cul-de-sac, in terms of public policy, which is having adverse effects on white fertility? One way to tease this out is something that Steve Sailer did after the 2012 election. He looked at how white women voted, relative to their marriage habits. In places where white women can and do marry, stay married and raise children, whites vote Republican.

Another way of putting this is that where affordable family formation is highest, you get more families. Despite being run by a cult, Utah is a wonderful place to raise a family. It is like the set of Leave It to Beaver, but the size of a European country. At the other end, a state like Massachusetts is wildly expensive and hostile to family formation. Those who do choose to marry and start families, often move to other states. The decades long migration, north to south and east to west, has largely been driven by cost of living.

None of this answers the basic question. Is it crackpot public policy driving down white fertility or is some weird desire for extinction? The latter is impossible to know, so the prudent course is to assume the former is the correct answer. That is basic logic. This means any movement that is explicitly for preserving the nation’s racial character should promote public policies that are explicitly and overtly pro-family. That is the part of Hawley’s post that is correct. The GOP should be fanatically pro-family, not pro-business.

This especially holds for the dissident right. The alt-right is all over the map on public policy, because they get bogged down squabbling over aesthetics. Oddly, the best thing they could do, in terms of “optics”, is cast themselves as the extreme end of the pro-family spectrum. Redefining pro-women to mean pro-mother would go a long way toward rallying white Americans to their cause. After all, being for something always trumps being against something, even when the thing you oppose is awful. Positive always beats negative.

A Foundation of Nonsense

Posted on by

Math and science are built upon axioms. Very simply, an axiom is something that is always true by its nature. An example is the reflexive property in algebra. A number is always equal to itself. Axioms are the building blocks, from which new truths are discovered. A proof is an inferential argument for a mathematical statement, using other previously established statements. That means a proof can be traced back to those axioms that are the foundation of mathematics.

This is how we accumulate knowledge about the physical world. The proofs based on those building blocks are incorporated into new building blocks. The theorems and proofs multiply, slowly building up the stock of things we know to be true. Calculus was built upon algebra and physics was built upon calculus and so on. It why a student can quickly go from zero to trying to discover new truths about the world. They inherit a supply of things assumed to be true.

This accretive process of increasing our stock of knowledge is not limited to math and science. It is the way human societies evolve over time. We start with basic truths about the human condition and the realities we face as a society. Over time we acquire new knowledge, by building on what we know or that which we think we know. For example, libertarians rely on the concept of homo economicus. This asserts that humans are consistently rational and self-interested agents pursuing their ends optimally.

In theory, at least, this is the basis of democracy. One side builds a set of policies and proposals, allegedly based on the assumed truths. The other side does the same thing arriving at different policies. After a vigorous examination of the competing claims, a consensus is formed around one solution. If it works out, then that becomes part of society’s truths, from which new problems will be addressed in the future. That is not really how it works, but people believe it. It is axiomatic that democracy works this way.

What we know to be Western liberal democracy, assumes certain things about humanity to be true all the time. The blank slate is the most obvious example. Everything about our politics and culture assumes that humans are infinitely malleable. From school policy to prison reform, public policy assumes that people can be whatever they choose, because they have free will and a blank slate that can be erased and re-illustrated at any point in their life. You are what you make of yourself.

It is how our rulers arrived at the idea of open borders. Those foreigners can be re-purposed into tax paying Westerners, through education and enculturation, to pay the pensions of the native stock. Those Somali goatherds can be plopped down into Minnesota and over time, develop all of the habits of the average Minnesotan, just by emulation and proximity. Race laws are all based on the assumption that you can train people to stop noticing racial difference and therefore, end racism.

Of course, science is putting the lie to the blank slate. Genetics is filling out the truth of the human condition, which is that we are the result of our coding. We are the product of thousand of mating decisions made before us. Everything from our height to our sense of humor is baked into our genetic coding. Our health outcomes and our life outcomes are the results of that coding. Not surprisingly, the closer our coding is to others, the greater the similarities.

While no one is prepared to say free will is a lie, at least not publicly, no serious person accepts that we are infinitely malleable. The argument that you can change your personality is as nutty as saying you can make yourself taller or younger. This reality used to be a building block of Western thought but was “discredited” by the blank slate theorists, but it is now being reestablished by genetics. In other words, one of the main building blocks of modern social democracy is about to crumble.

