The Strategy of the Mediocre

NB: a couple of weeks ago I received my first notice from google about one of my posts being barred.  I didn’t protest or anything.  The post already had its run, and was even picked up at LRC.  So, it was out there.  Strangely, a few days later, it magically re-appeared.  As of this writing, it is still up.

Why do I bring this up now?  Well, this might be number two in the series.

To Save America, Restore Our Frontier: Restoring accountability in America is the fight of our times, by Joe Lonsdale

The section I will focus on is entitled Unaccountable, Declining Institutions Prefer Wokey (link).  Lonsdale’s argument is that the woke mind virus (WMV) is “the perfect philosophy for unaccountable power.”

The WMV is the perfect nihilist philosophy for kludge and decline. It’s a circus being put on by the least accountable people and institutions on Earth.

Universities, growing on the back of guaranteed student loans, have departments in the dozens, even hundreds, working to stoke this virus.  Almost none of these people are qualified to do anything that society would pay for absent the temporarily “free” money doled out by the state.  Governments have countless tens-of-thousands of employees doing the same – and I expect the market demand for those individuals qualified to perform such WMV services also approaches zero.

But it isn’t that they aren’t qualified to even find their way out of a paper bag.  They are not even held accountable for the success or failure of the virtually useless task to which they are assigned.  Every failure is merely an opportunity for a bigger budget, a promotion, a new program.

Lonsdale notes the French radicals of the 1960s as providing philosophical cover for the WMV, but it is the unaccountable institutions that are the main driving force behind the movement in our societies.

So, “fighting wokeness” is the wrong strategy. We ought not spend time and energy fighting battles at the surface level while losing an institutional war underneath. The first step is to identify where it prospers most. Here’s a non-exhaustive list:

·         Federal and state bureaucracies

·         Big Tech monopolies

·         Giant banks

·         Crony companies, like in healthcare and defense

·         Hospital monopolies

·         NGOs (often funded by government)

·         Universities

·         Museums

·         Longstanding charitable foundations

·         Public schools and other union-dominated government areas

In other words, institutions and entities that require little, if any, market-derived support; institutions that have the government and its printing press and regulatory framework on their side.  They truly are unaccountable to the market and unaccountable for success toward even their stated objectives, therefore have little need to respond to market pressure. 

I would add to the list: automotive companies and airlines.  Very few, if any, companies in these industries would survive without government support – and this has been demonstrated repeatedly over the years via bailouts and subsidies. 

The Wisdom of Science

Scientists are among the most intelligent people on the planet.  Of course, this does not always make them among the wisest.  But today I offer an example that exemplifies the highest standards of both intelligence and wisdom.

Background

In biology/ecology, parasitism is a non-mutual symbiotic relationship between species, where one species, the parasite, benefits at the expense of the other, the host.

Unlike predators, parasites typically do not kill their host, are generally much smaller than their host, and will often live in or on their host for an extended period.

Parasites reduce host biological fitness by general or specialized pathology, such as parasitic castration and impairment of secondary sex characteristics, to the modification of host behavior. Parasites increase their own fitness by exploiting hosts for resources necessary for their survival, e.g. food, water, heat, habitat, and transmission.

The Discovery

Scientists like Barack Obama so much that they named a parasite after him….World, meet Baracktrema obamai, a deadly turtle pathogen named in honor of our current president.

Scientists and Social Awareness

Believe it or not, it's supposed to be a compliment.

To a scientist, maybe.

BU2B, 2nd Edition

Introduction to the 2^nd Edition

This post was originally published in August, 2014.  With this new post I have added several items and have updated various links.

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All is for the best

Believe in what we’re told

Blind men in the market

Buying what we’re sold

-        Neil Peart, Rush

I was brought up to believe…

…history is a constant progression – onward and upward.

…the Dark Ages were…dark and technologically backward.

…the Middle Ages offered lawlessness and barbarity.

