Fuzzy Numbers: Jobs report bad at minus 533,000, but made to look better

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True enough, insofar that capitalism is more or less a benign description of people interacting in economic freedom and liberty. But since the economic system we have now is clearly unsustainable and most people fancy it to be some incarnation of capitalism what part of our current system is leading towards our demise. Well, you correctly diagnose the problem next.

Though perhaps a more accurate way to state it could be: The unsustainable aspect is the continual growth that is pre-ordained by the monetary system.

Clearly. Wars inevitably hurt the masses via inflation and the social polarization that usually results. Veterans are mistreated during the war and when they return home – then they are used as political props by cynical politicians.

What do you mean by collectivism? Old, Soviet-style stuff or any kind of community-based activity that stresses a collective effort, made up of individuals obviously, for a common good, like a community farm or water supply? I ask this sincerely because I think broadly many of the changes we need to make – primarily because of the energy part of the equation – will be a re-localization of production and, in many cases, a return to the actual production of things once again. Part and parcel of this will be an intensification of the relationships people have in their immediate locales. It will be the opposite of the outreach that the Internet has provided, where users talk in chat rooms with people from eight different countries at once. In short, I see more groups of people working together to produce things that they themselves will consume and use.I think and fear that many mis-label or mis-describe this as some form of communism or collectivism – again, this means different things to different people – instead of simply as how humans have lived for most of their existence. When I hear collectivism used it has the ring of a Cold War code word.

As critical as any point you’ve made, though unfortunately still not understood by most.

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mainecooncat: I thank you for your comments.

In my view "collectivism" is what is imposed under various authoritarian regimes: communism, fascism, socialism, and the like. I reject it because it crushes the rights of individuals under the pretense of what is best for the group. As theory and empirical evidence show, productivity and the prospects for "success" of imposed collectivism are very limited in the economic sense.

Now, on the other hand, free and voluntary cooperation makes perfect sense to me. Clearly, humans can accomplish more together than they can alone. As long as we have choice in the matter and have freedom, local communities are probably the best way to deal with the challenges we face. This is a lot different than having a government that produces nothing impose high taxes and regulations upon the people that produce. But leave the decisions and the rights with the individual, so long as they don’t violate someone else’s rights.

In my opinion, the transition that we inevitably will face towards a more sustainable, more localized culture will be very politically destabilizing. Taken at an extreme level, if you spend your whole life within 20 miles of your local community, what need will you have for a central government?

The governments of large countries will be forced to make some sort of choice: either they will relinquish some of their power and give it back to the local communities to manage themselves, or they will impose some sort of authoritarian regime (communism, socialism) that impoverishes people and effectively uses their labor more than ever to simply maintain a strong centralized system. This sort of choice scares me, because history seems to have few examples of governments and political systems that willingly relinquish their power for the betterment of the people.

Comments are welcome.

Mike

 

 

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Keeping in line with the forum topic, this comment was posted December 5, 08 on www.shadowstats.com "November Jobs Plummet 732,000 Net of Revisions, Down 873,000 Net of Concurrent Seasonal Factor Bias" So things are even worse than advertised.

StudentOfJefferson: man, you are cheating, one has to agree with you on the grounds of your name alone! … Just kidding, I agree with you even after reading your posts.

I can’t stop the urge to comment on the remark about the "bottom of capitalism." What capitalism? We don’t have capitalism. Capitalism entails protection of private property, this is inconsistent with a monetary system that permits the surreptitious stealing of purchasing power by money debasement. The monetary system and the central bank are inconsistent with economic freedom. This was admitted even by Alan Greenspan himself after he sold out! (http://www.dailypaul.com/node/2237) The economic and political power is highly concentrated. People don’t seem to realize the power that a central bank has, as it reigns supreme over an economy. The central bank, through manipulation of the interest rates can control: the unemployment rate, the marginal profitability of productive capital, and the creation and destruction of bubble activities. Volatility in the interest rate structure has given rise to a huge financial speculative sector, totally unproductive, that through its activities hurts savers and producers to, as we may painfully see, its breaking point. The destruction of production is what may ultimately determine the ruin of the USA and more than a few countries around the world. In capitalism, a failed enterprise … well… fails! The population’s resources are not confiscated to support the few.