That is a big one, but it is not the only one. Both Freudian and Jungian psychology still cast a long shadow over Western culture. Freud is no longer taken seriously, outside of his historical importance. The idea that your emotional state is the product of childhood sexual trauma is a click less realistic than phrenology. Jungian psychotherapy is also being overrun by neuroscience. Few people still think they can be talked out of their madness anymore. Instead, pharmaceuticals are used to treat diseases of the brain.

It is not just the quackery. The moral philosophy that underlies our political philosophy is similarly built on a foundation of nonsense. The Enlightenment thinkers all started by considering man’s natural state. It was either a harmonious communal existence or a brutal war like existence. From both starting points, they worked forward to build a model how man went from the state of nature to what was then civilization. The resulting moral philosophy is the basis of our political and legal philosophy today.

Property rights, the rule of law, the relationship of man and state, these are all based on those assumptions about man’s natural state. Libertarians and so-called Conservatives take the Lockean position that society is built upon the social contract. Those on the Left assume Hobbes was right and order must be imposed on society. Marxists further accept the materialist claims about the nature of man. All of the iterations and flavors of political ideology are rooted in one of those two broad assumptions about humanity.

Those assumptions are all wrong. We know that much now. Better archaeology and anthropology are helping illuminate the pre-history mankind. Evolutionary biology is also helping explain the fossil and archaeological record. Genetics, of course, are re-writing the map of mankind, explaining how we spread across the globe. What we are finding out is that man, in his “natural state” was not what Hobbes imagined nor what Locke imagined. Man’s “natural” state is much more complicated and much more local.

The implication should be obvious. As the underlying assumptions give way to new knowledge, the conclusions built on those assumptions must give way. If tomorrow we learn that two plus two is not always four, everything we know about the world stops making sense. If everything we thought we knew about man and civilization turns out to be wrong, we suddenly do not know a whole lot about how we should organize ourselves, other than the old rules are probably not going to work.

It seems today that Western societies are painfully re-learning things that were common knowledge a few generations ago. The old axiom, fences make good neighbors, was replaced with “diversity is our strength.” Every time a swarthy fellow blows up in the public square, we inch a bit closer to the realization that diversity is a nightmare. That is the part we see. The part we do not see, at least not yet is the crumbling of the foundation of the modern West.

The BQ

Posted on by

We live in an age of great inequality. In fact, some economists think America may have greater inequality now than at any time in human history. Americans do not think about it too much, as generations of indoctrination about class envy have made questioning such things seem un-American. That and the middle-class may be swamped with debt, but they have all the trappings of prosperity. Even poor people are fat.

Few people on this side have much to say about economics. The main reason, obviously, is that demographics take up most of the space. A big part of the aesthetic is ignoring the trivial things like tax policy, in order to remain focused on the bigger topics that are assiduously ignored by our rulers. That and the subject is full of libertarian hucksters, peddling apologies for globalism and the billionaire class.

The Left has always argued that inequality is immoral on its face. They may not use that phrasing, but that is the underlying assumption behind their arguments for taxing the rich and redistributing wealth. Perhaps that can be debated, but there’s little doubt that great inequality brings with it great social and political change. A society with relatively small differences in wealth, where there is economic equilibrium, is unlikely to lurch into unrest or reckless adventures.

When Henry VIII ascended the throne in 1509, he became king of a country that could be described as a three-legged stool. The Church held 25-30% of the land in the country and had a monopoly on moral authority. The aristocracy, including the king, held an equal amount of land, but had a monopoly on secular authority. The rest of the land was owned by the commoners and petty nobles. The result was a balance of power between the three key elements of English society.

Henry is best known for his serial adultery and his habit of having wives sent to the gallows, but his biggest contribution is the destruction of the Church as a force in British political and economic life. The Acts of Supremacy, passed in 1534, recognized the King’s status as head of the church in England and, with the Act in Restraint of Appeals in 1532, abolished the right of appeal to Rome. The king had effectively assumed the moral authority that had once been the monopoly of the Church

This was made possible by the oldest of political tactics. When Henry seized Church lands, he used these to buy support from other nobles, as well as large land holders who also sat in Parliament. Naturally, Parliament was strongly in favor of not only seizing Church lands, but supporting their good friend, the King, in his efforts to assert his authority over the Church. When he seized Church lands, the crown ended the economic power of the Church and its moral authority.

This had a radical effect on the politics and culture of England. Hilaire Belloc argued in The Servile State that it was this reorganization of capital in England that gave birth to what we call capitalism. In this case, capital was land. When land was distributed between the people, the state and the church, the concentrated use of capital was impossible. Once the crown and nobility seized the property of the Church, capital was for the first time concentrated in a small number of hands. This allowed the propertied class to dominate English society.

