If I Had Trump's Ear...

If I were Trump's economic advisor, my advice to him would be that his legacy hinges on fulfilling the most basic spirit of his campaign promises, which is to improve the quality of the average, middle-class, 'normal' American's way of life.  And within this context (and the context of the recent election), that would seem to hinge on two, overwhelming concerns --

1) curtailing immigration

2) improving wages, especially of blue-collar type workers

And obviously these are related.  Trying not to delve into too much of the contentious political aspects of pursuing these things (especially number 2), let me just suggest a couple of things that have occurred to me.  

I see a lot of discussion in various whereabouts which seems to suggest that people have either forgotten or just to have relatively bad models in their head of the basics of how wages are determined, at least in my opinion.  Very basic economic theory says that wages (or really, the 'return' to anything, wages being the return to labor) are determined by what is called Marginal Value Product (MVP).  Not 'number of immigrants', not 'women entering the workforce', not 'supply of labor,' etc, though of course those are all relevant.  What it seems has happened is people have made rather radical theoretical simplifications -- even some very smart people -- and ignored that the process of production is intrinsically an interplay.

To make a slightly smaller simplification that gives a much more accurate picture (in my opinion, at least) wages are (mostly) determined by the ratio of capital to labor.  The higher the ratio of capital to labor, the higher wages will be, because labor has become relatively more dear (i.e., in lower supply compared to the amount of capital available for production.)  When capital is in short supply, labor must compete hard and prices of labor fall.  Conversely, when capital is abundant, capitalists must compete hard and wages increase.

Reducing the ratio of capital to labor, for example, through high immigration, hurts wages.  But not merely by 'increasing the supply of labor.'  If the supply of capital increases proportionately, there might be no change.  Real wages might even increase, due to efficiencies discovered in a larger system. But typically, immigrants don't bring much capital with them, and often strain the system when they arrive in sufficient numbers (have you seen Houston traffic lately?) precisely because there isn't enough capital to accommodate them.

With that in mind, it appears that the two things Trump should focus on are keeping his promises to overhaul -- and ultimately curtail -- immigration, and simultaneously attract more capital to the US. Not 'raise the minimum wage.'  Not engage in crony capitalism and special tax-break type arrangements to attract or retain businesses.  Even a cut in personal income taxes, while obviously something desirable and frequently the object of much political attention, is probably not the best focus of his efforts.  I don't think much of any tax cut he could arrange would help most people anywhere near as much as a raise would.  At least to me, the most crystal clear and obvious way -- perhaps very nearly the only real way -- to address low wages is more capital.

But how do you do it?

My second thought -- as weird as this sounds, probably the best way to do this would be to impose a small-ish, uniform, across-the-board import tariff, and simultaneously cut corporate tax rates back a bit.  This kind of suggestion has of course attracted both enthusiasm and criticism -- most of the criticism on free-trade, free-market grounds -- but I think a little bit of thought could put it into a context that might make it easier to digest.

First, it is obvious that a lower corporate tax rate would attract capital, for obvious reasons.  This is not an uncommon opinion.  But it is not obvious that a tariff would -- how exactly would imposing a tax attract capital?  Free-traders would protest 'protectionism!'  And beyond a certain point, I have no doubt they are correct.  Yet I have started to think these two are actually very closely related, and one actually implies the other -- so that to have the one and not the other could actually be something like the inverse of protectionism.  'Domestic vampirism,' or something.  To discontinue doing it might be helpful.

I will argue by analogy from a perspective I am more familiar with, and maybe other people are, too -- the housing market.  

According to at least some economic theory, different sorts of taxes are in fact interchangeable, and this is obviously the case (at least to me) in the housing market between property taxes and income taxes.  I will try to make a brief, hopefully-intuitive explanation for those who don't already know this.  Most people accept that the value of an asset is a function of the income derived from the asset, which can be expressed as an NPV (net present value).  This relationship of asset prices to income is what makes metrics like PE ratios and bond rates 'work' and why making comparisons between them is meaningful (take the reciprocal of a bond rate and multiply by 100, and you have something comparable to a PE on a stock.  I usually think of this as an 'asset multiplier' -- the multiple of income that the asset price commands, which is also used in business valuations, appraisals, etc., by the people who do these sorts of things.  The inverse is the discount rate, but I'm not going to go into that...)

If this relationship holds, then it is intuitive that a government taxing a portion of income is equivalent to taxing a portion of its present value, because the present value just is a function of income and is interchangeable with it using relatively simple conversion factors. Theoretically, anyway. So, on a house -- suppose that a house 'yields' an income of $6000 per year (after all expenses, etc., except property tax).  Further suppose that the government claims $2000 of this income in tax.  If the discount rate in this market is 6% (i.e., the 'multiplier' is 16.67), the implied value of the house is $100,000 -- but this value is discounted by 1/3 on the market, because the government claims 1/3 of the income it generates ($2000/$6000 = 1/3) -- asset buyers will not pay for income that they do not expect to receive. So, the house will have a market price of about $67,000 with a property tax of about 3% (3% of $67,000 = $2000, approximately).  

Therefore -- a 3% property tax and a 33% income tax on the property are (approximately) equivalent.  (Yes, I'm rounding a bit.)  It doesn't matter which way you charge it, the two taxes amount to the same thing.  Guessing home valuations is a bit easier, I suppose, so that is the way it tends to be done.  But to do it the other way would be equivalent.

