Before You Tell Me What You "Know," Tell Me Your Sources

We can no longer trust data and conclusions being published as impartial by institutions that were once trustworthy.

When someone says they "know" what's happening on the ground in Syria, how can we assess the validity of their claim to knowledge, i.e. their claim to "know" "facts" or (gasp) "truth"?

When someone says they "know" the U.S. economy is growing and unemployment is at record lows, what is the basis of their claim to knowledge?

Before you tell me what you "know," tell me your sources. We all know how this works nowadays: the sources are rigged or gamed to support the pre-selected narrative.

In "fake news," the sources are designed to appear legitimate via official-sounding institutional titles for the source organizations and human "experts" / researchers, and the data that's presented to support the "fake news" is also designed to be indistinguishable from legitimate data.

The cursory consumer of such content will be inclined to grant the institution, source and data as equal in legitimacy to other accepted sources. For example, if we read that the United Nations Labor Information Council has collected data showing the U.S. unemployment rate is actually 7.2% rather than the official 3.9%, the invocation of the UN and the precision of the data point suggests a legitimate source and data base.

But it's "fake news;" there is no United Nations Labor Information Council (at least not to my knowledge).

Official sources have learned that the most effective way to propagate the sanctioned narratives is to rig or game the data and/or its interpretation. Thus the bailouts of the U.S. "too big to fail" financial institutions in 2008-09 were purposefully obscured; it took independent researchers to assemble all the bailout guarantees and publish the staggering total of over $16 trillion.

official data is massaged to promote the official narrative. This is well-known to anyone who digs into the actual mechanics of the adjustments made to the raw data. For example, to mask real-world inflation, big-ticket expenses such as healthcare are minimized as a percentage of the basket of expenses being measured, and hedonic adjustments reduce the sticker price we actually pay.

The unemployment rate of 3.9% is based on excluding 95 million working-age residents from the labor pool. Many of these people are indeed unavailable for work, but millions have been categorized as "discouraged" and thus are not counted as being in the work force.

In other words, the process of rigging and gaming "facts" to support a pre-determined narrative is identical for both "fake news" and "official news."When researchers compared electricity consumption in China with the official growth rate, a vast discrepancy appeared: electrical consumption, a reliable indicator of economic activity, lagged the official growth rate.

The official response was to stop reporting electrical consumption data or rig the numbers to match the official narrative.

Now that the loss of trust in official reporting of data is widespread (due to the obviousness of the rigging / gaming / manipulation), the institutions tasked with generating belief in the sanctioned narratives are accusing anyone questioning the officially sanctioned data or narratives of issuing "fake news."

The irony is thick enough to cut with a knife: as institutions gin up ever more dubious "evidence" that all is well with the status quo, the line between "official news" and "fake news" has effectively dissolved.

We are now being bombarded with engineered data from supposedly legitimate sources that's explicitly designed to support insider rackets or profiteering cartel. A prime example is medical/pharmaceutical research data, which is increasingly funded by self-serving corporations or institutions with the explicit goal of finding (or rigging) evidence supporting some claim of efficacy that is highly profitable to the owners of the medication/genetic material.

In other words, we can no longer trust data and conclusions being published as impartial by institutions that were once trustworthy as these institutions become politicized or funded by corporations whose sole goal is to maximize profits by any means available.

Much of this legerdemain is statistical and therefore difficult for laypersons to analyze or assess. Despite the educational industry's focus on STEM skills (science, technology, engineering, math), relatively few citizens seem equipped to read the results of a pharmaceutical Stage III trial (human subject trials for the efficacy and risks of a new medication/treatment) or scientific paper that supports some overarching policy or a "headline number" such as GDP or unemployment.

The Corruption of Evidence Based Medicine? Killing for Profit (via John F.)

A skeptical reader naturally looks for weaknesses such as small sample size, wide margins of error, various assumptions made when eliminating data samples, and so on.

The general lack of interest and/or ability to make even a rudimentary critical assessment of the officially sanctioned evidence and narratives plays right into the hands of those engineering the evidence.

