Archive for the ‘economics’ Category

The Spandrellian trichotomy

Wednesday, August 13th, 2014


Technology capitalism: libertarianism

As the left gets ever lefter, it gets every crazier.  Since the libertarian tries to make a separate peace with the left on behalf of capitalism, its craziness necessarily flows into libertarianism.

Libertarians notice that capitalism, in particular the joint stock corporation based on double entry accounting, provides a great, humane, and highly productive system for creating wealth, advancing technological progress, and maximizing liberty. They therefore propose to accept the entire left wing program, only without its anti capitalist elements.  Supposedly the non aggression principle supports all left wing conclusions, except anti capitalism.

Thus a libertarian believes that people should be able to make binding contracts. So a young and naive woman can bind herself to an enormous debt for a PhD in hating dead white males and capitalism, a debt which cannot be expunged by bankruptcy

However, because leftists believe that female sexual autonomy is sacred, therefore has infinite utilitarian weight, absolutely trumping all other human, moral, and utilitarian considerations, a libertarian also believes that that same woman cannot bind herself to always be sexually available to one man, and never to any other, to submit to him, and to bear his children, in return for him protecting her, loving her, looking after her, supervising her, and fathering his children by her.

But it turns out that without the capacity to make a binding contract, it is mighty difficult to reproduce.  It also turns out that the reproductive contract has to be unequal.  A ship cannot have two captains, and neither can a household. (more…)

Why the art, literature, and science of decadent civilization is decadent

Thursday, August 7th, 2014

Gibbon called the art and literature of the latter days of the Roman Empire “the second childhood of human reason”.

Back in the days when European art was the greatest the world has ever seen, the wealthy and powerful Cornaro family patronized the artist Bernini because he was a great artist.  Because high status people like the Cornaro family patronized great artists, great art was high status, and, circularly, the Cornaro family gained status by patronizing great art, such as The Ecstasy of Saint Teresa, which features the Cornaro family as much as a Coca Cola advertisement features coca cola.

Similarly, in Restoration England, high status people patronized science because it was high status, and it was high status because high status people patronized it, starting with King Charles the Second.

Then the government gets into funding art.  But the large bureaucratic government funding organization inevitably gets captured by recipients, as Cornaro family could never be captured, as King Charles the Second could never be captured.  Funds are distributed for grantsmanship, not art quality.  The greatest experts in grantsmanship could draw no better than a small child.

So drawing like a small child comes to be deemed high status.

Neo reactionaries are fond of authority, but need to remember that there is lot that centralized authority cannot do, starting with operate a modern economy.  Large organizations suffer from diseconomies of scale, and a severe agent/principal problem.  Without aristocrats, kings are not much good.

The cure for IQ shredders

Friday, July 18th, 2014

Our best hopes for a high tech future, for avoiding a dark age, are consuming the genes needed for a high tech future. Smart people go to Hong Kong and Singapore and fail to reproduce.

Singapore has taken numerous measures, similar to those of the Nazis and Emperor Augustus, to improve fertility, which will doubtless be as ineffectual as those of the Nazis and Emperor Augustus.

Just as the cure for Chinese poverty was to import the economic laws and customs of Hong Kong into Shanghai, the cure for Singaporean infertility is to import the marital laws and customs of Timor Leste, where women cannot own property, because they are wards of their parents until they become wards of their husbands.

Dubai already has a system where low status expat workers are effectively wards of their employers. This typically applies to Indian construction workers (who are all male and unaccompanied by their wives and families) and Filipino “maids”, who are all female and normally single when they arrive. If an employee’s sponsor is her employer, the employee is effectively a ward of the employer. A higher status employee usually has the free zone authority is his sponsor, not his employer, even though his employer asked the free zone to sponsor the employee so the process looks very similar.