The polar opposites are not capitalism and socialism, as stated in other forums. Look at this from the libertarian perspective. As stated cleverly by someone in these forums a while back, libertarians of the left and the right meet out in the back. What this means is that if the fundamental value of the libertarian left (anarcho-syndicalism) and the libertarian right (anarcho-capitalism) is freedom, then they are basically at the same point in the political spectrum. Both need sound money. Whether in a free society a group of people decides to pull their resouces together in an enterprise under a classical scheme of ownership (the right) or by defining equity ownership by virtue of being a worker (the left: "the workers of the mills ought to own them"), is unimportant, as the people can decide on their own, without coercion. Both practices can coexist. But the point is that ownership and control are exercised locally, by the person in a community, not through some massive bureaucracy elsewhere.

The corruption of these terms (capitalism and socialism) by diverse propaganda systems is beyond belief. The USSR was not socialist. The resources were not owned by "the people" but by a centralized bureaucracy that denominated itself "the people". You do not own what you do not control. The USA is not capitalist, although it has more capitalist traits than the USSR had socialist ones. In countries with social responsibility (I’m thinking the Scandinavian ones), the inflationary currency system is at least accompanied by a welfare state. In the USA we have the worst of both worlds: the confiscation of resources and the falling through the cracks. Note that in Scandinavia, the wealth of the population is related with the existing level of production. Without this, no welfare state can avoid poverty.

The polar opposites are centralized versus decentralized power. Totalitarianism versus liberty, that is what the conflict is. The centralization of power in the USA should become evident when considering: a) the monetary system, b) the control of the housing market by the existence of Fannie Mae and Freddie Mac (which handle this market on a neighborhood-by-neighborhood basis), c) the redirection of savings into the coffers of Wall St. through mutual funds and 401k’s instead of in investments at a local level, d) the emergence and continued nurturing of a massive "defense" contractor sector (one of the best ways to make fortunes by the way). No free market in the latter, as there can’t be a free market with only one customer: the government, which pays cost-plus in its giveaway contracts. e) Consider also the actions of the legislature and the judiciary in their support of the all-powerful banking sector and a few select corporations. This is not capitalism. This is not even a democracy. A plutocracy might be a better word. But the idea of "democracy" has been jack-hammered into our skulls, fulfilling Bakunin’s statement: the "beating the people with the people’s stick."

Power will never be relinquished voluntarily. Whatever happens will be done in the name of "democracy", and to the extent that people don’t notice the ploy, people will not defend themselves. That is the sad and tragic thing.

PS: I hope I didn’t break the rules by my overextending and sounding like a scratched record on a few of my pet peeves. If I did, I hope that I’m notified to prevent this from happening again.

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Re: Hedonic adustment and the CPI
From the Harper’s article (on Fuzzy Numbers) Chris suggested (http://www.tampabay.com/news/article473596.ece )

"The hedonic adjustment, in particular, is as hard to estimate as it is to take seriously. No small part of the condemnation must lie in the timing.

If quality improvements are to be counted, that count should have begun in the 1950s and 1960s, when such products and services as air-conditioning, air travel, and automatic transmissions — and these are just the A’s!"

OK. I can see the logic in better for less. So how about worse for more?

If we’re going to wield the wild ax of hedonic adjustment, let’s take a swing at everything we the "consumers" (who represent the "C" in CPI) pay for. If it’s got a cost-to-quality ratio (C/Q), let’s include it. Therefore, how about the G’s?

Given: Government (as in George Bush and Sarah Palin) has a cost Cg; and since mathmeticians tell us we cannot divide by zero, we’ll assume it has some non-zero quality Qg. (Note: Mathematicians do allow us to divide by negative numbers–which may be appropriate in certain political administrations. However, dividing by a negative number throws a monkey into the hedonically adjusted CPI sum, and every reasonable person knows you shouldn’t add monkeys to hedonism. We won’t go there.)

As per recent headlines, the cost of government, Cg, has apparently gone up. The quality of government, Qg (as painfully witnessed here: http://www.youtube.com/watch?v=NrzXLYA_e6E) has gone down–and returned to the far north Forever, if misfortune has any sense of fair play at all. (Note: This returning north, to Alaska, is known in the economic calculus of hedonic adjustments as a Sadistic Retracement.)