This was clear after Henry VIII died. A dozen years of violent political turmoil followed his death. Edward VI never made it to adulthood. Lady Jane Grey was queen for nine days until Mary I, with support of the nobles, deposed her. Bloody Mary made it five years before dying and then began the reign of Elizabeth I. This also corresponded with the birth of the British Empire. Whether or not any of this would have happened if Henry had not sacked the Church is debatable, but it is clear that the change in English economic order was an inflection point.

Another example is what happened to the Roman Republic after the defeat of Corinth and Carthage. The Republic had been at war with both city-states, off and on, for over a century. In 146 BC, the Romans finally defeated and destroyed Carthage and then provoked a war with the Greeks. They defeated the Greeks at Corinth, destroying the city and its population. The male population was killed and the females and children were sold into slavery. Rome was the undisputed power in the Mediterranean.

Something else happened. Those slaves that poured into the Republic from the conquered lands first ended up in the hands of the wealthiest landowners. This influx of cheap labor allowed the large land holders to replace their native labor, which flowed into the cities, not having anywhere else to go. The small landowners suddenly found themselves at a disadvantage, as the larger landowners had an army of slaves to work their land. The result was a great economic re-ordering of the Roman Republic.

It is not an accident that this sudden change in political and economic of fortune changed the nature of the Republic. The constant campaigning created a class of soldier that was more loyal to his general than to the Republic. The turning over of large tracts of land to slave farming resulted in a new problem, slave revolts. The Servile Wars, the Social War and two civil wars dominated the Late Republic. It has this title because the Republic came to an end with Julius Caesar and the founding of the Roman Empire under Octavian.

The relevance of all this to our age should be obvious to those who have been following what is going on with our tech oligarchs. A generation ago, arguments for taxing the rich got little traction, because no one had any real fear of the rich. That and they were not so rich as to feel alien to the rest of us. Today, the billionaire class feels like they are from another planet and they are a real threat. They are advocating for policies that promise to dissolve the ties that bind the nation together.

A popular issue on the Dissident Right is that the old framing of politics, based on the blank slate and egalitarianism, is no longer relevant. Race and demographics are what will define politics going forward. That is true, but none of that will matter if the West is going to succumb to what amounts to techno-feudalism, where a relatively small number of oligarchs control not only capital, but information. Addressing the threat to free speech means addressing the Billionaire Question.

In order to address the BQ, the Dissident Right is going to have to break free from the old moral paradigm with regards to class, inequality and economics. The fact is, no one will care if Mark Zuckerberg drowns in his bathtub. The things that the vast bulk of Americans care about do not depend on getting cheap stuff on-line. The billionaire class is no more essential to society than any other luxury good. They are tolerable unless they become a burden.

That’s going to be hard for our side and it is going to be even more difficult for the sort of people attracted to the Oaf Keepers or the PoofBerries. That is the effect of a few generations of telling people that it is un-American to think ill of the rich. Even so, part of breaking free from the old thinking will be adopting a new brand of economics, along with tackling the realities of demographics. You can be pro-white all you like, but that is of no use if you are a serf living on the modern version of a feudal estate.

Hollywood Math

Posted on by

A while back I watched the movie Kong: Skull Island on the Kodi. It was one of those impulse things. I felt like watching a movie and this one just happened to be easily accessible. Samuel L. Jackson’s angry black guy routine stopped being fun a long time ago, but I figured the movie was going to be mostly about the giant gorilla. As far as modern movies go, it was not too bad. I suspect it was better in a theater with high end sound and the giant screen to make the monsters look more monstrous.

For some reason, I got to wondering what it cost to make, so I looked it up. (I know, I know. I should not be using Wiki, but the Infogalactic page is out of date.) According to the published data, the film cost $185 million to make and generated $586 million in ticket sales. That looks like an amazing success, but movie accounting is a bit weird. The theater gets half the gross, so the distributor got about $285 million. That’s a gross simplification, but a useful one for looking at the mathematics of movie making.

Movies don’t always do so well. King Arthur was a giant flop this summer. It cost $175 million to make and grossed just $140 million. According to people who know these things, the studio lost $150 million on this one film. There were other massive flops this summer like the Aliens movie and the Amy Schumer comedy. The opacity of Hollywood accounting makes it impossible to know the final tally, but people who claim to know suggest that the big studios are posting losses this year as a result of the bombs.