An employee sponsored by her employer normally resides in accommodation provided by the employer. The employee cannot change jobs without her employers permission. If the employer dismisses the maid, he normally cancels her visa, her bank accounts, her phone, and gives her a ticket back to her homeland. He has to give her a ticket out, because he paid a deposit to obtain her work visa, and because if she fails to leave by her employer’s fault, the employer is in trouble. If the employer cancels his employees visa, he is supposed to provide the employee with the means to leave. Often however, she fails to show up by her fault, in which case the employer still loses his deposit, so if he can, he drags her off to the airport whether she will or not.

Male Indian construction workers seldom do a run. If fired, they leave without any drama. “Maids” frequently do a run and fail to show up at the airport, because the usual cause of a falling out with her employer is raging hormones. If she does a run, her phone stops working, her credit cards stop working, her bank account stops working and if she does not withdraw any money in her bank account in a timely fashion, she loses the money. She cannot get a new phone, bank account or legal accommodation, and is subject to a large fine for every day she fails to show up. If caught, and unable to pay the fine, goes to jail for considerable time, then is sent out of the country and forbidden ever to return.

The future belongs to those that show up

Saturday, July 12th, 2014

Japanese fertility
A fertility of slightly over 2.0 is a stable population.

Sarah Perry on the Economic Value of Children

Thursday, July 10th, 2014

Sarah Perry argues that children have been nationalized, have become property of the state and ceased to be the property of their parents, so have become a cost to their parents and a profit to the state, so parents decline to produce so many.

Makes sense, certainly part of the story, but not what I seem to observe, not the main story.

What I seem to see happening is that the major cost deterring people from children is not economic, but rather loss of female sexual autonomy.  If a woman has children during her fertile years, then she is not longer able to respond promptly to a midnight booty call from Jeremy Meeks.

Your feelings differ from mine?  Let us look at Augustan Rome.

The Augustan reforms made children the property of their parents, but the wife even less the property of her husband than in the modern west.  Fertility continued to collapse, to levels that may well have been substantially lower than modern western levels.

On the other hand, the Pauline reforms, which were that a man and his wife were one person, and that person the husband, that the wife was part of the husband, did help substantially with fertility.

Further, I don’t think the nationalization of children is really separable from feminism.  Women really cannot look after themselves.  They will either attach to their fathers, their husbands, or Uncle Sam the big Pimp.  Thus feminism, in practice, means that children become the children of Uncle Sam the big Pimp.   If you denationalized children, women would spontaneously submit to patriarchy.  Conversely, if you enforce patriarchy, the patriarchs will claim their children.  To maximize fertility, need that form of patriarchy in which women attach to their husbands, rather than their fathers, and females are rationed out at only one wife per male, so that as many males as possible have incentive to attach to society, to work, and to invest in posterity.

The cause of population decline

Saturday, July 5th, 2014

At present, only poor countries have reasonable fertility.   The fertile age white population is everywhere declining, and the most intelligent and educated women reproduce the least. But quite recently affluent countries such as pre Weimar Germany had high fertility, and many poor countries have fertility as low as the worst of the west.

Conversely, Rome in its decline, and Sparta in its decline, had terribly low fertility, though their only methods of birth control were vice, abortion, and infanticide, and their living standards were relatively low compared to modern standards.

The demographic transition is nothing to do with whiteness, nor with wealth and economic development.  Nothing to do with having a Malthusian system.  It is not poverty that makes the difference.

Nepal is a good example of a very poor third world country with low fertility comparable to that of the advanced west – but its low fertility is a mix of very high fertility women and very low fertility women, which should make it easy to see what causes the difference. (more…)

Capitalism and entrepreneurial capitalism

Tuesday, July 1st, 2014

Capitalism, in the sense of wealth creating wealth, wage labor, power derived from wealth, and trade, is a bronze age social technology. “Capital” literally means “head” in the sense of “head of cattle”. Originally, the amount of capital one had was the number of beasts in one’s herds. The biblical bronze age patriarchs were capitalists, in that their wealth was their herds, and their power derived from their wealth, their power was their employees. The actual figures on whom the biblical patriarchs are based are probably considerably less ancient than they are depicted in the bible as being but since Moses dates from the collapse of bronze age civilization and he, or the people who wrote him up, are very early iron age, his predecessors have to have been at least late bronze age, possibly earlier. The biblical patriarchs are depicted as fighting, and winning, battles with kings, which would suggest that they were figures of the very late bronze age, since chances are that nomads only gave kings a hard time during the decline and collapse of the bronze age civilizations. The size of states, and the size of armies, declined during the collapse of bronze age civilization, to the point where the sword of a single hero could make a big difference, only to rise again in the early iron age.

