Sunday, July 29, 2018

Here's What We've Lost in the Past Decade

The confidence and hubris of those directing the rest of us to race off the cliff while they watch from a safe distance is off the charts.
The past decade of "recovery" and "growth" has actually been a decade of catastrophic losses for our society and nation. Here's a short list of what we've lost:
1. Functioning markets. Free markets discover price and assess risk. What passes for markets now are little more than signaling devices to convince us the economy is doing spectacularly well. It is doing spectacularly well, but only for the top .1% of 1% and the class of managerial/technocrat flunkies and apologists who serve the interests of the top .1%.
2. Genuine Virtue. Parading around a slogan or online accusation, "liking" others in whatever echo-chamber tribe the virtue-signaler is seeking validation in, and other cost-free gestures--now signals virtue. Genuine virtue--sacrificing the support of one's tribe for principles that require skin in the game--has disappeared from the public sphere and the culture.
3. Civility. As Scientific American reported in its February issue (The Tribalism of Truth), the incentive structure of largely digital "tribes" rewards the most virulent, the most outrageous, the least reasonable and the most vindictive of the tribe with "likes" while offering little to no encouragement of restraint, caution, learning rather than shouting, etc.
The cost of gaining tribal encouragement is essentially zero, while the risk of ostracism from the tribe is high. In a society with so few positive social structures, the self-referentially toxic digital tribe may be the primary social structure for atomized "consumers" in a dysfunctional system dominated by a rigged "market" and a central state that no longer needs the consent of the governed.
Common ground, civility, the willingness to listen and learn--all lost.
4. Trust. Few find reason to trust corporations, the corporate media, the tech monopolies or the government. This distrust is reasonable, given these institutions have squandered the public trust to protect the swag being skimmed by insiders and elites.
Rather than earn our trust with true transparency and accurate reporting of data, these institutions spew a false form of transparency that's doubly opaque, as it's rigged to mask the skims of the insiders. Transparency: lost. Accountability: lost.
Do you really trust Facebook, Google, and the agencies that are supposed to provide oversight of these monopolies? If you said, "yes," you're joking, right?
5. Social mobility for the masses. You've undoubtedly read reports about the stagnation of wages for the bottom 90% and the soaring wealth and income of the top 5%, which is concentrated in the top .1%. The old adage--go to college, you'll be guaranteed a secure, well-paying job-- no longer works, as we've over-produced elites (college graduates) for decades.
Starting your own business was once a ladder of social mobility, but the layers of bureaucratic costs and compliance are now so heavy that few have the resources or appetite for risk to start a business.
The only business model that's worth trying now is to start a digital company that can be sold for a couple of million dollars to a tech monopoly (Microsoft, Google, Facebook, etc.) within a matter of months, two years max. By that time, some corporate behemoth will have purchased a competitor and eaten your lunch.
6. Federal law enforcement and national security agencies that were above partisan politics. Now these agencies and their leadership are nothing but political agendas hiding behind a long-extinct reputation for apolitical professionalism. The political impact now guides what's made public, and how that "information" is gamed, spun or fabricated to drive a political agenda.
7. A democratizing Internet. A handful of corporate cartels and quasi-monopolies now control what we see in web searches, news feeds, our "friends" postings, and what's available on user-generated content networks such as YouTube. Under the banner of "fake news" and "hate speech," mass surveillance and censorship are now the status quo.
8. National purpose. Arguably lost long ago, but the loss has become painfully apparent in the past decade. Does anyone still think the Empire is spreading freedom and liberty? Everyone can see that what we're spreading is destruction and disorder.
The society and culture have degraded to an abject worship of greed and private gain. The "national purpose" is to maximize one's personal gain by whatever means are available, including fraud, racketeering, embezzlement, lying, cover-ups, punishing whistleblowers, gaming the system to maximize overtime, etc.
The rationalization is always the same: everyone else is doing it.
Here's a shorthand way to summarize America's "purpose" now: a medication that costs $8 per vial in Europe costs $38,892 in the U.S.
9. Perspectives on entitlement. Everyone's entitled to everything now--to sex, a secure income, the "right" to abuse/accuse online without restraint or blowback, the "right" to demand everyone treat you in whatever way you reckon is your "right," and so on in an infinite expansion of entitlements that require no sacrifice, virtue or even civility of the entitled.
10. Humility. How often do you find someone who publicly expresses caution about their own righteousness, or presents a healthy hesitation about the rightness of their positions, i.e. that they might be wrong? How many are publicly skeptical of their own views and not just of everyone else's views? How many admit to having a poor understanding of complex issues?
The confidence and hubris of those directing the rest of us to race off the cliff while they watch from a safe distance is off the charts.