Hollywood can withstand a bad year because of the high cost of making and distributing movies. Getting together $185 million to make a giant gorilla movie is not something you do on Kickstarter. It’s why Hollywood seems to be hooked on films with massive special effects budgets. It’s a niche only they can serve so they are trying to squeeze every penny from it. Dramas and documentaries, in contrast, have small budgets and small margins, so lots of small players can fight for those customers.

A common complaint about Hollywood is that they are not investing in new ideas and original scripts. Instead it is comic book movies, remakes of old films and sequels. The people in the business will counter with the fact that the losses are almost always accounting losses. The actors and directors are all getting paid. Once the accountants do their magic, often taking advantage of tax laws and special deals made with governments to shoot their films on location, the studios are in the black or close to it.

They are probably right in the short term. Hollywood is surely aware of what happened to the pornography business and what is now happening to the news business. Porn used to have a high barrier to entry. If you wanted to sell sex to the public, you had high costs due to a complex thicket of state and local laws to navigate. The Internet obliterated the barriers to entry. First came a wave of video makers who wiped out the skin mag operations. Then a wave of amateurs came through to wipe out the movie industry.

A similar thing is happening with the news and commentary business. First the internet undercut the ad business of newspapers. Why sell your car in the classifieds when you can sell it on eBay? Why advertise your job in the Boston Globe when you can use Monster? The only logical response has been for the newspapers to slowly move from their old distribution model to the internet. But, the cost of putting up a website is near zero now so anyone wishing to compete with the NYTimes can give it a go.

It’s not just the legacy media. Take a look at on-line audio and video. Joe Rogan does a one hour interview show that will get a few million viewers. His production costs are a fraction of what it cost to make the Charlie Rose program. Yet, Rogan reaches ten times the audience. The YouTube comic PewDiePie reaches 55 million people and he is essentially producing his show from his basement. Anthony Cumia was making his show from his basement until his success allowed him to rent a studio in Manhattan.

A similar thing is happening to radio. Podcasts are becoming a popular way to listen to news and commentary, that used to be the domain of radio. Buy a new car and you can sync your phone to the audio system, so you can tote around your own music and podcasts to play on the road. It will not be long before your car radio will let you listen to this stuff off the internet. Again, the low barrier to entry means a wider range of shows so the public can narrow cast to their taste. Old fashioned radio, as a result, is dying.

If you are in the media business, your number one task right now is figuring out how to keep the barrier to entry to high for that army of internet content makers. That’s why Hollywood is fixated on massively expensive super hero movies and film series based on comic books. They spend $100 million building out the infrastructure and then make five versions of Pirates of the Caribbean for $200 million a copy. Mike Cernovich is not competing with that, no matter how many Kickstarter campaigns he starts.

The beauty of this approach is that these sorts of films can easily be sold into foreign markets. The Chinese dudes watching Fast & Furious 19 don’t care about the dialogue or story. They want to see buff white dudes driving cars while shooting at bad guys. Given the level of writing for some of these movies, they may not even have to provide subtitles as no one really cares what’s being said. Hollywood is now in the business of creating giant special effects demonstrations that are viewed in movie theaters.

Whether this is sustainable in the long run is hard to know. Kong: Skull Island made a lot of money so a lot of people must have enjoyed it. I thought it was mostly stupid, but I watched it free at home, so I got my money’s worth. As long as these things keep making money, there’s no reason to think this model will break. It also means that Hollywood will be looking for ways to make these films even dumber. If they can get global audiences habituated to enjoying two hours of explosions, it simplifies their business even further.

The Servile State

Posted on by

A century ago, Hilaire Belloc wrote in the The Servile State¹ that attempts to reform capitalism will lead to an economy in which the state dictates that certain people will work for others, who likewise must take care of them. Belloc called this the servile state. This is different from early arrangements in which slaves and serfs were the backbone of the economy. In those arrangements, the owner has a choice to not own slaves. It is also different from capitalism, in which everyone is politically free by law.

Belloc was a man of his age so he viewed economics through the goggles of socialism and the newly emergent industrial capitalism. In The Servile State, he was searching for an alternative to the destruction of liberty necessary with socialism and the instability inherent to capitalism. The former results in an inequality of political power, while the latter results in an inequality of material wealth. Eventually, a small number of people rule over the masses, who begin to resent their rulers, seeing them as tyrants.