But the Internet is messing everything up by providing a universal forum for skeptics to publish critical assessments of officially sanctioned evidence. The spectrum of critics is wide, ranging from those promoting improbable theories backed by little substantiated evidence to those who have conducted rigorous critiques that interested parties can critique.

Such a forum requires a skeptical populace with critical-thinking skills and the willingness to ask cui bono--to whose benefit? As institutions are politicized and dissenters are marginalized and profit-maximizing organizations fund their own self-serving research, it falls to the citizenry to sort the wheat from the politicized. self-serving chaff.

The Corporate Media's Gulag of the Mind

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Kafka's Nightmare Emerges: China's "Social Credit Score"

China is creating Kafka's nightmare world as the perfection of centralized control of its citizenry.

China is rapidly building out a Total Surveillance State on a scale that far surpasses any government surveillance program in the West. The scope of this surveillance is so broad and pervasive that it borders on science fiction:

Life Inside China’s Total Surveillance State (8 min video)

China Aims For Near-Total Surveillance, Including in People's Homes ("Sharp Eyes" nationwide surveillance network)

"You're Being Controlled All The Time" - An Inside Look At China's "Social Credit Score"

China Assigns Every Citizen A 'Social Credit Score To Identify Who Is And Isn’t Trustworthy

It's well known that the intelligence agencies in America seek what's known as Total Information Awareness, the goal being to identify and disrupt terrorists before they can strike.

This level of surveillance has run partly aground on civil liberties concerns, which still have a fragile hold on the American psyche and culture.

The implicit goal of China's Total Surveillance State is to control the citizenry and root out any dissent before it threatens The Communist Party's hold on power, but the explicit goal is a behavioral psychologist's dream: to reward "positive social behaviors" and punish "negative social behaviors" via a "Social Credit Score."

There is something breathtakingly appealing to anyone in a position of power about this goal: imagine being able to catch miscreants who smoke in no-smoking zones, who jaywalk, who cheat people online, and of course, who say something negative about those in power.

But let's ask a simple question of China's vast surveillance system: what happens when it's wrong? What if one of those thousands of cameras mis-identifies a citizen breaking some minor social code, and over time, does so enough times to trigger negative consequences for the innocent citizen?

What recourse does the citizen have? It appears the answer is none, as the process is not strictly speaking judicial; the system appears to be largely automated.

Here's a second question: is the scoring system truly transparent, or can insiders place their thumbs on the scale, so to speak, to exact revenge on personal enemies?

Question #3: Who have the power to change the weightings within the automated software? Will criticizing the government online generate 1 negative point this month but 10 points next month? How can citizens with a handful of negative points, some perhaps incorrect mis-identifications, avoid crossing the dreaded threshold if they don't know how the system is truly ranking various violations?

This aligns perfectly with the world envisioned by Kafka in his novels The Trial and The Castle.

Kafka's fictional accounts of power manifesting through an impenetrable bureaucracy describe a world with two primary features:

1. The rules guiding the system are opaque to those enmeshed in the system

2. There is no recourse for those unjustly persecuted or convicted by the system

What is it like to inhabit such a world? I've assembled some insightful comments on Kafka's works from online resources.

Critic Michiko Kakutani: "(his novels share)...the same paranoid awareness of shifting balances of power; the same atmosphere of emotional suffocation."

The Trial is "the story of a man arrested and prosecuted by a remote, inaccessible authority, with the nature of his crime revealed neither to him nor to the reader."

"The law in Kafka's works, rather than being representative of any particular legal or political entity, is usually interpreted to represent a collection of anonymous, incomprehensible forces. These are hidden from the individual but control the lives of the people, who are innocent victims of systems beyond their control."

"For Kafka, law 'has no meaning outside its fact of being a pure force of domination and determination.'"

Kafka's novel The Castle explores "the motif of an oppressive and intangible system" and "the seemingly endless frustrations of man's attempts to stand against the system."