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Thursday, July 26, 2018

Here's How Systems (and Nations) Fail

These embedded processes strip away autonomy, equating compliance with effectiveness even as the processes become increasingly counter-productive and wasteful.
Would any sane person choose America's broken healthcare system over a cheaper, more effective alternative? Let's see: the current system costs twice as much per person as the healthcare systems of our developed-world competitors, a medication to treat infantile spasms costs $8 per vial in Europe and $38,892 in the U.S., and by any broad measure, the health of the U.S. populace is declining.
This is how systems and nations fail: nobody chose the current broken system, but now it can't be changed because the incentive structure locks in embedded processes that enrich self-serving insiders at the expense of the system, nation and its populace.
Nobody chose America's insane healthcare system--it arose from a set of initial conditions that generated perverse incentives to do more of what's failing and protect the processes that benefit insiders at the expense of everyone else.
In other words, the system that was intended to benefit all ends up benefitting the few at the expense of the many.
The same question can be asked of America's broken higher education system:would any sane person choose a system that enriches insiders by indenturing students via massive student loans (i.e. forcing them to become debt serfs)?
Students and their parents certainly wouldn't choose the current broken system, but the lenders reaping billions of dollars in profits would choose to keep it, and so would the under-assistant deans earning a cool $200K+ for "administering" some embedded process that has effectively nothing to do with actual learning.
The academic ronin a.k.a. adjuncts earning $35,000 a year (with little in the way of benefits or security) for doing much of the actual teaching wouldn't choose the current broken system, either.
Now that the embedded processes are generating profits and wages, everyone benefitting from these processes will fight to the death to retain and expand them, even if they threaten the system with financial collapse and harm the people who the system was intended to serve.
How many student loan lenders and assistant deans resign in disgust at the parasitic system that higher education has become? The number of insiders who refuse to participate any longer is signal noise, while the number who plod along, either denying their complicity in a parasitic system of debt servitude and largely worthless diplomas (i.e. the system is failing the students it is supposedly educating at enormous expense) or rationalizing it is legion.
If I was raking in $200,000 annually from a system I knew was parasitic and counter-productive, I would find reasons to keep my head down and just "do my job," too.
At some point, the embedded processes become so odious and burdensome that those actually providing the services start bailing out of the broken system. We're seeing this in the number of doctors and nurses who retire early or simply quit to do something less stressful and more rewarding.
These embedded processes strip away autonomy, equating compliance with effectiveness even as the processes become increasingly counter-productive and wasteful. The typical mortgage documents package is now a half-inch thick, a stack of legal disclaimers and stipulations that no home buyer actually understands (unless they happen to be a real estate attorney).
How much value is actually added by these ever-expanding embedded processes?
By the time the teacher, professor or doctor complies with the curriculum / "standards of care", there's little room left for actually doing their job. But behind the scenes, armies of well-paid administrators will fight to the death to keep the processes as they are, no matter how destructive to the system as a whole.
This is how systems and the nations that depend on them fail. Meds skyrocket in price, student loans top $1 trillion, F-35 fighter aircraft are double the initial cost estimates and so on, and the insider solutions are always the same: just borrow another trillion to keep the broken system afloat for another year.



