A technocrat doubts the future of technocracy

David Brooks sounds uncharacteristically immoderate:

When historians look back on this period, they will see it as another progressive era. It is not a liberal era — when government intervenes to seize wealth and power and distribute it to the have-nots. It’s not a conservative era, when the governing class concedes that the world is too complicated to be managed from the center. It’s a progressive era, based on the faith in government experts and their ability to use social science analysis to manage complex systems.

This progressive era is being promulgated without much popular support. It’s being led by a large class of educated professionals, who have been trained to do technocratic analysis, who believe that more analysis and rule-writing is the solution to social breakdowns, and who have constructed ever-expanding networks of offices, schools and contracts….

This progressive era amounts to a high-stakes test. If the country remains safe and the health care and financial reforms work, then we will have witnessed a life-altering event. We’ll have received powerful evidence that central regulations can successfully organize fast-moving information-age societies. If the reforms fail — if they kick off devastating unintended consequences or saddle the country with a maze of sclerotic regulations — then the popular backlash will be ferocious.

The so-called “reforms” will fail. The entire Progressive Era dating back to Woodrow Wilson is in the process of coming to an end and there is absolutely no doubt about it. We can be assured they fail, beyond any shadow of a doubt, because centralized planning always fails in the end. The more complicated the latest iterative attempt to repair the incipient failure is, the faster the next failure arrives. The Misean concept of central information deprivation – not to be confused with F.A. von Hayek’s later refinement – first foresaw and explained this certain failure not long after the Progressive era began, in a monograph entitled Economic Calculation In The Socialist Commonwealth, published in 1920.

And yet, 90 years later, the technocrats still believe that this time, they’ll somehow be able to get it right. They won’t. The elites are still caught up in their fantasy that 2+2 can equal 5 if they can only come up with just the right bureaucratic incantation. But they never, ever will. What the technocrats keep failing to understand is that no amount of technological assistance in information gathering can resolve the problem, because in replacing the supply and demand mechanism of the market, the central planners have removed the very engine that produces the necessary information.

Let me explain. A computer can theoretically keep track of how many people wear tennis shoes, their usage patterns, and when those shoes are likely to wear out and require replacement. But what it cannot track or simulate for even a single individual is the marginal utility of a pair of new shoes to that individual in comparison with all of the various competitive options, which, it should be kept in mind, are not limited to footware. Nor can it even begin to calculate the way in which all of the possibilities and preferences of all of the individuals in the economy will interact, thus preventing it from being able to tell the planners how many pairs of tennis shoes or how much electricity must be produced next year.

As I wrote in RGD, the Story of the Pencil only tells half the story. It is a supply-side story that ignores the more important demand-side one, which is the story of the myriad assignments of subjective value assigned to a pencil made by the tens of millions of potential pencil-buyers who could have bought pencils but elected not to buy them at the available price. Until a computer can correctly calculate the statistical probability of events that never happened, technology cannot even begin to help central planners solve the economic calculation problem.

A bit off

Ireland’s debt is downgraded:

Credit agency Moody’s has downgraded Ireland’s government bond ratings to Aa2, blaming banking liabilities, weak growth prospects and a substantial increase in the debt to GDP ratio…. The general government debt-to-GDP ratio was at 64 per cent at the end of last year, up from 25 per cent before the financial crisis took hold, and is continuing to rise.

I had Ireland, Spain, and the Baltic countries as the first to be downgraded. Instead, it was Greece, Spain, and Portugal that kicked off the sovereign debt spiral earlier this year. But it was only a matter of time before Ireland joined the party.

For those who are interested, here is a debt specialist’s opinion on what will happen in the Great Depression 2.0 scenario that I have been predicting: “Here is the Really Bad scenario. It’s not a worst possible scenario. It is more like the Long Depression or the Great Depression reoccurring under 2010 conditions. In the Really Bad scenario, 45% of the countries with large outstanding sovereign debts are in default within a 2-3 year period.”