I would like to argue that, I think, tariffs and business income taxes may likewise actually be interchangeable -- and by setting a lot of tariffs at zero and corporate taxes at 40%, our policies may have induced a really harmful disequilibrium.  It might help a great deal to (try to) put them back into equilibrium.

Unfortunately, I do not know how to calculate the right values for this example, but the argument is basically as follows -- given that taxes are to be imposed, a domestic business pays income taxes in order to access American markets.  Presumably, the taxes go to 'uphold the common good' -- to pay for roads, basic law and order, etc.  (Or some such; I don't want to get into a debate about that -- call it pay-to-play, if you prefer.)  Under a regime of no tariffs foreign companies get access to the American 'common good' for free -- so they are being subsidized by domestic companies and taxpayers.  The foreign companies have no equivalent tax imposed for access to the American market, which constitutes a strong incentive to locate overseas.  I don't really know what to call this, but it reminds me of the 'moral hazard' people used to talk about during the financial crisis -- privatization of profit, socialization of costs.

I will grant a few things -- first, that they do not have as much 'access' to the American 'common good' as domestic companies, since much of their operations are overseas.  But it is absolutely inarguable that they derive value from it (else they wouldn't do business with us), and aren't required to support it as domestic companies do. A second thing I will grant -- just as a 3% property tax was equivalent to a 33% income tax, yet 3% and 33% are very different numbers, there is no doubt that a tariff equivalent to a 40% income tax would also be a very much smaller number.  Income deducts expenses, but revenue does not.

But I'm not sure how to calculate it -- it seems like a sales or revenue tax, and so you would need to know how much profit was derived per unit to calculate what was equivalent to a 40% income tax.  But obviously, most profit margins are in the less-than-10% range, especially for the kinds of things America tends to import, so likely an equivalent tariff would be something like 4%.  Anyway, I think that's a reasonable estimate, and getting fairly close is at least a lot better than completely blowing it.  Hopefully Trump would know someone smarter than me who could do the math.  And hopefully if this was done, 40% would not be the target since one would want to reduce the corporate rate at the same time.

By making the two equivalent, the goal would be something like tax indifference -- it would not matter which side of a border a company was on, the impact of the American-imposed tax regime would be the same.  And since America is a relatively great place to do business, more businesses would be induced to move here if they'd like to sell here.  And with increasing levels of domestic production, capital would accumulate and wages would rise.

But even if companies didn't choose to relocate here, they could at least defray a little of the price it takes to keep this place running...

A rather massive caveat -- I'm not 100% sure that this is all actually true.  If I think about it in terms of Arnold Kling's null hypothesis (that, basically, pretty much no matter what you do, nothing matters, assuming I understand him right), it could be that all this stuff is already 'priced in' and all material adjustments already made.  So that a change in policy would simply result in a very large (and possibly painful) shifting and re-coordination of prices, with nothing materially changing as a result.

I don't really have an answer for that.  I would like to say that it couldn't hurt to try, but I don't really think that's true.  It probably could.

Also -- I'm hardly an expert on this stuff.  I have no idea what fraction of our imports even have a tariff of less than 4%.  The whole thing may not even be meaningful if it doesn't apply to very much trade volume.

Another idea I have seen floated -- create what are essentially uncapped IRA funds, so that any arbitrarily large amount of money could be invested with no tax consequences until the funds are withdrawn for other use.  That would also, no doubt, lead to a massive accumulation of capital; however, I suspect that the capital would not lead to actual investment in the US.  Most likely it would simply inflate asset bubbles in Asia, or some other place, as Americans used their 'IRA' funds to buy assets wherever the expected yield was highest, i.e., not here.

If Trump wants people to capitalize the US, he has to make it more profitable to do so.  Maybe try some of both?  As much as I like the idea of revamping the income tax code, though, I don't think it would help nearly as much, and I don't think he should use up too much political capital on it -- unless, of course, it was quite popular anyway.

Just an idea...

Hearken Unto John C. Wright!

In his words (except for a few typos I corrected) --

Let us cut to the chase. 

Think back to the day when you first discovered that you were a meat robot without free will, without freedom, and without dignity. Did the discovery fill you with awe, rapture, wonder and gratitude? 

For, if not, the discovery is false. Truth is majestic and majesty provokes awe; truth is sublimely beautiful and beauty provokes rapture; truth is startling, because it shatters the lies we tell ourselves, and the bright surprise leaves us blinking in wonder; truth is a gift of prized above all price, and gifts provoke gratitude. 

If the discovery of materialism did none of these things, either your reactions are mis-calibrated and do not reflect reality, or your discovery was not a discovery at all, merely a falsehood you have yet to test with due rigor. 

So? What was your reaction?

My reaction (to his argument, not to materialism) --

The only modification I would make is to simplify that Truth affects -- as do Lies, except to opposite effect.  Some truth we'd rather not know, and of course then the effect might not seem as pleasant as is made out here.  And yet, we somehow know it to be truth -- because it affects.

I know a lot of people will dislike and disagree with this kind of argument, however, I think even such thinkers should deeply consider the slightly more primordial thought from which this train flows -- that the only way to know Truth, the only way to know or believe anything, is through experience.  There just simply is no other avenue.