China is creating Kafka's nightmare world as the perfection of centralized control of its citizenry. The question is: will the Chinese people tolerate this as long as the current artificial financialized "prosperity" reigns? What will happen to their perception and tolerance when the debt-fueled "prosperity" blows away like the sands of the Taklimakan Desert?

Gordon Long and I discuss the conceptual framework and implementation of Social Control in a two-part video series:

Part 1:

Part 2:

My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

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Taking the Pulse of a Weakening Economy

Corporate buybacks provide the key analogy for the economy as a whole.

Central banks have been running a grand experiment for 9 years, and now we're about to find out if it succeeds or fails. For 9 unprecedented years, central banks have pushed the pedal of monetary stimulus to the metal: near-zero interest rates, monumental purchases of bonds, mortgage-backed securities, stocks and corporate bonds, injecting trillions of dollars, yuan, yen and euros into the global financial system, all in the name of promoting a "synchronized global recovery" that in many nations remains the weakest post-World War II recovery on record.

The two goals of this unprecedented stimulus were 1) bringing consumption forward and 2) generating a "wealth effect" as the owners of assets rising in value would translate their perception of feeling wealthier into more borrowing and consumption that would then feed a self-sustaining virtuous cycle of expansion.

The Federal Reserve has finally begun reducing its stimulus programs of near-zero interest rates and bond purchases, the idea being that the "recovery" is now robust enough to continue without the extraordinary monetary stimulus of the past 9 years since the Global Financial Meltdown of 2008-09.

Will the "synchronized global recovery" continue as interest rates rise and central bank assets purchases decline? Policy makers and economists evince confidence as they collectively hold their breath--is the recovery now self-sustaining?

2018 is the first test year. Global assets--stocks, bonds and real estate--remain at levels that are grossly overvalued by traditional measures, and most economies are still expanding modestly. But since the other major central banks have only recently begun to "taper" / reduce their securities purchases, the real test has yet to begin.

The pulses of asset valuations and productive expansion are weakening. Asset valuations are either no longer expanding or are actively falling; markets everywhere feel heavy, as if all they need is one good shove to slip into major declines.

The vaunted "wealth effect" was extremely asymmetric: only those in the top 5% who owned enough assets to experience a meaningful increase in wealth--those who bought assets years before the current bubble expanded, and the relative few households who own roughly 70% of all financial assets--and the few workers and entrepreneurs who benefited from an increasingly "winner take most" expansion.

As a result, the enormous increases in assets had little real effect on the bottom 80% who own few assets, and only modest effects on the "middle class" between the bottom 80% and the top 5%.

Meanwhile, bringing consumption forward has drained the pool of future consumption and creditworthy borrowers. Future consumption now rests on the shaky foundation of marginally qualified buyers and the relatively few young people forming new households who also have high incomes and good credit.

The reality nobody dares acknowledge is that a "recovery" based not on improving productivity and innovation but on cheap credit and an artificially stimulated "wealth effect" was inherently weak, for the stimulus effectively hollowed out the productive economy in favor of the financialized, speculative economy and created perverse incentives to over-borrow and over-spend, stripping future demand to create the illusion of growth in a stagnating economy of rising wealth and power inequality.

A funny thing happens when you borrow from the future to spend more today--the future arrives, and we find the pool has been drained to serve the absurd policy goal of "no recession now, or ever again."

Corporate buybacks provide the key analogy for the economy as a whole: as sales, productivity and profits all stagnate, corporations borrow against future earnings to buy shares back from investors to push share prices higher, creating an illusion of "wealth." But it's all illusion; once the billions in buybacks cease, gravity takes hold and the phantom "wealth" dissipates.

Apple is simply the latest corporation to announce slowing sales growth and to compensate for this stagnation with a massive $100 billion buyback to prop up shares at their current valuation.

Perhaps these realities are seeping into the margins of the complacent herd. It certainly feels like the "smart money" is selling (distributing) to the complacent herd, which is one lightning strike and thunder clap away from a panicked rush to sell and book 9 years of gains before the synchronized global asset bubbles all pop.