Sex, lies, and trophy shirts

But apparently not everyone lies about sex. Or perhaps, as I tend to suspect, they are lying about not lying about it.

Research shows that, perhaps unsurprisingly, there is a split between the genders when it comes to answering the potentially embarrassing question. Around a third of women give a false response – and 64 per cent of these reduce the number. Half lie because they ‘feel ashamed’ of the number, while a further 19 per cent don’t want to be seen as promiscuous. A fifth of women would be dishonest about their number of sexual partners if their new partner had slept with fewer people than them.

A higher proportion of men – 43 per cent – lie to their new partner. In these cases, around 60 per cent increase the amount.

I was very surprised by this, because on every occasion I have been privy to accurate information about a female friend’s history and then heard her mention a number, she has lied. But then, it occurred to me that because higher numbers tend to devalue a woman’s relationship appeal, many women have no reason to lie. Consider the CDC report on anonymously reported female sexual history:

15+ partners: 9.4 percent
7-14 partners: 21.3 percent
2-6 partners: 44.3 percent
0-1 partners: 25 percent

Can you find “around a third of women” who might have an incentive to “give a false response”? The majority of the false reporting is almost surely from the 30.7% of women who fall into the Slutty and Frisky categories but are dishonestly claiming to be Normal. The average college-educated woman is disposed to believe that claiming 4-5 previous lovers is going to sound credible and not too promiscuous, (one high school boyfriend plus one fling per year of college), whereas no one is going to believe a claim of near-chastity. This is why a man should call BS on a woman who claims that moderate level of experience while simultaneously providing evidence that it is actually more extensive.

Now, it’s pretty easy for a woman to tell if a man is exaggerating about his experience, since he probably won’t know what he is doing. But how can a man tell if a woman is clever enough to avoid claiming complete inexperience and doesn’t give it away by breaking out bedroom gymnastics worthy of Cirque du Soleil? It’s quite easy if you happen to have access to her clothing drawer. Women attempt to steal status-branded t-shirts and sweatshirts whenever they have a fling with a man. It’s a bizarre form of competitive female trophy-hunting; a Harvard Hockey t-shirt trumps a nice, but generic University of Oregon sweatshirt.* So, you can be sure that every t-shirt advertising a college she never attended, a sporting event she never saw, a military service** to which neither she nor any family member are connected, or, if she actually went to that college, a sport she never played, represents a notch on her bedpost that she doesn’t report as a boyfriend. If she keeps around a few worn-out favorites of the sort she’d never buy in a million years but somehow keep managing to survive periodic wardrobe purges, you can be sure that they once belonged to other men.

And if she has a drawer full of t-shirts representing the entire SEC plus half the Big Ten, Notre Dame, and two Ivies, you had better run, not walk, to the nearest medical clinic.

Male dishonesty makes similar sense, albeit coming from the opposite angle. Because women place a negative value on men without sexual experience, men who lack it have an incentive to make themselves look more attractive via false preselection. And if 17% of men are lying to REDUCE their numbers, that gives some support to the 80/20 rule. Only the Alphas in the most successful quintile can afford to reduce their reported numbers without reducing their appeal to a prospective partner.

UPDATE – It occurs to me that women can find some use in the t-shirt test too. If you’re with a high value man you suspect of being haut alpha, check his t-shirt and sweatshirt collection. If he’s a former college athlete or graduated from an elite school, he should have no shortage of commemorative event t-shirts and team sweatshirts. If he doesn’t have any, then you can probably guess how they managed to walk out the door, one by one. If you want to amuse yourself, try asking him where they are. Most guys are so completely clueless about female trophy-hunting that he probably isn’t even aware they’re missing.

*If you ever feel like upending a woman’s applecart, note the trophy shirt X that she’s proudly sporting. Then, the next time you see her, ask her if she’s ever hooked up with X. While she’s wide-eyed and stammering in confusion, just smile and say, “Yeah, I thought you looked like the type.”