Do you believe in the Bible?  Because you have somehow experienced the truth of it -- through reading it, through sermons, what-have-you.  Do you not believe?  Even that belief is through experience of some sort.

Do you believe in logic, even?  Because you have experienced the truth of it, you have seen it work before your eyes.  Otherwise, even logic itself is simply a proposition --  it might or might not have been true to your eyes.  I know a lot of people are not going to like that, but there it is.

These days a lot of people like to argue for some other basis of belief -- 'proving' this or that through 'pure logic', 'rationality', etc.  This is simply not the way it works.  Even if you were convicted of such a system it would be because of your experience of it, and not, strictly speaking, because of the logic itself, in a direct sense.

Experience is the ground of all knowledge.  It is the only way 'in.'  Of course, it is just as fallible as people are, but nevertheless, it's all anybody has got to go on, and the only 'evidence' anybody has of the veracity of anything.  Which means, at least to my mind, that experience is indeed very good and important evidence, i.e., that if you experience -- in some way or other -- that there very much is a divine aspect to reality, then there probably is, and you are absolutely right to believe even if it can't be 'proved,' even if you can't 'defend your faith rationally,' etc.  Yes, you should probably work on those things -- but they come second, not first!  Don't let the posers on the internet convince you that it is in some weird way otherwise.

This would all seem almost painfully self-evident, and yet, how many arguments have you seen where one side becomes incensed that the other won't accede once the case has been 'proven?'  And yet -- of course! -- that is not at all on what it all turns -- if the other party does not experience the truth of what has been presented, of course he should not (and almost certainly will not) be converted over.  He may be wrong or right in doing so; it may simply be that he does not understand, he thinks something or other important is missing, or maybe in some cases he is outright dishonest.  But it is rather silly to think that he should on logical or 'rational' grounds, as if that were really what it were all about.  If it is really one's purpose to bring him over, it would seem to be more prudent to search for a way to bring about the proper experience.  Apparently, the one presented wasn't up to the task.

As always -- in my opinion... for whatever that's worth...

Borders -- an uncomfortable example

Apropos of the last post -- a very uncomfortable example:

A federal grand jury has indicted seven Latino gang members in connection with a 2014 firebombing attack at the Ramona Gardens housing project in Boyle Heights, accusing them of trying to drive black residents out of the neighborhood, prosecutors announced Thursday. 

Federal prosecutors allege that the men – all described as members of the Big Hazard street gang – met before the attack, where Carlos Hernandez, 31, is accused of telling the group they were going to use Molotov cocktails to firebomb homes where black families lived. 

While no one was injured in the May 12, 2014, firebombing, three of the four apartments targeted were occupied by black families, recalling uneasy times from decades ago when similar attacks prompted most African Americans to flee the housing project.

I originally saw this on Steve Sailer's blog, but I have lost the link.

There is the obvious racial angle, of course, but I wanted to come at it from another direction -- a failure in markets because of an unwillingness to acknowledge an important reality.

Basically, through my economic lens this looks to me like a black market in operation -- even though nobody is talking about buying or selling anything.  You have people in the market for a neighborhood 'of their own people', resorting to violence and obnoxiousness because such a market is effectively closed off by law.  There is demand frustrated for supply, and the result is violence and criminality.  And to be sure, this is not the only place you see this kind of thing, it is just a very overt and nasty example.

Forget about race and all that for a moment -- it is just very hard to imagine being able to assemble, say, a Presbyterian, or an environmentalist, or a homeschooling community, or a whatever-enthusiast community, precisely because we have open markets in housing.  There just isn't a good way to coordinate anything, because it is disallowable by our system of things to control who your neighbors sell their houses to.  Maybe conceivably, some mega-bucks guy could just build a whole neighborhood and let his buddies live there, or something of that nature.  But hopefully that sounds like an unreasonable stretch of things.

And yet people have a very strong interest in who their neighbors are.  This is an extremely valuable thing for people, and how their communities are structured and who they interact with are extremely meaningful in their lives.  But the only available mechanism for discrimination in markets is price.  And so, as a result, we have a highly stratified market with people bidding up prices absolutely like mad, for houses probably many of them really don't even want, just for a chance to hopefully not wind up next door to criminals, or for 'good schools,' i.e., so their kids don't get shot.  Which is a pretty low bar, but all you can ask for the way we have things set up.

And worse, you have miscreants in government actively stirring the pot by shuffling people into neighborhoods they have no business in and lifestyles they can't handle.  (Sorry, no link, but you know the kinds of programs...)

I don't really know what the answer to this is.  It isn't always reasonable to think that there should be a market in absolutely whatever people want -- we don't have a market in slavery anymore, for example.  Or children.  Maybe some wants just should be frustrated, criminality and violence in such cases being just that and no more.  I don't really want to go down that particular avenue.

But this is really, really bad, it is a huge problem, and it is the result of a system which has little meaningful avenue for expressing the existence of borders.  It isn't good for anyone.