What Belloc argued is that socialism is inevitably the state dictating to property holders how they can dispose of their property. The state does this either through direct ownership, or through legal requirements for the ownership and use of property. Political freedom is determined by the degree of freedom one has with regards his labor and the results of his labor.. Therefore, socialism must restrict the political liberty of citizens to the same degree that it controls property and labor of the citizens.

Capitalism puts ownership and control of property in the hands of the people. In pure capitalism or what we now call libertarianism, individuals not only control their labor and the results of their labor, they are politically free. In theory, men either labor for their own use or agree to labor for others. The state’s only purpose is to enforce contracts as all of the dealings between citizens is consensual and formalized in a contract. The appeal of capitalism, pure capitalism, is the allure of pure political freedom.

By the time Belloc was writing, it was clear that pure capitalism would inevitably result in the concentration of wealth. A small class of property owners would come to posses the bulk of the nation’s wealth. That means a class of people who were free and a class of people who were not free, because they could not own and control their own labor. This led to social instability and eventually violence. Belloc argued that attempts to reform capitalism through state action would result in something he called the Servile State.

Reforms to capitalism are always through the law. The state places limits on how the owners of property may use their property. This then leads to a negotiation between the state, which has the monopoly of force, and the property class, which has a monopoly of capital. The result is a system in which the state seeks to protect those without property by placing requirement in the capital owners. In return, the state require the masses to labor for the property class, under conditions set by the state.

The result is that the business is forced to hire people it may not wish to hire, but the state also dictates to labor how and when they can sell their labor. Put another way, the poor are forced to serve the rich, but the rich are forced to be generous to the poor, looking out for their welfare. It is a social contract enforced at the barrel of a gun. It has the inequality of capitalism and the lack of political liberty inherent in socialism. The Servile State is the worst elements of both economic systems.

Belloc could not see what was coming in the post-war era and he certainly had no idea what was coming with the technological revolution and the explosion of neo-liberal globalism. He was prescient, however, with regards to how English economic systems would evolve over time. Look around at the modern world and you see the world he described as the inevitable result of “reformed capitalism.” Today, employers hire whole teams of people who makes sure the rich and powerful follow the rules.

What’s been missing in the technological age is the other half of the equation. As the West de-industrialized, the enforcement of labor laws have fallen away. Masses of helot labor brought over from Asia into Silicon Valley, for example, worked under agreements they struck with the business owners. Tech companies love open borders as it gives them a loophole to avoid some of the constraints of the Servile State. The same is true at the unskilled end, where companies rely upon masses of labor from Latin America.

This is an untenable situation in its own right, but the coming automation of the American economy will result in an evolution of the Servile State. The Universal Basic Income is nothing more than a modern implementation of the sort of infringements on political liberty Belloc described a century ago. Property holders will be forced to care for the dispossessed and, inevitably, the state will put behavior rules on the dispossessed. The UBI will come with rules requiring the recipients to act a certain way.

You get a glimpse of this in the efforts to control political speech on-line. Social media companies get exceptions to anti-trust laws, permitting them to run monopolies. In exchange, they are tasked with policing dissent on behalf of the state. The users get “free access” to platforms like Faceberg and Twitter, just as long as they agree to the terms of service and accept discipline when they post subversive things. Imagine this system applied to the universal basic income or to access to your self-driving car.

Belloc’s alternative was something he and Chesterton called distributism. Some have argued that their economic ideas were proto-fascism, but that’s debatable. What Belloc argued for was the inverse of the Servile State. Instead of a strong central state, political authority would be distributed and diffused throughout society, while wealth concentration would be constrained locally though ad hoc arrangements and cultural institutions. The goal is to maximize liberty, while minimizing inequality.

Whether or not this is possible in the modern age is debatable. Belloc and Chesterton argued that this was the natural arrangement of Europe. They also argued that it required a strong and energetic Christian tradition. That ship has sailed in the West, but maybe it does not matter. There’s no getting around the fact that neo-liberalism may be economically stable, but it is wildly unstable culturally. The experience of Europe thus far suggests it is suicidal. How to address it may lie with globalism’s last critics.

The Douche Bag Society

Posted on by

Inevitably, whenever I write about the new economy or new technology, I get responses like this one from reader Fred Z, taking me to task for challenging his assumptions about the morality of the new economy. Fred likes the fact he can grind his local vendors into poverty, by ordering his stuff from a stranger in America on-line. No one wants to be thought of as a bad guy, so he has bought into the neo-libertarian moralizing about so-called free trade and globalism. He’s not screwing his neighbor. He’s efficient!