**thanks to AmyJ for reminding us of this one.

WND column

Matches for Arsonists

It is of paramount importance to every individual in a modern civilized community that banking credit should have the same solidity as coined money.
– Charles Connant, “Principles of Money and Banking,” 1905

In The Return of the Great Depression, I predicted that “the consensus scenario will gradually transform from Green Shoots into Jobless Recovery, which will remain the mainstream consensus until it begins to become apparent in the autumn of 2010 that even Jobless Recovery is too optimistic.”

It would appear I was somewhat too optimistic myself despite my frequent contentions that we are passing through the early stages of a large-scale economic contraction that will last more than a decade. It is only summer, and yet already the dread “double-dip” term is being regularly bandied about, while the last champion of Neo-Keynesian economics, Paul Krugman, has begun to hedge his bets by complaining that the two previous stimulus packages were too small and talking about “the third depression.”

The ending of America

This American Spectator article has been going around and is well worth reading. I’m posting the economic section here, but the bit on the difference between the ruling class’s interests and the rest of the country are arguably the most important part:

By taxing and parceling out more than a third of what Americans produce, through regulations that reach deep into American life, our ruling class is making itself the arbiter of wealth and poverty. While the economic value of anything depends on sellers and buyers agreeing on that value as civil equals in the absence of force, modern government is about nothing if not tampering with civil equality. By endowing some in society with power to force others to sell cheaper than they would, and forcing others yet to buy at higher prices — even to buy in the first place — modern government makes valuable some things that are not, and devalues others that are. Thus if you are not among the favored guests at the table where officials make detailed lists of who is to receive what at whose expense, you are on the menu. Eventually, pretending forcibly that valueless things have value dilutes the currency’s value for all.

Laws and regulations nowadays are longer than ever because length is needed to specify how people will be treated unequally. For example, the health care bill of 2010 takes more than 2,700 pages to make sure not just that some states will be treated differently from others because their senators offered key political support, but more importantly to codify bargains between the government and various parts of the health care industry, state governments, and large employers about who would receive what benefits (e.g., public employee unions and auto workers) and who would pass what indirect taxes onto the general public. The financial regulation bill of 2010, far from setting univocal rules for the entire financial industry in few words, spends some 3,000 pages (at this writing) tilting the field exquisitely toward some and away from others. Even more significantly, these and other products of Democratic and Republican administrations and Congresses empower countless boards and commissions arbitrarily to protect some persons and companies, while ruining others. Thus in 2008 the Republican administration first bailed out Bear Stearns, then let Lehman Brothers sink in the ensuing panic, but then rescued Goldman Sachs by infusing cash into its principal debtor, AIG. Then, its Democratic successor used similarly naked discretionary power (and money appropriated for another purpose) to give major stakes in the auto industry to labor unions that support it. Nowadays, the members of our ruling class admit that they do not read the laws. They don’t have to. Because modern laws are primarily grants of discretion, all anybody has to know about them is whom they empower.

By making economic rules dependent on discretion, our bipartisan ruling class teaches that prosperity is to be bought with the coin of political support. Thus in the 1990s and 2000s, as Democrats and Republicans forced banks to make loans for houses to people and at rates they would not otherwise have considered, builders and investors had every reason to make as much money as they could from the ensuing inflation of housing prices. When the bubble burst, only those connected with the ruling class at the bottom and at the top were bailed out. Similarly, by taxing the use of carbon fuels and subsidizing “alternative energy,” our ruling class created arguably the world’s biggest opportunity for making money out of things that few if any would buy absent its intervention. The ethanol industry and its ensuing diversions of wealth exist exclusively because of subsidies. The prospect of legislation that would put a price on carbon emissions and allot certain amounts to certain companies set off a feeding frenzy among large companies to show support for a “green agenda,” because such allotments would be worth tens of billions of dollars. That is why companies hired some 2,500 lobbyists in 2009 to deepen their involvement in “climate change.” At the very least, such involvement profits them by making them into privileged collectors of carbon taxes. Any “green jobs” thus created are by definition creatures of subsidies — that is, of privilege. What effect creating such privileges may have on “global warming” is debatable. But it surely increases the number of people dependent on the ruling class, and teaches Americans that satisfying that class is a surer way of making a living than producing goods and services that people want to buy.