Metaphysical Bumblings #3: Markets

I'm probably not the best person to 'do' philosophy, as I don't think I function in a particularly logically-driven fashion.  When I read most modern stuff (and, frankly, when I read most anything in terms of the kinds of things you see in fairly intelligent writings) very quickly I start to hear that voice in my head from the Peanuts cartoons -- that nasally 'wah wah, whah wha wah, wha....' that the adults speak in.  And...it usually glazes my eyes over and puts me to sleep.

Sorry, I just don't find 98% of it very convincing.  I can force myself to follow it, but it is almost always a waste of time, as I generally find that when I understand it, it is either trivial, repulsive, or wrong, and that 'style' of thinking seems to have this take-it-or-leave-it aspect to it that almost always means leaving it.  For me, anyway.  

I think in pictures -- if you want to convince me, invite me into your picture of things, and let me inspect the truth of it for myself.  I might take all of it, or some of it, or maybe only a little of it, but I almost never find that sort of writing to be totally without value.  I will almost always come away with something.

That's what I'd like to do here -- sketch out a few pictures of things, and see if there isn't some truth to be had.  Let's do some 'metaphysics of markets.'

First things, though -- I want to do something weird, and to do it, I need to do some clearing up of what seems to me some muddying that surrounds the ideas of 'subjective' and 'objective.'  I hope you'll bear with me, but in my opinion, the ways these two words are used is 90% wrong.

If you don't agree -- and you probably won't, at least at first -- that's okay.  You can keep your opinion.  I'm just sketching a picture here; I need this as an element, and once I'm done, you can go back to the way you've always done things if you don't find it useful to you.  But you probably won't be able to 'see' my picture if you don't first step into a different picture of these two terms.

Mere Objectivity

What I want to do -- and the reason most people won't like this -- is 'relativise' the meanings of objective and subjective.  However, I promise that if you stick around to the end, you'll get something else to anchor yourself that you might like better.  And as I said, you can always anchor yourself back to these terms if you don't like what I'm going to show you.

The reason I think you should consider 'relativising' the words objective and subjective is just because they are relative terms.  I've even heard that Eric Voegelin once instructed his students to simply stop using them because they do not correspond to anything in reality.  I do not think I would go that far, because I think they are useful in their place, nevertheless, I would agree with him that they are generally abused and therefore often unhelpful or downright misleading.

We usually like to think of rendering something like an 'objective' opinion or judgment, or giving 'objective' evidence, to mean something like 'true' evidence, or an 'impartial' opinion, or what have you.  But I have to use words like 'true', and 'just', and 'universal', and 'absolute' and other such notions and connotations we commonly attach to the word objective precisely because mere objectivity proper cannot render them on it's own.  Surely an opinion is more likely to be just if it is rendered objectively, but simply because one is 'outside' a situation (and therefore objective to it) does not render his opinion just.  Merely objective evidence is often wrong, misleading and all the rest, otherwise it would be enough to get at the truth simply to be objective.  Objectivity is certainly something, but it doesn't in itself render 'the whole enchilada.'  You need more to the system to get all of that -- like logic and consistency, veracity to actuality, etc.  Likewise for subjectivity.

So, at least for the moment, let's only use the words objective and subjective to mean, basically, whether we are viewing something from outside or inside a particular 'frame' at hand, and use the other sorts of words we have to mean those other things if we need them.  For the moment, we are only using the words to consider how the situation is framed.

With that annoying stuff out of the way, let's draw a couple of pictures.

Market Picture #1

Suppose that I took a map of reality -- a nice 2D picture with you in it -- and I drew a circle around just you.  You are inside of this circle (subjective frame of reference) with everything else outside of it (objective frame).  This, as it happens, is a pretty common way of thinking about things, for hopefully obvious reasons.

And if you think about markets in these terms, you can really go a long ways.  One interesting thing you may notice -- and one of the most important discoveries of economics as a science -- is that value is subjective.  It emerges from within market actors (like you).  (Yes, okay, we'll afford the other market actors their own circles, too.  I'm trying to keep it simple here.  They also impute value 'subjectively.')  People value goods, and this is what renders them valuable in markets.

Likewise, you will discover that prices are objective.  You can look at an ad in the newspaper, and you will see there prices that are indifferent to what you think of them.  You can consider them outrageous, you can consider them 'cheap.'  But whatever they are, they just are.  The numbers on the paper don't change depending on your opinion of them.

Do they emerge out of the physical laws of the universe?  Or some such?  No.  They emerge out of the decisions made by marginal actors in markets -- the ones making immediate decisions to buy or sell at a particular price at a particular moment in time.  Sometimes that marginal actor might be you, but most of the time not.  And even then, you really only get half a say -- it takes two to tango. 

Which is to say, that despite your very occasional participation, and despite being the outcome of the objectively visible actions of many individual actors, prices are nevertheless objective phenomena using our frame of reference.  They are 'brute facts of your Universe', as far as you are concerned.  Your 'say' in them reduces to a rounding error.  You just have to deal with them, as they are.

And hopefully it is equally crystal clear that they are -- nevertheless, nevertheless! -- the product of subjective valuations!  Time for some bold, large font --

Price structures are the outcome of value structures, via market mechanisms.  The objective structure of a market is a product of subjective values.

...and that's kinda important, especially to the actors who have to navigate those structures.