Markets have ignored the tapering of central bank support (asset purchases), but the question remains: is this complacency temporary?

Productivity is the only sustainable source of widespread prosperity, and it's stagnating:

My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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What Lies Beyond Capitalism and Socialism?

The status quo, in all its various forms, is dominated by incentives that strengthen the centralization of wealth and power.

As longtime readers know, my work aims to 1) explain why the status quo -- the socio-economic-political system we inhabit -- is unsustainable, divisive, and doomed to collapse under its own weight and 2) sketch out an alternative Mode of Production/way of living that is sustainable, consumes far less resources while providing for the needs of the human populace -- not just for our material daily bread but for positive social roles, purpose, hope, meaning and opportunity, needs that are by and large ignored or marginalized in the current system.

One cognitive/emotional roadblock I encounter is the nearly universal assumption that there are only two systems: the State (government) or the Market (free trade/ free enterprise). This divide plays out politically as the Right (capitalism, favoring markets) and the Left (socialism, favoring the state). Everything from Communism to Libertarianism can be placed on this spectrum.

But what if the State and the Market are the sources of our unsustainability?What if they are intrinsically incapable of fixing what’s broken?

The roadblock here is adherents to one camp or the other are emotionally attached to their ideological choice, to the point that these ideological attachments have a quasi-religious character.

Believers in the market as the solution to virtually any problem refuse to accept any limits on the market’s efficacy, and believers in greater state power/control refuse to accept any limits on the state’s efficacy.

I often feel like I’ve been transported back to the 30 Years War between Catholics and Protestants in the 1600s.

I’ve written numerous books that (in part) cover the inherent limits of markets and the state, so I’ll keep this brief. Markets are based on two premises: 1) profits are the key motivator of human activity and 2) whatever is scarce can be replaced by something that is abundant (for example, when we’ve wiped out all the wild Bluefin tuna, we can substitute farmed catfish.)

But what about work that creates value but isn’t profitable? This simply doesn’t compute in the market mentality. Neither does the fact that wiping out the wild fisheries disrupts an ecosystem that is essentially impossible to value in terms that markets understand: in a market, the supply and the demand in this moment set the price and thus the value of everything.

But ecosystems simply cannot be valued by the price set in the moment by current supply and demand.

As for the state, its ontological imperative is to concentrate power, and since wealth is power, this means concentrating political and financial power. Once bureaucracies have concentrated power, insiders focus on securing budgets and benefits, and limiting transparency and accountability, as these endanger the insiders’ power, security and perquisites.

Both of these systems share a single quasi-religious ideology: a belief that endless economic growth is an intrinsic good, for it is the ultimate foundation of all human prosperity. In other words, we can only prosper and become more secure if we’re consuming more of everything: resources, credit, energy, and so on.

The second shared ideological faith is that centralizing wealth and power are not just inevitable but good. In other words, Left and Right share a single quasi-religious belief that centralization is not just inevitable but positive; the only difference is in who should hold the concentrated wealth/power, private owners or the state.

This ideology assumes a winner take most structure of winners and losers,with the winnings being concentrated in the hands of a few at the top of the Winners. Thus rising inequality and divisiveness are assumed to be the natural state of any economy.

This ideology underpins the entire status quo spectrum. The "growth at any cost is good" part of the single ideology underpinning the status quo is captured by the 1960 Soviet-era film Letter Never Sent; in its haunting, surreal final scene, a character envisions a grand wilderness untouched by human hands transformed into an industrial wasteland of belching chimneys and sprawling factories. This was not a nightmare--this was the Soviet dream, and indeed, the dream of the "growth at any cost is good" West.

Simply put, the status quo of markets and states is incapable of DeGrowth, i.e. consuming less of everything, including credit, "money", profits, taxes—everything that fuels both the state and the market. As I have taken pains to explain, it doesn’t matter if a factory is owned by private owners or the state: the mandate of capital is to grow. If capital doesn’t grow, the resulting losses will sink the enterprise—including the state itself.