…the Catholic Church ruined western civilization.

…the Renaissance was a renaissance.

…King George was a tyrant.

…Americans fought for independence.

…Americans won their independence.

…the founding fathers were selfless.

…Robert Morris was America’s financier.

…government exists to protect my life and property.

…the time during the Articles of Confederation was chaotic.

Speaking Lies to Power

Isaiah 41:10 So do not fear, for I am with you; do not be dismayed, for I am your God.  I will strengthen you and help you; I will uphold you with my righteous right hand.

Psalm 23:4 Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.

Daniel 3: King Nebuchadnezzar made an image of gold, sixty cubits high and six cubits wide, and set it up on the plain of Dura in the province of Babylon. 2 He then summoned the satraps, prefects, governors, advisers, treasurers, judges, magistrates and all the other provincial officials to come to the dedication of the image he had set up. 3 So the satraps, prefects, governors, advisers, treasurers, judges, magistrates and all the other provincial officials assembled for the dedication of the image that King Nebuchadnezzar had set up, and they stood before it.

4 Then the herald loudly proclaimed, “Nations and peoples of every language, this is what you are commanded to do: 5 As soon as you hear the sound of the horn, flute, zither, lyre, harp, pipe and all kinds of music, you must fall down and worship the image of gold that King Nebuchadnezzar has set up. 6 Whoever does not fall down and worship will immediately be thrown into a blazing furnace.”

12 “…there are some Jews whom you have set over the affairs of the province of Babylon—Shadrach, Meshach and Abednego—who pay no attention to you, Your Majesty. They neither serve your gods nor worship the image of gold you have set up.”

13 Furious with rage, Nebuchadnezzar summoned Shadrach, Meshach and Abednego. So these men were brought before the king, 14 and Nebuchadnezzar said to them, “Is it true, Shadrach, Meshach and Abednego, that you do not serve my gods or worship the image of gold I have set up?

16 Shadrach, Meshach and Abednego replied to him, “King Nebuchadnezzar, we do not need to defend ourselves before you in this matter. 17 If we are thrown into the blazing furnace, the God we serve is able to deliver us from it, and he will deliver us from Your Majesty’s hand. 18 But even if he does not, we want you to know, Your Majesty, that we will not serve your gods or worship the image of gold you have set up.”

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Psalm 52:3 You love evil rather than good, falsehood rather than speaking the truth.

The Pope gave a speech to a joint session of the US congress.  It is worth examining the lies of commission and the lies of omission.  I will not comment on his statements that are contrary to the NAP – or even violations to the US Constitution; this post will already be long enough without having to comment on virtually every line of the speech.  For clarification, the Pope’s words will be in italics.

I am most grateful for your invitation to address this Joint Session of Congress in “the land of the free and the home of the brave”.

He isn’t able to get beyond the opening sentence.  What “home of the brave”? 

The US military will drastically increase drone flights over the next four years, in a bid to boost intelligence and strike capabilities across a growing number of conflict zones, the Wall Street Journal reported.

Not very brave, murdering thousands from the comfort of an air-conditioned office.

You [congress] are called to defend and preserve the dignity of your fellow citizens in the tireless and demanding pursuit of the common good, for this is the chief aim of all politics….Legislative activity is always based on care for the people.

There was a time when this “care for the people” was the function of the Church body.  Never did Peter – the rock on whom the Church is built, and from whom the Pope derives his authority – or Paul call for the Roman government to shepherd and guide the faithful.

Yours is a work which makes me reflect in two ways on the figure of Moses. On the one hand, the patriarch and lawgiver of the people of Israel symbolizes the need of peoples to keep alive their sense of unity by means of just legislation.

It was God who gave the Law, not Moses.  Moses was a messenger.  Likewise, Congress cannot give or create law.  (I need not explain that I do not expect all people live under Mosaic or God’s Law; the NAP is enough, given its broad applicability.)