What I've sketched out here is the basics of Economic Subjectivism, one of the most critical insights of the subject of economics.  It was originally articulated by the Austrian school, but eventually absorbed by pretty much every modern school of economic thought.  I'm not gonna dwell on any more of the details within this picture much more than this, because lots of others already have much better than I could, it's pretty conventional, and I don't have a lot more to say about it as regards the point of his essay.

But to be sure, this is one doozy of a metaphysical system we have sketched out.  This way of dividing up reality will get you a lot.  You can see a long way from this mountaintop.  An awful lot of what is known of economic systems derives from this treatment of things.  And, I would submit, its effectiveness emerges for a very good reason -- because dividing things this way -- they way we drew our 'circle' -- captures a very important truth of the situation.  Individuality is an important aspect of reality, so 'breaking it at this joint' gives good results.

Metaphysical Skepticism

However (you knew there was going to be a 'however', didn't you?) when I have run across systems like this, I have come to find it good practice to ask two questions -- and I would encourage everyone who comes across some new train of reasoning or body of facts ("Evolution!  It's so amazing -- it explains everything!  Just like this --!") that is being put to use to make sweeping statements about all of reality ("Therefore, obviously, there's no God.") to make use of them.

Question 1 -- So what?  As in, does this thing really imply all of that?  Are you sure?  Do I have to take it just this way, all the way to the ends of reality?  Or are the implications really more limited than all that?

Question 2 -- What else?  As in, is this all there is?  The whole story?  Might there be more -- especially more that might bear a bit more directly on questions that seem further removed from the original issues that led to this train of thought?

In the case at hand, what we learned emerged out of a way of dividing up reality -- one way among many we could have chosen -- and the result turned out to be pretty darn good.  But just what all should we conclude from it -- i.e., so what?  Well, a lot, but maybe not everything.  We definitely should not conclude that 'this is it' without any further inspection.  We didn't bother (yet!) to divide it up some other way and see if something useful might shake out.

Is there anything else? My tendency is to almost always answer this question one way -- there is almost always more!  Reality is a big and wondrous place.  I don't think that needs a lot of elaboration.

Let's see if we can find more.  How about another picture?

Market Picture #2

This time, we're going to draw the circle in a different place -- instead of around individual people, around a group of people.  We'll pick the one that's getting the most attention of late -- a nation of people.  You could probably draw a circle around other groups and arrive at useful conclusions, but for now we'll stick with this one of interest.

Now, a lot of people who support free-trade will talk about 'invisible lines' or 'imaginary lines', to ridicule the idea of the meaningfulness of national borders and such.  And if we had bought in too deeply into the metaphysics from before -- that our way of dividing up reality was not merely a useful way for yielding truthful insight, reflective of truth, but in fact necessarily the whole truth of the matter -- we might be pulled in.  But hopefully, by getting as far as we have in the way that we have, it is easy to see that this characterization carries not much weight -- of course the line is 'imaginary', so was the one that we drew around individuals!  The whole point of drawing it was to imagine, to see if we found any truth in it, and the exercise proved very useful indeed!  If the objections is, 'well of course, that's not really what I meant, I meant it doesn't correspond to anything 'real', in the way an individual is 'real',' well, then I will say at least this begins to get to the heart of the matter.

And honestly, I wish the debates on the matter would go this way, instead of the way they usually go -- each side making fun of the other, without taking the debate to the actual issue at hand.  Are groups real, or not?  Because that is the issue, and no other.  And as with our previous example, I would submit that if they are real, then we should immediately see that applying this metaphysical divide will yield us some useful insight. And since I am not very good at this sort of reasoning and this section is devolving into the sort of writing that I don't like, rather than run around and around with this, let's finish off the 'drawing' and see what the picture looks like.

I think it is a very useful picture indeed.  With the circle drawn around nations, the pattern one immediately notices is that the price structure is typically fairly different within one circle as compared to outside of it.  In fact, a lot of things are different.  If our inferences hold from the previous 'drawing,' this is the result of differing value structures -- that just happen to line up with the circles we drew.  Clearly, there appears to be an underlying reality to the circle.  Some would say that, well, it's the legal sanctions imposed at the border that causes the difference, and to a degree this is partially true, but even when borders were far looser than today and where they have had much less legal significance, there were still differences -- and further there are price structure differences within borders where there is no substantial legal differentiation between regions.  Think -- one city versus another in the same state, or a city versus the countryside.

Of more significance, I think, is that in this picture, to the degree that prices differ, pricing is subjective!  The differences emerge from within the confines of the circle -- subjective to our delineation -- presumably in response to local economic conditions, as an expression of local valuations.  External conditions impinge only so far, even in the absence of any sort of purely legal differentiation.  If we were to modify the large, bold statement we made earlier, we'd have to say further that price and value structures emerge from 'the' subjective valuations 'of the members of the system in question.'  Not purely and abstractly from 'subjective valuation,' which is a bit different.  Presumably you care about the values of the people around you that you live with and do business with.  Their opinions are not wholly 'subjective' -- in the former, abused sense -- and arbitrary to you, as the previous formulation might seem to imply.

So -- 'real' or not, groups at least matter.  And to the degree they matter, well, to me at least they would seem to be 'real'.  And I don't want to run to the clincher just yet, but generally, there is a rather wise conservative proverb concerning theories that ignore significant realities...

How about valuations?  This, I think, can get either very murky...or very trivial...or very interesting.