Fred does not think of himself as a bad person for buying on-line, rather than buying locally. No one does. Every day we are told by our betters, through the mass media, that the only thing that matters is that you get what you want, when you want it, at the price you want it. The defining feature of the modern economy is that anything resembling value-added is stripped away, in order to turn it into a commodity. Once everything is just a commodity, then the only decision is price and when you can have it.

This is a big part of the libertarian fantasy. Everyone is a deracinated economic unit. The only engagement between humans is transactional. Fred Z feels no obligation to buy from a local vendor or even buy from a countryman. He’s just getting what he wants, when he wants it at the price he wants. His only concern is himself. If the people he ends up buying from are homicidal lunatics, that’s not his concern. If his decision to buy from strangers means his neighbors fall into poverty, then maybe his neighbors should just die.

The marketplace has always been a ruthless and unsentimental part of the human condition. The ancient Persians looked at the Greek agora as a festival of liars, robbing from brothers and neighbors. From the Persian perspective, haggling over price and quality was just one person trying to swindle the other, by telling lies to the other. The seller lied about the product and what he would take for it. The buyer lied about his opinion of it and how much he was willing to trade for it. They were right, the market is built on lies.

It is also why human societies have always put limits on what can happen in the marketplace. Life is all about the trade-offs. The socialists think they get better trade-offs with a highly regulated state economy where the excesses of the marketplace are constrained. Free market types think the trade-offs are better with much less control over market activity. They are both right to a point. That point is determined by how the people of a society want to live. What they want of themselves determines what they permit.

In the 1980’s, it was often remarked by Progressives that the Scandinavian countries made socialism work. They had high tax rates and very low amounts of inequality. The liberals were careful not to talk about it too much for fear people would notice that these countries were all white. The culture of the white people that made up these countries had a long tradition of egalitarianism and sharing so socialism worked for them. The trade-offs they preferred reflected what they loved and what they hated about the human condition.

That’s the debate we will have to have about neo-liberalism. Fred Z loves that he can get cheap stuff on-line, but he is not thinking about the trade-offs. The rich people who rule over us do think about the trade-offs, which is why they ruthlessly support a system that socializes costs and privatizes profits. The trouble for guys like Fred Z and everyone reading this is that we’re on the other side of the equation from those rich guys. We’re the ones on whom those socialized costs fall. We are getting the bill for all this.

Think about it this way. Law enforcement requires society to employ bad people to deal with the criminal element. It’s why even today, most cops are horrible people and prison guards are sociopaths. Policing deviant humans is an unpleasant task that is best done by unpleasant and cruel people, who take some pleasure in the task. Few of us could work in a prison and most of us would never want to do the things cops do every day. It also means law enforcement people get to do things the rest of us are prohibited from doing.

Even libertarians understand the necessity of having cops and jails, but they will argue that we have gone too far in an effort to make society safe. The cops have too much power and the state abuses the rights of too many people. The trade-offs are not acceptable, so libertarians argue for things like drug legalization. The costs of the police state far outweigh the costs of additional addicts. Whether or not you accept that, you have to accept the premise, that there are trade-offs and they should be debated.

The douche bag is someone that is self-absorbed and has a high time preference. He wants what he wants and he wants it now. At some level, he knows this is at odds with the rest of humanity so he takes some pleasure in annoying others. This feedback tells him he is serving himself and thus living up to his douche bag code. It’s why the douche bag laughs and mocks normal people when they point out that he is being a douche. It’s validation that he is being all the douche he can be. He’s the giant douche.

That’s what is at the heart of the global marketplace. Fred Z can be a colossal douche nozzle to his friends and neighbors, but call it mere consumerism. His friends and neighbors will eventually return the favor. The marketplace, instead of being confined to one area of our life is coming to define our lives and our common humanity. We live in an era when the stepinfetchits of the billionaire class can gleefully talk about killing poor people or deporting them. We are on the way to being a douche bag culture.

Iceland

Posted on by

Iceland is one of the weirdest places on earth. In fact, it may be the weirdest, at least that is what many Icelanders will tell you. Some of their weirdness is made up for the tourists, but some of it is made up for their own entertainment. The belief in elves and “hidden people” seems to be mostly for local amusement. The Icelandic Phallological Museum, on the other hand, is harder, so to speak, to explain. But, when you live on a volcanic rock in the North Atlantic, indulging in weirdness is probably to be expected.