With no negligible amount of confidence, I think we can conclude that:

  1. As the distance between Palin-like politicians and Washington, D.C. decreases, the cost-to-quality ratio of government, Cg/Qg, approaches infinity;

  2. while our government seems to have no fear of infinite sums, hedonic adjustments and government cost-to-quality ratios will never meet.

NZO

 

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mred: you are absolutely right. History doesn’t seem to offer us much hope in this area.

I’m saddened to say I work as an engineer for one of the aforementioned defense contractors. While it is more lucrative than many other competing industries in my region, I have found it far less fulfilling. I can see huge amounts of taxpayer waste, inefficiency, and even the signs of mild corruption, and my view is not from the crow’s nest. I’m on my way out because I can’t stand the fascist, war mongering tendancies of this sector. I will be transitioning to a career in alternative energy, if I don’t become a subsistence farmer first!

 

Mike

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[quote=Arthur VIbert]


Economists point to historical data and recent developments as solid grounds for optimism.

The "Pollyanna" approach to modern economics seems to me to be a lazy way out.

[/quote]

Oooh…not lazy at all. It take hard work (money mostly) and brains to game the systems like it is. What is necessary though is a ignorant and lazy populous for this to be pulled off.

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Your view is narrow on these. Democracy is collectivism which is why an active democratic society becomes at odds with capitalism, which produces disparities in wealth. I would also like to see all this theory(?) and empirical evidence. There is just as much empirical evidence that indicates that failings of free markets and/or capitalism. I know, I know…"there has never been truly free markets." The same can be said for any of the other ideological frameworks mentioned. Every single one of these is a model of human behavior…"if people would just be like this, then…" These are all utopian frameworks that fail when human behavior does not live up to expectations. For instance, people are socialized in particular ways from early ages…should children from less than desirable environs be penalized for circumstances beyond their control from the start? It is rediculous to think that society should be devoid of any type of collectivism if you desire society to function in a particular manner. Those who are ok with this are sociopaths (lack empathy) by definition and are not concerned that there will absolutely be extreme losers in society…many (or most) never having a real chance.

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ajparrillo:

You raise some interesting points and I concede that utopian frameworks never truly exist. I simply point to the fact that frameworks that were de jure and de facto collectivist (i.e. the USSR, North Korea) tend to fail miserably. I honestly don’t know where I would put the USA on a spectrum but I do assert that we have many of the facets of collectivism already in place here and I would argue that those collectivist tendancies are A) part of the reason we are in big trouble and/or B) will greatly hamper our prospects at any sort of recovery or stabilization.

As you are quick to point out that democracy can be viewed as collectivism, I would answer that you are right. In a sense, pure democracy is the most collectivist system around, since it can allow the 49% to be subjected to the decisions of the 51% all in the name of the "common good." Communism, socialism, and fascism are all authoritarian regimes that use the guise of collectivism to confiscate the wealth of the people and maintain the elite ruling class. The point is that all four of these frameworks share one thing in common: at some level, people are forced to change their behaviors to conform to the "system." And the key is that there are no real limits as to how much the individuals will be forced to conform. In democracy, everyone must conform to the majority. In C, S, and F, everyone must conform (to one degree or another) to the person or party that is in power.

And that is why I argue that a republic is the finest form of government devised to date in that it protects individual freedoms and liberties to the greatest extent possible. Our Constitution never mentions "democracy" and is very clear in indicating that it is defining a republic. In a republic, it is law that forms the rules. The laws can be voted on by some form of democracy, but the point is the same: natural laws that protect the rights of individuals are instated. Outside of these basic, fundamental laws (don’t kill, steal, commit fraud, etc.), individuals have as much freedom as possible and have the greatest incentive to work hard.

I will admit that while I believe a republic is the best form of government from the individual standpoint, it is also the least stable in the historical sense. This stems from the fact that there will always be political wolves that try to game the system and usurp disproportionate amounts of power. The law alone is not enough to maintain a republic. It is incumbent upon the morality and dilligence of the people to enforce the law to protect their basic rights. This, I would argue, is the price of liberty.