On the other, the figure of Moses leads us directly to God and thus to the transcendent dignity of the human being.

The Pope is saying flatly that, like Moses, Congress leads us directly to God.

More Macro Nonsense

Apparently Germany has a demographic problem:

Germany’s birth rate has collapsed to the lowest level in the world and its workforce will start plunging at a faster rate than Japan's by the early 2020s, seriously threatening the long-term viability of Europe’s leading economy.

“No other industrial country is deteriorating at this speed despite the strong influx of young migrant workers. Germany cannot continue to be a dynamic business hub in the long-run without a strong jobs market,” warned the [World Economy Institute].

What happens (or should happen) when a person of prudence contemplates aging and retirement?  Usually, saving for retirement is offered as wise counsel – we are pummeled with reports of the lack of retirement savings by individuals.  It seems Germany, nationally, is walking along a similar path – at least this is the interpretation offered by the author of the subject article, Ambrose Evans-Pritchard:

The demographic crisis explains why Germany is so determined to run a budget surplus and drive down its public debt ratios, hoping to avoid a Japanese-style debt-trap before it is too late.

Sound practice for the micro; is it considered sound practice for the macro?

The IMF says Germany would do itself and the rest of the eurozone a favour by spending more to prepare for its old age, not less.

Oh.

Macro-economics, as currently practiced, is – on every level – nonsense.

Murder as a Cure for Economic Stagnation

This will be short and to the point: Ambrose Evans-Pritchard sees Keynesian stimulus in the bubbling fight over a few rocks in dispute between China and Japan:

Asia is on the cusp of a full-blown arms race. The escalating clash between China and almost all its neighbours in the Pacific has reached a threshold.

War as a diversion?  One that would be valuable to China, Japan, and the US given the economic problems faced by these governments?

All other economic issues at this point are becoming secondary.

Yes, perhaps.  Ambrose certainly sees it this way:

Even if the immediate crisis can be defused, we are clearly sliding into a new Cold War. While it is dangerous, it could have paradoxical and powerful side effects. Rearmament lifted the world economy out of slump in the late 1930s, working as a form of concerted Keynesian fiscal stimulus. It could do so again.

This would be an answer of sorts to the West's "secular stagnation" – to use the term of former US treasury secretary Larry Summers – or the liquidity trap as others call it. But be careful what you wish for.

Ambrose, perhaps you should be careful.  Why do you so easily accept the connection of death and destruction as being the cure for economic stagnation?  Is it possible that good can ever come from such total evil?

Even if your moral center is a mess, don’t you at least understand the fallacy of the broken window? 

If you are so gung-ho to intervene, why not put two new cars in every driveway?  At least millions don’t then have to be murdered for your catastrophic theory – they will merely die quietly due to your continued advocacy of interventions.

Ambrose, You Asked For It

Ambrose Evans-Pritchard has written a blog post regarding the inflationary efforts of the BOJ, the resultant spike in JGB yields, and the battle that will take place between markets and Japan’s central bank.  In this post, he notes the accurately predictive statements of Kyle Bass regarding this chapter of the worldwide grand experiment:

Kudos to Kyle Bass at Hayman Advisers for warning that the Bank of Japan would lose control of its ¥70 trillion bond buying blitz. The spike in the 10-year yield to 1pc on Thursday was certainly shocking to behold.

His point is that the BoJ faces a “rational investor paradox”. The authorities are trying to drive up the inflation to 2pc and therefore to devalue Japanese government bonds (JGBs), so why on earth would you want to own them?

“If JGB investors begin to believe that Abenomics will be successful, they will ‘rationally’ sell JGBs to buy foreign bonds or equities,” he told Bloomberg

He says the scramble to sell has “overwhelmed” buying by the BoJ. Governor Kuroda will now have double down with a huge increase in the scale of QE.

He notes similar criticism, from Nomura’s Richard Koo, although Koo approaches the problem from the viewpoint of an “arch-Keynesian.”