The little island republic came to world attention back in the financial collapse when they went bankrupt. Iceland had managed to become a hedge fund with a fishing village attached to it. Michael Lewis wrote a fascinating and humorous piece on them back in 2009. When I was over there last summer, I mentioned this to locals a few times and they had never heard of it. When I mentioned some of the colorful anecdotes from it, they laughed at me like I was an idiot, so Lewis may have been liberal with the truth.

In addition to the Dungeons & Dragons vibe to the place, Iceland is interesting for biological reasons. It is a small and extremely homogeneous population located on an isolated island. That means it makes for a good place to tease out things about the human genome. The genetics company deCode is located in Reykjavik and has been doing a lot of interesting work for decades. The willingness of the population to participate in this research makes it a great laboratory for this type of work.

Another topic of interest is how the people have organized themselves over the last 1,000 years since settlement. Unlike most places on earth, human settlement on the island is very recent and it has been written down. We can only guess about the waves of humans that settled in the Ruhr Valley or along the Thames, but we have written records about who settled Iceland and how they developed their society. It is, in this regard, an interesting anthropological study.

A Norwegian chieftain named Ingólfur Arnarson is usually considered to have been the first permanent settler in Iceland. His legend says he threw two carved pillars overboard as he neared the island, vowing to settle wherever they landed. He then sailed along the coast until the pillars were found. There he settled with his family around 874 and named the place Reykjavík, which means “Bay of Smokes” due to the geothermal steam rising from the earth. As is always the case, historians are not sure if this entirely true.

Eventually, Ingólfur was followed by other Norse chieftains, who brought their families and slaves, settling all the inhabitable areas of the island in the next decades. The Chieftains were Norwegian, while their slaves were Irish and Scottish, according to the Icelandic sagas and Landnámabók, which is a written history of the settlement. This tracks with the findings of modern genetics. That’s what makes Iceland so useful, We have written records and archaeological findings, that are validated by genetic data.

There are two theories for why the Norse fled Norway and settled on a volcanic rock in the middle of the North Atlantic. Legend says it was due to people fleeing the harsh rule of the Norwegian king Harald the Fair-haired. Norway was undergoing a consolidation of power under one powerful family and the losers were heading off for new lands. It is also possible that the western fjords of Norway were simply overcrowded in this period. The general theory for the rise of the Vikings is simple over population.

Once there was enough people to farm the land and create an economy, they set about organizing themselves. In 930, the ruling chiefs established an assembly called the Alþingi that convened each summer. The representative chieftains made laws, settled disputes and appointed juries to judge lawsuits. Because writing down laws could lead to the use of force to interfere with an individual or individual’s property, the laws were instead memorized by an elected Lawspeaker until the next assembly.

Since there was no central executive power, it meant the laws were enforced by the people on an ad hoc basis. A land dispute, for example, would require hiring some third party to act as the judge. Violence against people or property would require the people temporarily banding together to address the problem. This is the sort of arrangement that results in blood-feuds. Consequently,  the writers of the Icelanders´ sagas had plenty of material. Trial by combat was a real thing when it came to disputes.

Iceland did pretty well into the 13th century when the growing power of a few families led to a break down in the system. Rather than adjudicate disputes the old fashioned way, for example, it was easier to go to the head of one of the powerful families for relief. Inevitably, the ruling families began to resolved things, like land disputes, in a way that benefited them over other rival families. This led to other powerful families doing the same in order to check the power of their rivals and soon Iceland was dominated by a few chieftains.

The start of the 13th century known by the very cool name Sturlungaöld, which means “The Age of the Sturlungs.” Sturla Þórðarson and his sons were one of two clans waging war for domination of the the island. This clan eventually won the support of the king of Norway who was looking to exploit the conflict. Sturla Sighvatsson became a vassal of Haakon IV of Norway in 1235, thus allowing the Norwegian king to exercise authority over the island, by backing the Sturlungs against their rivals.

In 1262 Iceland signed the Old Covenant establishing a union with the Norwegian monarchy. It was a nice run as a transactional society, but they ran into the problem of how to deal with inequality once their society was able to amass excess wealth. The rich were not satisfied with being rich, they also wanted power, which means authority over others. It is the natural human impulse and the ad hoc system of governance was unable to respond to this internal challenge. The result was domination by a few.

Of course, they also had the problem of how to deal with powerful neighbors looking to dominate the island. Norway could use a combination of force and political meddling to create the sort of conditions they could exploit. An iron law of the human condition, and of nature, is that the strong come to dominate the weak. In the case of Iceland, Norway was the strong neighbor determined to dominate the island. They were not going to be talked out of it so Iceland eventually fell under her dominion.

