Archive for the ‘Economics’ Category

When extreme inequality leads to extreme violence

December 4, 2010

This is an important speech. Thanks. It reminds me of the notion that Dickens wrote “Tale of Two Cities” as a warning to England that if they are not careful they too might have their own “To punish the oppressors of humanity is clemency; to forgive them is barbarity.” — Maximilien Robespierre, 1794 — I’m not saying that what Robespierre did is good or right nor am I advocating it but simply remembering that such things have happened in history when inequality becomes extreme. — Robespierre saw no room for mercy in his Terror, stating that “slowness of judgments is equal to impunity” and “uncertainty of punishment encourages all the guilty”. Throughout his Report on the Principles of Political Morality, Robespierre assailed any stalling of action in defence of the Republic. In his thinking, there was not enough that could be done fast enough in defence against enemies at home and abroad. A staunch believer in the teachings of Rousseau, Robespierre believed that it was his duty as a public servant to push the Revolution forward, and that the only rational way to do that was to defend it on all fronts. The Report did not merely call for blood but also expounded many of the original ideas of the 1789 Revolution, such as political equality, suffrage, and abolition of privileges. Despite executing a good number of his fellow revolutionaries, Robespierre was still one of them in his theory, even if his practice was questionable.

Ibn Khaldun Father of Economics

November 17, 2010

@Sam – actually Ibn Khaldun, the father of sociology, was the first (in 14th century Tunisa) to speculate that cultures undergo long cycles of rise and decline Ironically his disciples did not take up his ideas and he was not rediscovered until centuries later. Personally, I think that America must decline while some nation such as China or India must increase …. When civilization [population] increases, the available labor again increases. In turn, luxury again increases in correspondence with the increasing profit, and the customs and needs of luxury increase. Crafts are created to obtain luxury products. The value realized from them increases, and, as a result, profits are again multiplied in the town. Production there is thriving even more than before. And so it goes with the second and third increase. All the additional labor serves luxury and wealth, in contrast to the original labor that served the necessity of life. ……….Businesses owned by responsible and organized merchants shall eventually surpass those owned by wealthy rulers.
Ibn Khaldun on economic growth and the ideals of Platonism.

@Suzanne: I agree. Tutor Eva Brann is one of the greatest minds I have ever personally experienced albeit from a row in the FSK auditorium. Her 1967 lecture “The Student’s Problem” is magnificent. I will say that when I glanced at something she wrote about Postmodernism, I felt that she was understandably writing from her own SJC agenda (the Pope IS after all Catholic, and bears do use Charmin in the woods) but it occurred to me that there are young people who choose to pursue that Pomo direction (e.g. CJ .. I think I have to check my list) and one should not just categorically denounce everything which is different. She also wrote something recently which spoke of “philosophers peeking into the windows of the scientists to see what they are doing” and I suspect I might personally find some problem with what was said there. I share these things to acknowledge Suzanne’s point that in some way we are in the dark… no not dark… let us be kindly and say that Newton stands upon the shoulders of giants, and we are not in the dark but in the shadows of giants.

Creating more jobs

November 4, 2010

One should not put the cart BEFORE the horse. In order to employ tomato pickers, first there has to be a field, second there has to be seeds, thirdly the seeds must be planted, fourth there must be water and sunshine…. oh and there must be a market of consumers for the tomatoes … ON A DIFFERENT NOTE … our societies are predicated not simply on productivity and consumption but on WILD SPECULATIVE INCREASE AND GROWTH of the sort that cannot be realistically sustained… at least that is my gut feeling… our notion of prosperity is not simply having some lentils and rice to cook for dinner but rather how on having a 3rd car, a summer home, properties which appreciate in value, a portfolio… I am reminded of Hoover’s speech prior to the crash where he stated that every person in the nation could become wealthy…. I apologize that I am neither an economist nor an historian to back up this post with volumes equivalent to “Wealth of Nations” or “Das Kapital” … but to me some of this seems intuitively obvious

Quakers and Shakers

September 25, 2010

Somewhere I read that it was the Quakers who first introduced the idea of FIXED prices for items in the market place rather than bartering in order to promote fairness.