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Wednesday, July 25, 2018

When Long-Brewing Instability Finally Reaches Crisis

Keep an eye on the system's buffers. They look fine until they suddenly collapse.
The doom-and-gloomers among us who have been predicting the unraveling of an inherently unstable financial system appear to have been disproved by the reflation of yet another credit-asset bubble. But inherently unstable / imbalanced systems can stumble onward for years or even decades, making fools of all who warn of an eventual reset.
Destabilizing systems can cling on for decades, as the inevitable crisis doesn't necessarily resolve the instability. History shows that when systems had enough inherent wealth to draw upon, they could survive for centuries, thinning their resources, adaptability and buffers until their reservoirs were finally drained. Until then, they simply did more of what's failed to maintain the sclerotic, self-serving elites at the top of the Imperial food chain.
If we want to trace back the systemic instabilities and imbalances that culminated in China's revolution in 1949, we can start in 1900 with the Boxer Rebellion, which was itself a reaction to the Opium Wars of the 1840s that established Western influence and control in China.
But is this far enough back in time to understand the Communist Revolution in the 1940s? If we want a comprehensive understanding, we must go back to 1644 and the demise of the Ming Empire, and perhaps even farther back to the Mongol victory over the Song dynasties in the late 1200s.
In the same fashion, we can trace the current crisis of global-finance Capitalism back to the expansion of globalization, affordable fossil fuels and credit in the early 1900s. Affordable fossil fuels enabled rapid industrialization and the growth of transportation and communication networks. Add the expansionary effects of globalization and credit, and the consumer-finance economy took off like a rocket until the inevitable consequences of providing leverage and credit to marginal producers, buyers and speculators led to the Great Depression.
And so here we are in 2018, 25 years into an unprecedented technological and financial boom which is once again the result of cheap, abundant energy and credit and the global arbitrage of labor, yields, currencies and risk. And once again, the "solution" to every crisis is to do more of what's failed because that's the only option that doesn't require sacrifices from the elites and a painful reshuffling of power relations.
Those of us who saw the 2008-09 Global Financial Meltdown as the inevitable flowering of systemic instability have been marginalized by an epic 10-year boom, much like the Roaring Twenties seemed to "prove" all was not just well, it was terrific.
The seeds of the next financial crisis--or a series of crises which never quite dissipate-- were planted decades ago in the globalization of the 1970s, the financialization of the 1980s and the promise of an enduring energy abundance due to fracking technologies in the early 2000s.
Economic booms are relatively easy to understand and launch: flood an economy limited by constraints on production and consumption with cheap energy and limitless credit at low rates of interest, and you reliably get a boom.
But flooding an economy with cheap, limitless credit inevitably leads to systemic excesses of leverage, risk and debt, and a systemic reliance on marginal borrowers and lenders for "growth"-- a credit-based "growth" which is destabilizing and unsustainable.
The boom turns to bust and asset bubbles pop, laying waste to fortunes and the confidence that bubble-based prosperity is our endless birthright.
The crisis of 2008-09 was averted for a decade, but at what cost? To buy that extra decade of illusory stability, the system has been pushed to extremes that cannot be unwound or reversed painlessly. Beneath the surface illusion of stability, its buffers have been thinned to the point that a relatively modest-sized crisis will trigger a domino cascade that will bring down the entire system.
History has many examples of destabilizing systems "saved" by a stroke of extraordinary good luck (discovery of gold, the unexpected collapse of a geopolitical rival, the rise of a competent leader, etc.), and destabilizing systems not so blessed that were nudged into collapse by a crisis that could have been weathered with relative ease in bygone eras.
Doom-and-gloomers reckon we've finally depleted our run of "saves" while the immoderately cheery techno-enthusiasts reckon technology always conjures up another "save" when we need one. (Delivery of consumer goods by drone, paid for by Universal Basic Income--yippee, problem solved!)
The path ahead narrows to a binary option: the status quo either enters a crisis that can no longer be pushed forward with financial trickery or another systemic "save" emerges by 2024 - 2025. The buffers have been thinned to the point that the global financial system has at best 6 or 7 years before the present era is subsumed by a systemic crisis that cannot be resolved with more of the same, or is rescued by another systemic "save": scalable fusion power, emergency "spaceship money" delivered by the Martian Central Bank, etc.
The system has been "saved" multiple times since the slow-motion crises and anomie of the 1970s. The technological candidates for the next "save" are many, but at this late date, questions of scalability and cost arise. Can the new whiz-bang "save" be scaled up fast enough to make a difference, and will it be cheap enough that a debt-riddled system can pay for it without tipping the system into collapse?
Keep an eye on the system's buffers. They look fine until they suddenly collapse. For a real-world, real-time example of this, look at Venezuela.