The Hobbesian Net

Posted on by

I clicked on a link from Drudge and I was taken to a website called CBS Money Watch, which is obviously a CBS property. The first thing I see is a video trying to load. I see the pause button and stop it before it starts. It then starts itself in a few seconds and I stop it again. I hate baked-in video. If I want to watch videos, I’ll go to a video site or turn on the television. The trend of jamming video into sites borders on the sadistic. No one likes this. No one can possible think it is a good idea. Yet, they keep doing it.

Like everyone, I use a combination of blockers and filters on my browser. It’s not that I begrudge the content makers their money. I get that they need to sell ads. I’m OK with it and prefer it over the paywall model. Having 85 pop-ups and hidden audio play automatically, on the other hand, is a dick move that should carry the death penalty. This does nothing but piss people off, which is why ad-blocking software proliferates, along with tools to block plugins. How did this happen? Why would anyone do this?

The standard answer to these questions is that there is a war between web content makers and the anti-capitalist developers behind the ad blockers. It’s the sort of thing that’s believable if you are new to the internet. The truth is the proliferation of pop-ups got so bad in the 90’s, the web was becoming unusable. I recall some sites having as many as a dozen pop-ups. You would close one and two more would open. Then there was the malware problem. Legitimate web sites would load malicious code onto your PC.

It’s another example of people applying the front lash and then complaining about the backlash. Ad-blockers, flash-block, script blockers, etc., would not exist if the web sites had been slightly responsible for their content. Instead, they got caught up in the hype of the “new economy” and tried to turn their customers into content. Even that could have been done with some care, but they carried on like they were doing you a favor and thereby created a market for these defensive browser add-ons.

This is a curious thing. We’re told that the normal relationship in business is for the seller to curry favor with the buyer. “The customer is always right” is something everyone learns at a young age. TV and radio companies put a lot of effort into making their product attractive by using pleasant personalities and inviting topics. Radio, which lives off ad dollars, is especially ruthless with their talent. Low ratings means you get fired, no matter how much the management likes and supports you. It’s all about the customers.

Even television, which is mostly a cable fee racket now, keeps up appearances by paying some attention to ratings. Even Cult outposts like ESPN pull back a little from their daily proselytizing in order to maintain the facade of respecting their customers. They may still be in the business of chanting the gospel, but they are not quite ready to have their on-air talent giving the viewers the middle finger. It’s still important to be well regarded by the audience, even when you’re a tax farmer.

Internet business, particularly the content side, is the exact opposite. The business model seems to be based on assaulting the customers in ever more creative ways. Twitter, which should be like radio in terms of a business model, is at war with its customers. The web designers appear to be sitting around, wondering how they can make the experience less pleasant for the user. In order to use your mobile devise to consume web content, you need a script blocker. Otherwise, your browser will lock up and force a restart.

It’s tempting to think that it is just incompetence and that may be a big part of it. For some reason, web development attracts a lot of hack coders. It also appears that web development relies on foreign labor. I regularly get solicitations from Indian coding shops and their specialty is almost always web development. There’s also the loosey-goosey standards on the web, which means everyone can be Steve Jobs, reinventing old ideas and calling them new. Much of what ails the web is simply not sticking with what works.

Even if that is all true, why would the business people sign off on the slow-loading crap that passes for web content? Why would the business side say, “Yes, let’s have our hidden and very loud audio ads re-spawn three times after the user figured out how to turn them off. Great idea team!” It strongly suggests the people making these decisions don’t actually spend a lot of time consuming their company content. At the Washington Times, I know this is true as their pages simply will not load on a mobile devise.

As is often the case, there may be things at work about which I’m unaware. The economics of most websites remain a mystery to me. Running ads strikes me as a compete waste of money, especially in the current environment where ad-blocking is the norm. I also suspect most people are trained to just filter out ads as they scan their gab feed or favorite web sites. I don’t recall the last time an ad caught my attention and I stopped to notice it. But, billions are spent on ads so maybe I’m an outlier.

Even so, the web content business model says something about modern society. The hostile relationship between the customer and seller is weird, but maybe it reflects the sterile transactionalism that is modern life. Not only are we strangers to one another, we feel free to treat one another like highwaymen. The sites try to jam us with ads and spyware and we try to break their business model by stealing their content. The internet economy is the war of all against all that Thomas Hobbes described as the state of nature.