Does Ambrose believe it is game-over for Japan?

Au contraire. Monetary policy should take the strain, pursuing a nominal GDP target of 3pc and later 4pc to turn the vicious circle of the “denominator effect” (ie a rising debt load on a shrinking nominal base) into a virtuous circle.

What?  Are you surprised?  The answer is for more interventions – target nominal GDP, that favorite macro-economic measure that includes all government spending as good spending, therefore any reduction in (or slowing in the growth of) spending automatically impacts negatively on this nonsensical macro-statistic.  A self-reinforcing government-interventionist statistic if ever there was one, one that ensures the economic house will be built on sand.

Ambrose views that what the BoJ has done so far is miniscule, and aimed at the wrong target:

The BoJ meddled on the margins with pinprick purchases of short-term debt, buying from the banking system, and merely pushing up the monetary base. Of course it failed. Who cares about the monetary base. It is irrelevant.

What they should have done is to conduct old-fashioned open-market operations, à la Friedman, Fisher, Hawtrey, Cassel, or Keynes himself, buying long bonds from non-banks to force up the M3 money supply. That works, as Ben Bernanke discovered when he finally alighted upon the policy by accident late in the Fed’s QE efforts.

Apparently, Bernanke has it right.  To complete his statement of faith in central bankers, Ambrose declares these individuals larger and more powerful than markets:

I stick with my view that the BoJ has the means to crush all resistance, and should do so. This may require financial repression.

Financial repression.  Use the force of the state to disallow markets from acting rationally – “crush all resistance.”  The power-mad talk of the power-mad. 

Central planning, central planning, and when that fails, more central planning.  This is the world of Ambrose.  He suggests Japan cap interest rates along the entire maturity curve, as the Fed apparently did in the 1940s.

It certainly worked. It allowed the US to whittle away its wartime debt through inflation and negative real rates. The creditors paid the price. It was an “inflation tax”, or covert debt restructuring.

Of course, one could argue this is what the US has been doing for going on six years now.  The shallowness of the so-called recovery bears witness to the shallowness of the policy.

Ambrose realizes this will require further interventions, not just monetary interventions, but likely with capital controls as well.  More repression, more central planning. He suggests this is worth a try:

But all this is clearly “doable”, and if the alternative is a spiral into mayhem and debt default, you can hardly blame Mr Abe for wanting to try. There was always a “Hail Mary” element to this massive reflation experiment, a last-ditch effort to avert a debt compound spiral.

Worth a try.  They do not know what they are doing; they do not know what to do.  You can hardly blame them for trying….

There are, of course, other means by which this problem could be tackled.  None painless; but yes, other means.  Will we find these possibilities raised by Ambrose?

The critics are right to say it may fail. But are they suggesting that the previous status quo was tenable?

It will fail.  Central planning has always failed, of that history has delivered a resounding and repetitive verdict of guilty.  But this does not leave the only option as the previous status quo – after all, it was heavily laden with central planning as well.  It, too, was not tenable.

If Mr Bass happens to read this blog, I would like to know what he would do if he were prime minister of Japan.

I am not Mr. Bass, but what the heck.  Here you go: Default.

And then allow markets to do their cleansing work.  Sooner or later the markets will do this anyway; why not get it over with, and before even more of the productive capacity of the remnants of the free portions of the economy are destroyed. 

Yes, pensioners and others will be hurt by this, but you recognize they are being hurt by financial repression yet recommend repression as your preferred solution.

As for the countless readers demanding an apology from me for backing QE, Abenomics, and all the sins of monetarism: I defy you all.

Your cockiness will not survive the verdict of history.  Markets are larger than any central planner.  Markets are having quite a difficult time of making their voices heard today – this only speaks to the levels of sophistication in the central-planning tools. 

It speaks to the levels of repression already occurring.  It also speaks, qualitatively, to the level of the upcoming crash.

Markets will win.  Always.