Also (and this may have come from the Forbes museum) Quakers were so compulsively honest that business people overseas were eager to extend credit on shipments knowing that their payment was a certainty. The terms “Quaker” and “Shaker” both come from verses about “fear and trembling”

My flesh trembles for fear of You, And I am afraid of Your judgments. Psalm 119:120

When Daniel (Daniel 10:7) saw a vision it caused a great trembling

So said the LORD. “But this is the man I will look on [favorably]:
he who is of a poor and contrite spirit, and trembles at my word.”
Isa 66:2

Therefore, my beloved, as you have always obeyed,
not only in my presence, but now much more in my absence,
continue to work out your own salvation with fear and trembling.
Phil 2:12

[and here are a bunch more]

Constructive Criticism vs non-Construtive

September 8, 2010

Erik, regarding my MAIN question:

1.) ANYONE at all who criticizes any proposed measures whatsoever (be they legislative, economic, health care, foreign policy) SHOULD be willing not simply to criticize but to offer constructive ALTERNATIVES. (e.g. if everything that Bush does or Obama does sucks… then dont simply say it sucks but say what you think SHOULD be done, or who you think should be in charge and what they should do.)

2.) ANYONE connected with the government (e.g. congress who are said to have all sorts of gravy benefits like health care and even a freaking barber shop) should be able not simply to “talk the talk” but “walk the walk” (in other words, if John Q. Public has to tighten their belt, then John Q. Public Servant had damn well better be willing to tighten their own belts to the same degree.) I do realize that you are somehow connected with an embassy, but I think your own personal situation and benefits is very germane to whatever criticisms you level. And it sounds like you have to pay for your health insurance which means that you are putting your money where your mouth is. So you are not one of those people who soaks up the gravy but says “let them eat cake.”

Erik, you are in good shape because you are willing to give detailed positive answers/suggestions rather than simply complaining and also you candidly describe your health insurance status so you are not a privileged person living on Easy Street.

Both management and labor have been guilty

August 28, 2010

Historically there have been abuses and extremes both on the side of capitalist entrepreneur/management and also on the part of labor. There is no happy medium. Novels such as Upton Sinclair’s “The Jungle” show the extremes of abuse on the side of the capitalists. On the other hand, the automotive worker’s union achieved so many gains and yet when the American automotive industry was teetering on the brink of collapse it was pointed out how in America labor and management had always had an adversarial relationship whereas other countries (e.g. Japan) had a more cooperative history. Then too there are examples of worker owned companies that enjoy great productivity and prosperity.

Changing World Economy

July 29, 2010

Bryan is posing a question to fellow finance dorks: Why do so many people still insist on saying “what goes up must come down” in reference to the markets? As in, why do people still insist on the idea that the markets are subject to Newtonian physics, when the markets have proven to be a social science?


I personally feel that unending prosperity and growth is not feasible. Too much of the world’s growth over thousands of years depended upon such things as non-renewable mineral and fossil fuel resources, upon conquest and exploitation of less developed civilizations which are now vanishing with modernization. Slave labor and genocide also played a role in expansion and prosperity. Entrepreneurs are more enticed by high risk high yield of very unstable financial instruments which are now more closely controlled and scrutinized. War and reconstruction have played a deceptive role in periods of prosperity and dominance. The tendency towards internationalization of currencies creates situations where the Euro must balance the frugality of nations like Germany with the prodigal nature of nations like Spain and Greece. The US model of private enterprise which seeks to reduce the influence of big government is being overshadowed by the growing success of nations like China where central government control and long term planning dictate the economy.

I have listened to old villagers in China who remember Mao’s revolution of the 1940s speak their stump speeches of “the empty belly now full.” The young generation of China has no memory of such years of hardship. Their great shift is from an agrarian village life with simple needs to an urban manufacturing and service economy where they demand cars over bicycles and increased power consumption. India and China each reach the 1 billion population mark. Gorbachev allowed the Soviet Union and the cold war arms race to dissolve because he finally saw that the underlying agricultural business model of the kalhoz collective commune was no longer competitive. No empire has lasted more than 1000 year if even that. Around the 11th century Ibn Haldune of North Africa realized vast cyclic changes in history and economy which were then forgotten for centuries. Our ecosystem is perhaps irreparably damaged and global warming is irreversible. This means that the wealth of the ocean flora and fauna will not be something that future generations can count on. Conservative political philosophy means literally conservation of wealth, power and status quo. Even the sudden emergence of open source as something superior to proprietary software is a stunning change in business models from older conservative competitive to progressive socialist liberal. Ideological strife between religious right and humanist left among Christians, and between secular vs conservative Muslims with the terrorist element present not just in Islam but in North Korea and among Kurdish nationalists are all dynamics of great instability, whereas business-as-usual conservative speculative models depend upon predictability.