But, obviously there is something importantly different about today’s capitalism, something that changed around the time of the restoration.

The phrase “Industrial Capitalism” is misleading, for it was this new form of capitalism that created industry, not the other way around.

The big difference, the social technologies that caused the big difference, were double entry accounting, which made the joint stock corporation possible, made it possible to separate ownership of capital from enterepreneurship. Investors could put an entrepreneur in charge of their capital, and use double entry accounting to keep an eye on him. This is the foundation of western civilization, which began to soar when Charles the Second cut joint stock corporations loose from strong government oversight.

This means that owners of capital can employ people smarter than themselves to manage their capital, increasing the effective intelligence applied to production.

Which caused productivity to consistently and substantially rise faster than population, for the first time in history.

Double entry accounting is a critical part of this system. Unfortunately, double entry accounting has been profoundly disrupted in America by Sarbanes-Oxley, making it impossible to tell how a business is doing. This ham fisted government intervention was officially intended to prevent businesses from misleading investors and creditors, but instead it has made it mandatory to mislead investors and creditors. Sarbanes-Oxley consists of thousands of pages of law, each page of law giving birth to thousands of pages of regulation. It is of course impossible to comply with all this, for if one was to comply with any one page of Sarbanes-Oxley, it would put you out of compliance with hundreds other pages of Sarbanes-Oxley, so what the big firms do instead is hire accountants sufficiently well connected with the government, accountants on the revolving door between regulators and regulated, so that any figures the accountant conjures up will be deemed compliant with Sarbanes-Oxley.

The practical effect of this became apparent in the financial crisis, when it became obvious that many banks simply had not been keeping track of their finances, and had no idea what assets they owned, what financial obligations others had to them, and what financial obligations they had to others. Sarbanes-Oxley replaced the intentionally misleading figures of Enron with fog, with meaningless figures.

Which brings us back to the old system, where rich people cannot, and do not, entrust their wealth to smart people.

“More Right” proposes communism

Saturday, June 28th, 2014

More right quoting “Men among the ruins”

The preliminary condition would naturally be the overcoming of the typical situation in democracies, where the political element makes promiscuous alliances with the plutocratic element, opening itself to corruption and pretending to represent a “Right” in opposition to Marxism. Again, the pure political power must be released from every bond—first from the bonds of capitalism, and then from those of the economy

This is, the state released from every bond, is the old communist fantasy. If the state is released from every bond, it can decree that everything be lovely.

The state does so. Strangely, everything fails to be lovely. Obviously evil people, wreckers, are disobeying the decree. They must found and destroyed. Then everything will be lovely.

But things still are not lovely. Obviously there must even more wreckers, who must be sought out even more vigorously and destroyed even more thoroughly.

At some point Stalin declares that Utopia has arrived, notwithstanding appearances to the contrary, thereby stopping the madness, or Vietnam invades Cambodia, thereby stopping the madness.

The state cannot be free from the bonds of capitalism, because it needs money and goods, and therefore needs capitalists to tax and to purchase technology from. As for being free from the bonds of the economy, we saw how that worked out for the communists.

Reality is that for the reasons explained by Mises and Hayek, and colorfully dramatized by Ayn Rand, the state cannot directly run the economy, nor directly sponsor science. Private individuals, with private wealth, have to be free to create wealth and knowledge, without which the state has nothing to tax, and no means to pay the army, nor any source for the technology to equip the army.