Beyond patronage, picking economic winners and losers redirects the American people’s energies to tasks that the political class deems more worthy than what Americans choose for themselves. John Kenneth Galbraith’s characterization of America as “private wealth amidst public squalor” (The Affluent Society, 1958) has ever encapsulated our best and brightest’s complaint: left to themselves, Americans use land inefficiently in suburbs and exurbs, making it necessary to use energy to transport them to jobs and shopping. Americans drive big cars, eat lots of meat as well as other unhealthy things, and go to the doctor whenever they feel like it. Americans think it justice to spend the money they earn to satisfy their private desires even though the ruling class knows that justice lies in improving the community and the planet. The ruling class knows that Americans must learn to live more densely and close to work, that they must drive smaller cars and change their lives to use less energy, that their dietary habits must improve, that they must accept limits in how much medical care they get, that they must divert more of their money to support people, cultural enterprises, and plans for the planet that the ruling class deems worthier. So, ever-greater taxes and intrusive regulations are the main wrenches by which the American people can be improved (and, yes, by which the ruling class feeds and grows).

I’ve been saying for years that America as we knew it is over. The incipient battle between the rulers and the ruled will determine what its replacement will be. Fortunately for the ruled, the economic meltdown combined with the ruling class’s dedication to macroeconomic guidance is adding a high degree of difficulty to their effort to finish reducing the citizenry to serfdom.

Here Finny Finn Finn

In which the cat is set amongst the pigeons… SK asks a question:

Have read Mere Christianity. Will do so again on regular basis. Have noted numerous references to other Lewis works in recent posts. Can you and/or Ilk recommend Lewis reading list and in what order (if relevant) his works should be read?

I would start with the Chronicles of Narnia, then read the Screwtape Letters, then Mere Christianity and The Abolition of Man. After that, the Space Trilogy. I wasn’t that impressed with either The Problem of Pain or Miracles, but they’re worth reading; at this point I think one is better off delving into GK Chesterton. Lewis is, without question, a great writer. But over time, I have gradually reached the conclusion that he was more skilled at portraying the core truths of Christianity in a highly accessible manner than he was at delving into its depths. This should not be taken as a criticism, for it is a rare and enviable skill indeed.

Which reminds me. You will never see a child more excited than the little girl who was walking through the Italian airport and noticed that there was a flight to NARNI. “Narnia! Oh Daddy, please can’t we go there instead?”

I have to admit, I was tempted. After all, the wardrobe isn’t the only way into Narnia.

New Stross

The third novel in Charles Stross’s Laundry series, The Fuller Memorandum, is out.

“Like the majority of ordinary British citizens, I used to be a good old-fashioned atheist, secure in my conviction that folks who believed—in angels and demons, supernatural manifestations and demiurges, snake-fondling and babbling in tongues and the world being only a few thousand years old—were all superstitious idiots. It was a conviction encouraged by every crazy news item from the Middle East, every ludicrous White House prayer breakfast on the TV. But then I was recruited by the Laundry, and learned better.

I wish I could go back to the comforting certainties of atheism; it’s so much less unpleasant than the One True Religion….

I’m a believer. And like I said, I wish I was still an atheist. Believing I was born into a harsh, uncaring cosmos—in which my existence was a random roll of the dice and I was destined to die and rot and then be gone forever—was infinitely more comforting than the truth.

Because the truth is that my God is coming back.

When he arrives I’ll be waiting for him with a shotgun. And I’m keeping the last shell for myself.”

Oh yeah, I’m definitely going to get into this one as soon as I finish Mattingly’s Armada. I’ll post a review when I finish it. In my opinion, Stross is BY FAR at his best when he delves deeply into the squamous, the rugose, and the darkly divine.