Ecologists estimate that the Earth could support a maximum of 1 billion with a stable ecosystem. But Earth is now approaching 7 billion with an estimated 20 billion by 2030. Unless humanity unites in a world global government that is more secular and humanist in nature then the future and our survival does not seem promising. Unexpected plagues like HIV (and the Bubonic plague of the 13th century) are always possible. And in an ecosystem suddenly stressed by oil spills, nuclear waste, warming, genetic engineering and biological weapons, the chances of a catastrophe are heightened.


December 29, 2009

We need you on our team. You need us on your team. Lets face it, the world NEEDS a team, some kind of team, any kind of team. So far, all we seem to manage is teeming (as in teeming hordes). Our problem is a geographical one; we need to eliminate boundaries. Our problem is an ethnic one; we need intermarriage. Our problem is an ideological one; we need pluralistic interfaith.

Friedrich August Hayek quotes

September 12, 2009


“Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one’s government is not necessarily to secure freedom”

“If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others, and because they are convinced of their own capacity to do this.”

“Freedom granted only when it is known beforehand that its effects will be beneficial is not freedom”

“If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion”

“We shall not grow wiser before we learn that much that we have done was very foolish”

“From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the law and material equality are therefore not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time.”

“There is all the difference in the world between treating people equally and attempting to make them equal.”

“We must show that liberty is not merely one particular value but that it is the source and condition of most moral values. What a free society offers to the individual is much more than what he would be able to do if only he were free. We can therefore not fully appreciate the value of freedom until we know how a society of free men as a whole differs from one in which unfreedom prevails.”

“Even the striving for equality by means of a directed economy can result only in an officially enforced inequality – an authoritarian determination of the status of each individual in the new hierarchical order”

The road to serfdom: text and documents
By Friedrich August Hayek, Bruce Caldwell

“The choice open to us is not between a system in which everybody will get what he deserves according to some absolute and universal standard of right, and one where the individual shares are determined partly by accident or good will or chance, but but between a system where it is the will of a few persons that decides who is to get what, and one where it depends at least partly on the ability and enterprise of the people concerned and partly on unforeseeable circumstances.”

“The more the state ‘plans’ the more difficult planning becomes for the individual.”

“There is, in a competitive society, nobody who can exercise even a fraction of the power which a socialist planning board would possess”

“Only where we ourselves are responsible for our own interests and are free to sacrifice them has our decision moral value. We are neither entitled to be unselfish at someone else’s expense nor is there any merit in being unselfish if we have no choice. The members of a society who in all respects are made to do the good thing have no title to praise.”

“Intellects whose desires have outstripped their understanding”

“We must face the fact that the preservation of individual freedom is incompatible with a full satisfaction of our views of distributive justice”

“It is rarely remembered now that socialism in its beginnings was frankly authoritarian. It began quite openly as a reaction against the liberalism of the French Revolution. The French writers who laid its foundation had no doubt that their ideas could be put into practice only by a strong dictatorial government. The first of modern planners, Saint-Simon, predicted that those who did not obey his proposed planning boards would be “treated as cattle.”

“Who can seriously doubt that the power which a millionaire, who may be my employer, has over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work?”

“It is neither necessary nor desirable that national boundaries should mark sharp differences in standards of living, that membership of a national group should entitle to share in a cake altogether different from that in which members of other groups share.”

“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

Erik, my Facebook friend, comments:

First, as someone who has been reading Hayek off and on for decades and who has read — or at least read thru — all of his major works, I would suggested starting with his last work. Hayek wrote The Fatal Conceit when he was over 90 years old. Ordinarily, that would be a reason enough not to recommend a book. But, in the case of The Fatal Conceit, Hayek had been thinking about the issues discussed in the book all of his life and he had an unusual intellect, so he somehow-someway managed to write his most mature philosophical treatise at a time in life when most people are blowing bubbles in their jello.

Second, as I mentioned to William before, Hayek was not a conservative. Far from it. He advocated many radical reforms. However, he is read by almost all conservative intellectuals. In fact, the Wall Street Journal nominated Hayek to be Man of the Century in 2000. He’s more popular than Edmund Burke. If you want to understand conservatives, read Hayek”