At first glance, they are clearly subjective, because they also emerge locally from within the circle.  Or, if you want to import more of the previous metaphysics, from within the individuals who are within the circle.  And, as you probably intoned from the discussion so far, there is a significance to this -- different groups possess and express different value structures, and in turn will produce different price structures and consequently different economic structures. How could it be otherwise?

Likewise, from within any particular circle, both prices and values outside the circle are objective, emerging from outside.  There are 'your' values and structures and ways, and then there are 'the world's.'  You could also have done this from the previous metaphysics (and probably seen some truth in a 'you versus the world' perspective, but hopefully you don't feel quite that isolated!)

But suppose we ask of our picture this -- ok, so the value structures, as expressed in markets, come from groups of people.  But where do the groups and the people get them?  Do they really emerge 'just' from within them?

And for whatever reason, when you ask a question like this almost everyone will default to a materialist perspective, and say 'well, of course!  Where else would they come from?'  Which I guess is fine if you actually are a materialist, but since most people would say that they are not, that they belong to some religion or other that believes in 'spiritual' things, or otherwise believes in the 'immaterial,' this is kind of an inadequate answer.  And I suspect that even most of the materialists don't really believe what they are saying, if they really think about it.

As I pointed out in another post, most people will say that they at least nominally belong to one transcendent religion or another, so they probably ought to think that some portion of their beliefs and values are not merely subjective opinions but are given them from 'outside' -- that as individuals or as a group of faithful believers, they give expression to transcendent, eternal values which could be said to be objective to the entirety of the material universe, coming as they do from beyond it.

And if you say this is what you believe -- that it is a part of your metaphysics -- then why on earth is it not just habitually a part of your 'picture' of things?

As regards the picture we are presently drawing -- if we believe these sorts of things, then as 'beings made in the image of God', or however this idea is formulated by other religions, we can act as 'metaphysical conduits' through whatever circle we choose to draw to that which is 'truly objective'. There simply is no adequate 'firewall' to a transcendent God. And so -- in an important sense -- we could say that the values, prices, structures, etc, in our circle are our attempt at the expression of something much higher than our own subjective tastes, objective in the sense that really matters -- the ultimate sense. Therefore these things must take on something other than being 'merely subjective,' at least if we are to take our beliefs and ourselves seriously.

Have I shot through the metaphysical picture well enough?

Anyway, the picture that emerges is sets of value structures expressed by individuals and groups of people, occasionally, and unfortunately, sometimes even arrayed against eachother (i.e., in conflict).  And, frankly, the way these structures get to maintain their identity and integrity -- the way that people and groups get to live out their values -- is through borders.  Period.  Without any reality to the imaginary lines, they don't exist anymore, and the temporal becomes the tyrannical.  So, regardless of what I might think (or not think) about policy, or governments, or what any of these values should or should not be, it seems to be at the very least folly in my eyes to deny the reality and necessity of national borders -- provided there be such a thing as a nation.  And probably much worse than folly.

I suppose you could take this picture a lot of directions, but I will just say a bit more -- it seems to me you could draw a great number of these circles in meaningful ways -- around family lineages (especially concerning the issue of inheritance, which seems to have completely gone to the dogs), around families themselves, around neighborhoods and communities, etc.  Without representation of these realities in the here and now -- without borders -- well, you can expect them to have about as much reality in truth as the representation afforded them.  When you open your borders up, you invite in external values.  And since the world is bigger than you, and probably also your group, you'll likely be overwhelmed.

People need to allow for this...somehow.  If you buy into this picture anyway...

Metaphysical Bumblings #2

From the comments section of an SSC post, Scott Alexander answers why he thinks there might be some important truth to be uncovered in psychedelics research --

When people are on psychedelics, they feel incredibly happy, incredibly compassionate, like the world is meaningful, like they want to help people, and like all of this is completely obvious and even logically necessary. They understand the problems of life but they feel able to deal with them in stride and believe that there’s a higher purpose behind them. 

It seems really sad that there’s no way to promote this state that lasts more than a few hours and doesn’t have the same level of complications and side effects.

Hmmm.... meaning, a higher purpose, love, happiness, helpfulness, and compassion.

Jeez, where could we come by stuff like that?

Jeez, oh jeez...  ok, no snickering about the psychedelics => religion.  This is metaphysics -- serious stuff!

Protip -- I'm pretty sure there's not just a whole lot that's 'logically necessary,' strictly speaking, at least when you are operating from a standard of 'contingent on nothing.'  But you might ask ... oh ... I don't know ... Kim Jong Un, or somebody like that.  But to my way of thinking (or at least, the way I understand it) if logic were a mill, it would need some grist.  Just the way it is.

And if a person takes a very strong and principled stance against Be Not a Jerk Unto Others, and Don't Worry -- Be Happy!, and Stuff is, Like, Meaningful, and Stuff until such time as it be proven logically necessary to A Very Exacting Degree of Satisfaction, well, methinks the problem is more likely to lie with him than with The Universe.