Science vs religion: a bet

PTQ claimed that science has a vast track record of correct predictions while religion has none. “Science has produced zillions of correct predictions. Religion has produced none. A bigger winner-loser gulf does not exist.” Very well, then let’s place a bet on the matter:

Religion: The poor will be with you always.
Science: Global poverty will be ended by 2025.

From The End of Poverty by economist Jeffrey Sachs: “This book declares, at the core, that steadfast, science-based approaches can end extreme poverty on the planet. The benefits of modern science and technology which have reached Bulgaria and most of the rest of the world can work for the poorest of the poor as well…. the great challenge and possibility of our time: to end extreme poverty on the planet by the year 2025.”

Now, since this is far from the first time that the possibility of an end to poverty has been proclaimed; religion’s track record over the previous two millennia remains unblemished to date. But here we have a straightforward science-based claim that extreme poverty can be eliminated from the planet in 15 years. Science says it can be done. Religion, specifically the Christian faith, says it can’t.

If, as has been claimed, scientific predictions are so much more reliable than religious ones, obviously the pro-science side will have to give the pro-religion one the odds. I don’t think it’s necessary to go as far as demanding zillion to one odds; I’ll settle for 1200 to 1 and put up one U.S. dollar against one ounce of gold that the religious prediction is correct, the scientific prediction is incorrect and extreme poverty will not be eradicated from the globe by 2025.

Now, put your money where your mouth is, science fetishists. If you won’t, recognize that you are admitting you don’t actually believe that religion does not produce correct predictions despite those predictions having been made thousands of years before the scientific ones. The fact is that some religion is so much more accurate than science in certain matters related to human behavior that it can spot science the additional experience of 2,000 years of human history upon which to draw and still best it.

Digging a deeper hole

This astonishing display of madness should settle the question about who runs the country, Washington or Wall Street:

Just a few months ago, amid populist anger at the Fed for failing to prevent the financial crisis of 2008 and bailing out Wall Street, Congress was talking of stripping the central bank of its supervisory oversight of banks or forcing it to submit to congressional audit of its interest-rate decisions.

Instead, the new law gives the Fed more power and a better tool box to help prevent financial crises. It will become the primary regulator for large, complex financial firms of all kinds, such as American International Group, the insurer which built a massive derivatives portfolio that regulators didn’t see until it was too late.

So, the Fed created the debt boom, which led to the subsequent credit crunch and the initial stages of Great Depression 2.0. And rather than auditing the central bank, Washington has elected to give it more powers. This should end well.

The future is free

To virtually no intelligent observer’s surprise, Rupert Murdoch’s paywall is failing:

My sources say that not only is nobody subscribing to the website, but subscribers to the paper itself—who have free access to the site—are not going beyond the registration page. It’s an empty world. The wider implications of this emptiness are only just starting to become clear. A Murdoch and Fleet Street veteran with whom I’ve been corresponding about the paywall reported to me on his recent conversation with an A-list entertainment publicist: “What was really interesting to me was that this person volunteered a blinding realization. ‘Why would I get any of my clients to talk to the Times or the Sunday Times if they are behind a paywall? Who can see it? I can’t even share a link and they aren’t on search. It’s as though their writers don’t exist anymore.’”

What the professional journalists and their corporate paymasters have forgotten is that they are on the wrong side of not one, but two issues. Everyone knows that the corporate media are on the wrong side of the cost equation. But what they don’t realize is that the corporate media are quite often on the wrong side of the quality equation as well these days.

Now, my daily readership of 7k blog readers is absolutely tiny compared to however many people visit the Fox News and Sunday Times sites, but is there anyone who would put the track record of a single economics writer for one of those sites against mine? And if you start factoring in other independent economics writers like Mike Shedlock, Karl Denninger, and the Mises Institute collective, you can see how the cumulative free readerships not only rival the corporate readerships, but enjoy a substantially higher quality of material as well.

Given the influx of corporate investment from places like Mexico and Saudi Arabia, we can count on the mainstream media product to become more and more irrelevant, while the free media that is a marketing adjunct to its producers’ primary careers continues to improve in quality.