There is absolutely nothing wrong with free people choosing to collaborate and work together. But they should also have the freedom to decide if and when the system no longer serves their needs. That is, if the collaborative structure that they are a part of is unfairly taking advantage of their labor and efforts, they should have the ability to opt out and meet their needs in some other way, so long as they do not infringe on the basic rights of others.

Personally, I trust individuals far more than I trust large groups. The tendancy for groupthink can be very strong and the consequences devastating. It is not fair that the honest, hardworking individual should be forced to pay for the errors of others. Everyone should (and hopefully is able to) trust themselves. A free collaboration of individuals working together should satisfy every single one and also lead to the greatest productivity. On the contrary, forced collectivism will hurt and anger those that work the hardest and unfairly elevate those that work the least. Besides, I believe that individuals have an inherent altruism about them when they know they are sharing the fruits of their own labor. But people can get very stingy when they feel they are already devoting their time to serving the group rather than directly serving themselves.

Thank you,

Mike

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Mike,

Well stated and can’t disagree with much in general. A note on myself…I mostly interject in discussions that become fairly dogmatic, i.e. my ideology can beat up your ideology. As for the US, I would suggest that we are progressing rapidly towards what the former USSR was in terms of real wealth distribution and control of this wealth. While the ideology of a free market republic is appealing, is cannot and will not ever exist, primarily because wealth will be created and pooled (through generations) and we lead to a lopsided system. I argue that once markets expand beyond localities and grow more anonymous, they become increasingly gamed for more powerful players. Futher, the only way to protect our free markets (if we were to move towards this) would be to enable some protectionism in order to maintain local market and competition.

I would also not group all collectivism together. There are many forms and levels of what can be collectivism and these should no be ignored, especially if they may enhance liberty and economic competition. There are no natural laws that define human action…some argue for social darwinism where the fat is cut from society. However, fat is important, to a degree of course. I prefer to believe that we are intelligent beings and can make thoughtful decisions that direct our lives even and especially through gov mechnisms. We should rise above "natural" laws, which sets us apart from other animals. In the end, is productivity the most important thing in society? There is a balance.

Just some thoughts…good discussion.

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Hi StudentOfJefferson and ajparillo:

Yup, ajparillo nails down the reason why even starting in an evironment of economic freedom, over time conditions of inequality would emerge. Thus giving rise to coercive institutions of some sort, as the relatively more powerful use their power to gain even more, thus limiting freedom. A society with fairness that may grow prosperous would need a tremendous degree of maturity and foresight by its citizens: constant awareness of the values that ought to be protected and the ground rules that may help preserve the fairness through the generations. From what I have written above, you may figure out that I resonate with the ideas of the libertarians. Anarchism may mean no ruler, but it doesn’t mean no rules.

The free market view is based on the idea that the collective decisions of the many in terms of deciding how resources ought to be invested, will outperform the decisions of a centralized bureaucracy. The signals provided by free-market pricing may be very important in managing limited or scarce resources. Having said that, it is of course no panacea. Business tends to be short-sighted in its plans, if it focuses on the long term, the competitors that focused on the short term may ensure that the former will not even exist in the long term. Many of the most significant problems are, of course, long term. This is why I was bringing up the issue of maturity and foresight.

Productivity is important in the sense that it underpins a society’s prosperity. Low production means that the effort that the members of the society must exert to secure the basic needs is high. High production means the reciprocal. Compare the levels of production of 50’s America with the present. That goes a long way to explain why a single salary could support a family then, and at present, a two-income family may live in debt. There are more factors of course, but this is an important one.

Productivity may also have its impact with regard to sustainability. Here is where the maturity comes in again. A prosperous (high production per capita) society can impoverish itself by increasing its size, unless production increases also. Thus the sustainability problem. Imagine the kind of sophistication of a society that may choose to maintain a population level to keep a sustainable level of prosperity.

Two side comments: in the example of the 51% imposing its will on the minority, that is one reason that democracy doesn’t "scale". The more people involved in decisions that affect you, the less freedom you have. But also note that we don’t have even that at present, since the 51% simply gives a rubber stamp to the ruler to basically do whatever the elite wanted to begin with. It is sort of an elected dictatorship.

And finaly, SOJ: I feel your plight with respect to your profession. I’m in the same boat.