Metaphysical Bumblings #1

From somewhere on the interwebz --

Is beauty subjective? People have strong feelings in both directions. A stylized representation of possible opinions about the nature of beauty might look like this: 

• Strong Subjectivism: the phenomenon of beauty is essentially random with little regularity, a purely personal response that is not predictable across time and person.
• Weak Objectivism: the phenomenon of beauty can be partly predicted by definable regularities in its perception as a result of our specific environments of evolutionary adaptedness (EEA).
• Strong Objectivism: the phenomenon of beauty can be predicted by definable regularities because of regularities in our EEAs and in the phenomenon of intelligence itself.

What?  That's it?

Whatever happened to beings made in the image of God, or participation in the divine consciousness, or any of the other transcendent metaphysical whatsits that provide perfectly serviceable justifications for objective notions of truth, beauty and goodness?  Aren't there supposed to be people out there -- quite a few I'm told -- that believe Man is fundamentally a divine spirit, ultimately grounded in the eternal, with ready access to eternal truths?

Bueller?  ...  Bueller?

I mean, we're only talking about religions that the vast majority of human beings have ostensibly been members for, what, the last thousand years or so?  And yet we're down to the deification of intelligence? Can't even crack the top three?

And while I'm asking obtuse hypotheticals, how come I have to be the one to bring up this kind of stuff in conversation?  And people look at me weird?

Isn't this basic Christian metaphysical thought?  Why don't I hear my pastor talking about this?  Why do I have to go digging through the bowels of places like Project Gutenberg to find that kind of stuff?  Why do I have to patch it all together for myself, and/or make it up out of whole cloth?

Maybe because it's all arm-wavey god-of-the-gaps X-tian nonsense.  Obviously, the apotheosis of intelligence is a much more serious answer.  Even better -- just not having a clue.  Better yet, the denial of all meaning in such silly questions and notions.

Those silly religious idgets...

Monetary Inanity (Part Infinity)

For those who have been living under a rock the last week or so, the Swiss franc went off like a rocket when the SNB (the Swiss National Bank, Switzerland's central bank) decided to end a currency peg against the euro.

And as usual, when something like this happens, there's lots of rather poorly informed commentary making the rounds out there.  Judging from their writing, I think that financial writers must not make very much money, so it is probably understandable that most of them don't have much of a grasp of monetary matters or any real incentive to learn, especially as concerns exchange rates and central banking.  But at least some of these guys should know better, especially the ones talking about deflation.

So, once again, I'll do what I can to try and correct the internet...

Why Piketty is Wrong and Western Workers Have a Bright Future

I'm sorry.  I'm supposed to be angry and dismal, because angry and dismal is smart, or at least that's the current received wisdom, and not wanting to look smart is practically a cardinal sin these days, and it would be a wilful sin to boot given that I could just keep my mouth shut, or at least write something angry.  But I can't help it -- I'm just too happy and optimistic, though somewhat overworked, which I suppose goes a long way towards explaining many things, including my rather poor writing record of late.  It seems kind of easy to write angry things (especially when you've gotten into the habit!), but harder to write other kinds of things, especially with pressing matters to attend to.

But I do think I have something happy to say about Piketty's new book which also might happen to be smart.  I confess to not having read the actual book (which is something of an economic tome at 700 pages, and a bestseller on Amazon, no less, an unusual juxtaposition, to say the least).  But I have read reviews!  And I will try to be fair, and trust that the reviews have been more or less accurate.  I also don't intend to go into great detail, but just to stick with the basic idea, which I also confess to be a really interesting one, but, alas, as I said, wrong on a very central point.

Texas, Explained

My sister forwarded me this video by Bill Whittle --



It is funny, and has a kernel of truth to it (I did these sorts of things growing up, too, and could do them still if the urge ever really got hold of me), but it did set me into a bit of a melancholy state, because it is very easy to make observations like this and come to conclusions that I think are a bit off and too optimistic.

Karen Hudes

Holy moly, this lady is the mother of all smoking guns. If half of what she says is true - and from what I heard from her on the radio, she gives every indication of being legit - the mother of all cats is about to come out of the bag.

She really is unbelievable.  She is hopelessly naive, moralistic, and somehow got past the gatekeepers and landed herself right in the middle of the international banking system.   She's been in the middle of 20 years worth of scandals at the highest levels and decided to blow the whistle.

Maybe I'm late to the game on this one, but this is the first I've heard of her.  And she basically confirms all the worst things you might have guessed about places like the IMF,  the World Bank,  the national governments,  etc.

For some reason, she's naive enough to think it's a matter of rooting out corruption,  and she still has faith in state governments,  but anyway, 100% worth listening to if you are into that kind of thing.

Coffee...

...is not actually a substitute for food. Or sleep.  All rumors to the contrary.

It looks like it should work, but it doesn't.  And I never thought I'd become one of 'these people.'

Kids

It is incredible how difficult it is to raise kids.

I have slogged through 4+ years of blogging, through living at 4-5 different addresses, through two different jobs -- one of them (my current) 24-hour rotating shift -- 60 to 80 hour weeks, and about a year and a half of that time with my in-laws living with me in my own house.

Yet 'settled' as I am, I have never found it so difficult to get blog posts up.  Or to get just about anything else done, for that matter.

Part of the reason for the 80 hour weeks is, basically, what the hell?  I'm not going to get anything done anyway.  Or any sleep.  Might as well get paid while I'm (not) doing it and feeling like crap.

I hope and pray that all of this is worth it someday, because right now, it's all on faith.  God only knows why I want another one...