The state is at best a stationary bandit that keeps mobile bandits at bay. If it consumes everything, it destroys itself. Stalinist Russia kept itself afloat on an illegal but essential and tolerated black market, by letting capitalism that it had thrown out the front door in by the back door and by seizing and pillaging additional capitalist economies.

Stalin’s successors faced an ever more serious conflict between ideology – that everything should be devoured – and reality – that they needed the market and wealthy people, a conflict that gradually became more serious as no more advanced economies fell under their power.

Which eventually led to the open abandonment of the “seize everything” ideology

Bitcoin failure

Sunday, June 15th, 2014

For bitcoin to work politically, authority over the currency needs to be distributed over a large group of peers. If power is concentrated at a single point, the state can dominate that point, whoever controls that point can steal other people’s currency and do a variety of bad things.

Bitcoin was designed so that “voting” depended on computing power and network connection. Initially, almost everyone who had a client was a miner, there were a huge number of miners, everyone who used bitcoin had roughly equal influence because they contributed roughly equal computing power to the block chain.

Today, bitcoin is controlled by by a single miner., which was a predictable consequence of bitcoin’s scaling problems.

What we need is a crypto currency which is controlled by the top one hundred or so owners of the currency that are well connected to the net and have adequate computing power, with influence over the currency proportional to the amount of currency that they own, rather than the number of cycles that they burn.

In principle it should be possible to do this using bilinear maps, but the details are a bit tricky, because we have to make sure that manageable number of votes reflects an infinitely divisible currency whose ownership changes continually. So the shares (private and public keys in groups with a bilinear map) have to be reissued frequently, while ownership of the infinitely divisible currency is given value by the fact that if you own a lot of it, you get shares proportional to the amount you own. Since shareholders are people who own a lot of currency, they have an incentive to not misbehave, to continue to reissue shares according to currency ownership and validate transactions according to the rules, since to do otherwise would destroy the value of the currency that they own.

The number of shares remains manageably small, however many people use the currency and however many transactions take place. The shares underlie the value of the currency – and absolutely nothing underlies the value of the shares. Of course we still have other scaling problems, to which I have not figured out a solution except in alarmingly vague outline.

Why women need to kept on leashes

Wednesday, May 7th, 2014

A software company just went bust.  Happens a lot.  That a woman happened to be running this company is not significant.  Lots of men have lost lots of other people’s money too.  What is significant is that she starts off her explanation of how she pissed away all her investor’s money by talking about her sex life.

She begins:

Something wasn’t right, and I couldn’t put my finger on exactly what it was. On the surface, it seemed like I had the best life. A popular blog with millions of readers. The perfect relationship with Brian, the most adoring fiance in the universe.

Adoring Fiance is girl code for The man I am about to cheat on and then dump. If a woman says her fiancee adores her, she is cruising for a dicking.  If she is not cruising for a dicking, she tells us she adores her fiancee, not that he adores her.

Then, one day, a few weeks ago, an event happened (I’ll save the details of that for some other time.) Suddenly a torrent of emotions poured in. I was overwhelmed. I stayed home from work one day–my best friend Erica sent me some poetry, and I just cried. I wept. It felt like my soul was pouring out of me, one tear at a time.

I reeled from the onslaught of emotions for days, and soon thereafter, I broke off my relationship with Brian.

And, by the way, forgot about running the company she was supposed to be running, with the result that the paychecks bounced and the investors lost all their money, but that, not being very important to her does not get much mention, even though the people she is addressing, the investors, are likely to be more interested in that part.

Here is what I guess happened, interpolating between My adoring fiancee  onslaught of emotions, and payroll.

My adoring fiancee

She fucked some bad boy, Mr Very Wrong.  After Mr Very Wrong was done, he kicked her out of his room and soon thereafter called the next girl on his booty call list.

onslaught of emotions

She dumped her fiancee and forgot about her business so as to be fully available in case the next booty call came.   And the next booty call did not come.