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Sunday, July 22, 2018

The Imperial Naivete of the American Public

The nation's premier corporate profit engines / social media giants are the ideal platforms for undermining the U.S. via the sowing of disintegration.
Whether it's stated or not, one source of the inchoate outrage triggered by Russian-sourced purchases of adverts on Facebook in 2016 (i.e. "meddling in our election") is the sense that the U.S. is sacrosanct due to our innate moral goodness and our Imperial Project: never mind that the intelligence agencies of all great powers (including the U.S.) meddle in the domestic affairs and elections of other nations, including those of allies as well as geopolitical rivals-- no other great power should ever meddle with U.S. domestic affairs and elections.
In effect, meddling in the domestic affairs and elections of other nations is the raison d'etre of all great power intelligence agencies:
Our outrage is based on Imperial Naivete: the naivete of a public lulled into a warm and fuzzy sense of moral superiority based on the notion that we only go to war to save the good and punish the evil, and if we meddle in other nations' domestic affairs and elections, we're only doing so for their own good.
If we weren't a kindly, generous Empire, we'd let them go down the drain without trying to set them straight.
And since people tend to react poorly to Imperial meddling, we have to do it real sneaky-like using our alphabet agencies (CIA, NSA, et al.) and Alphabet itself (Google) and all the other tech giants so beloved by financial analysts agog at their immense profits and power.
There's another aspect of Imperial Naivete: the American public naively assumes that their Imperial Project is so god-like in its powers and prowess that no other great power should be able to meddle in our domestic affairs and elections.
In other words, we're outraged to be vulnerable to any blowback, any intrusion, any meddling.
We implicitly or explicitly reckon that its our Imperial right to, say, blow up a wedding party in a destabilized nation we're "helping," killing dozens of innocent attendees, all on the off-chance we might nail a bad-guy who happened to be in attendance.
If he survives the slaughter, well, we'll blow up the next wedding party he attends.
That is to say, there are no limits on our execution of power because we're morally superior and this grants us carte blanche on everything from undeclared war to slaughtering wedding parties to manipulating (meddling) in every other nation's domestic affairs and elections.
This is broadly defined as "protecting our interests," which just so happen to extend into every nook and cranny of the globe. There are no corners of the planet that are not of interest to the Imperial Project.
The great irony in all this is the 2016 meddling was so easy and cheap, thanks to Facebook and the rest of America's Big tech / Big Data quasi-monopolies. As I explained in How Much of our Discord Is the Result of the "Engagement" Advert Revenue Model of Social Media? (October 24, 2017), Facebook's model for generating outsized profits is tailor-made for arousing conflict, discord, disunity and Balkanization.
The reality is Facebook is just too tempting a tool to sow division and conflict.In effect, other powers would be fools not to exploit Facebook et al.
Meanwhile, the stock market analysts love all the profits Facebook reaps. I hope you discern the irony: the nation's premier corporate profit engines / social media giants are the ideal platforms for undermining the U.S. via the sowing of disintegration.
And the social-media / corporate media addicted U.S. populace is also tailor-made for meddling: a populace addicted to its mobile phones, social media and divisive mainstream media is the ideal populace for those seeking to disrupt and fragment.
So let's go back to the offending adverts purchased on Facebook in 2016. It seems that the purpose of those campaigns wasn't necessarily to elect Trump but to sow conflict and discord in the U.S. populace.
I'd say if that was the goal, it's working frightening well. Meanwhile, we laud our tech overlords and spend an ever-increasing number of hours on news feeds, threads, social media, search and corporate-owned media.
Maybe the real problem is our own naivete about our Big Tech / Big Data corporations. Poking thumbs in other people's eyes is immensely profitable--not to the nation being torn apart, but to the Big Tech / Big Data /Social Media -Marketing corporations we are addicted to.
In loving social media and mobile telephony, we're loving our servitude and our vulnerability to meddling.
Many thanks to G.F.B. for illuminating these issues, which are unexplored by the mainstream media (no surprise there...).


Summer Book Sale: 30% off Kindle editions, 25% off print editions. If you're interested in real solutions, check these out:
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Read the first chapter for free.


My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 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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