What lies beyond "growth at any cost" capitalism and socialism? My answer is the self-funded community economy, a system that is self-funded (i.e. no need for a central bank or Treasury) with a digital currency that is created and distributed for the sole purpose of funding work that addresses scarcities in local communities.

I outline this system in my book A Radiocally Beneficial World: Automation, Technology and Creating Jobs for All.

Rather than concentrate power in the hands of state insiders, this system distributes power to communities are participants. Rather than concentrate the power to create currency for the benefit of banks and the state, this system distributes the power to create currency for the sole benefit of those working on behalf of the community, on projects prioritized by the community.

This community economy recognizes that some work is valuable but not profitable. The profit-driven market will never do this work, and the central state is (to use Peter Drucker’s term) the wrong unit size to ascertain each community’s needs and scarcities.

Clearly, we need a socio-economic-political system that has the structure to not just grasp the necessity of DeGrowth and positive social roles (work benefiting the greater community) but to embrace these goals as its raison d’etre (reason to exist).

Human activity is largely guided by incentives, both chemical incentives in our brains and incentives presented by the society/economy we inhabit. In the current system, concentrating power and wealth in the hands of the few at the expense of the many and wasting resources / destroying ecosystems are incentivized if the activity is profitable to some enterprise or deemed necessary by the state.

In the current system, the state incentivizes protecting its wealth and power and the security/benefits of its insiders, and markets incentivize maximizing profits by any means available.

As I have explained many times in the blog and my books, we inhabit a state-cartel economy: the most profitable form of enterprise is the quasi-monopoly or cartel that limits supply and competition in order to extract the maximum profit from its customers.

Monopolies (or quasi-monopolies such as Google, which holds a majority share of global search revenues, excluding China) and cartels quickly amass profits which they then use to secure protection of their cartel from the state via lobbying, campaign contributions, etc. The elites controlling the state benefit from this arrangement, and so the system inevitably becomes a state-cartel system dominated by the state and private sector cartels and incentives that benefit the wealth and power of these institutions.

Once we understand the inevitability of this marriage of state and cartel, we understand socialism and capitalism--the State and Markets--are the yin and yang of one system. Reformers may recognize some of the inherent limits of the state and the market, but they believe these problems can be solved by tweaking policies--in systems-speak, modifying the parameters of the existing subsystems of lawmaking, the judiciary, regulatory agencies, and so on.

But as Donella Meadows explained in her classic paper, Leverage Points: Places to Intervene in a System tweaking the parameters doesn’t actually change the system. For that, we must add a new feedback loop.

The status quo, in all its various forms, is dominated by incentives that strengthen the centralization of wealth and power, increase inequality and divisiveness and the permanent expansion of consumption and credit. That this path leads to implosion / collapse does not compute because the status quo is constructed on the fundamental assumption that permanent growth/expansion of consumption, credit, wealth and state power is not just possible but necessary.

As many of us have labored to show, the financial system has been pushed to unprecedented extremes to maintain the illusion that rapid growth of consumption and credit can be maintained essentially forever.

We need an alternative system that’s built on sustainable incentives and feedback loops so we have a new blueprint to follow as the current arrangement unravels in the next decade or two.

Security and prosperity are worthy goals, but the means to achieve them, as well as the definition of security / prosperity, must be reworked from the ground up. We need to include positive social roles and meaningful work as essential components of security/prosperity.

My conception of a Third / Community Economy does not replace either the state or the free-enterprise market; rather, it does what neither of the existing structures can do. It adds opportunity, purpose, positive social roles and earned income for those left out of the state/cartel/market economy.

My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.

Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Kent M. ($50), for your monstrously generous pledge to this site -- I am greatly honored by your support and readership.

Thank you, Dave S. ($5/month), for your wondrously generous pledge to this site -- I am greatly honored by your support and readership.

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