Anyway, this is not one of those 'screw it all, I'm quitting blogging' sorts of posts.  Because that would be a lie.  Writers are compelled to write.  If they're not, they aren't writers.  If you ever hear me utter such nonsense -- or any other once-prolific writer, for that matter -- you can know it for what it is.  Writers are like crackheads.  If they aren't posting their crap publicly, they are scribbling it on napkins and paper towels with crayons and stuffing it away somewhere. 

But I won't be writing much (as if I were already, anyway), and even of what I do, unfortunately you won't be seeing much of it.  I actually have something of a backlog of (very) lengthy posts which will likely never see the light of day.  The demands on me are much too high right now.

For the life of me, I will never understand the apparently near-universal compulsion to demand the attention of others for the purpose of completely wasting it.  In general, I tend to avoid the attention of others, even when I probably should speak up.  But that is the way it is.  And no, I'm not really talking that much about my kids at the moment.  'The job' has ratcheted itself up along these lines as well.  But I'm afraid that until I can achieve some modicum of isolation, I'm just not going to be able to get anything done.

My hope is that someday I'll be able to arrange some sort of life-hibernation, so that if I can erect enough barriers between myself and these people, I might actually be able to get something done.  In the meantime, I have finally entered into the 21st century and gotten myself a shiny new smartphone.  I hope that I can at least get up those little 'blurby' type posts ever now and then.

Just to remind people that I'm alive.

Healthcare, If Any?

According to a report issued by a House committee bssed on data provided by a consortium of insurers, healthcare costs will increase dramatically under Obamacare -- by 100 to 400%:

Internal cost estimates from 17 of the nation's largest insurance companies indicate that health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent, crushing the administration's goal of affordability.

I...don't believe this.   Oil from a turnip, anyone?

People won't spend money they don't have.  They can't.  It's one of those quirky aspects of accounting.  Costs imposed on insurers are certainly relevant, but this analysis seems crude to me.

Quality will probably fall, waiting times will probably increase, etc.  But I do not think prices can rise much.

And wouldn't it surprise everyone if they fell?

Open Letter From Texas

Dear Wealthy Californians --

On behalf of those people of Texas who still retain a modicum of common sense, by which I mean all of us except for Governor Perry, I would like to rescind the offer which he has so graciously but injudiciously extended to you. You see, the whole thing is a really, really bad idea. I'm not sure what my governor is thinking, or even if he is even capable of actual thought in light of his horrendously bad suggestion.

Over the years, I have met many Californians who have moved here to Texas, usually for a job, which they were apparently incapable of finding in their home state. Invariably, they have taken it upon themselves to inform me just how awful Texas is, and how much better it would be if Texas were more like California. In that respect, they have a great deal in common with the Mexicans I meet here. The irony of their position does not seem to dawn on them, but never mind, that is another subject for another time.

Much as it pains me to say this, their complaints are largely correct. Texas is full of very ignorant people. For example, there are still people here who think homosex is wrong, even when done in public, and wouldn't have the slightest clue how to properly accessorize S&M apparel.

We don't, in general, embrace the enlightened ideals of government which you favor, such as enormous tax burdens and deficit spending to fund important public initiatives like sex change operations and massive welfare spending. People here tend to think that spending more than you take in is generally a bad idea anyway, but worse if you happen to be a government. I may know as well as you that, although your present difficulty centers around a few accounting quirks in making this particular strategy work for you, nevertheless I'm confident you'll figure them out at some point. But here in our backwards state, that kind of thing is looked down on, and it is not generally believed that you can get around things like arithmetic.

In general, I'm not a big government kind of guy, either, but in this case I do think I could get behind what I see as the only real solution to the 'California conundrum.' I propose that the Army Corps of Engineers dig a large moat around California, and fill it with radioactive waste. And pirannhas. And maybe land-mine the western half of Nevada.

Because, you see, the problem with California as it seems to me is that there is just not enough commitment to its ideals. People embrace these kinds of innovative ideas, but then as soon as things start getting exciting, and the results of all these great plans start coming to fruition, they get all weak-kneed and want to bail out. How can anybody really accomplish anything great if he loses his nerve just when things start to get a little sketchy? No -- California and her people need to ride this train clear to the station, and I and I believe other Texans, and probably people from many other states, are fully committed to helping motivate Californians and steel their jittery nerves at this time of indecision to see things through to the end.

But coming to Texas is just a stupid idea. What, really, does Texas have to offer? It won't accomplish anything. You won't like it here, and we won't like you being here.

Seriously, don't come.



Truly and Sincerely Yours,

Texas

P.S.  OK, you're right.  The real reason I don't want you here is that I'm not so keen on the idea of bringing into my state a whole bunch of people who have managed to utterly ruin what otherwise sounds like a really wonderful place.  Texas isn't perfect, it has its own problems certainly, even some major ones, but one thing we sure don't need is a massive influx of foolishness.

And we don't really need your money, either.  Have you considered Florida?  Or maybe Virginia or New Hampshire?  They sound pretty nice.

Tex-Mex Egg Salad

I made a different version of my standard egg salad today and since I'm such a creative, inspired person I decided to call it Tex-Mex Egg Salad. I threw in some random stuff that I happened to have around, namely:

• Hard-cooked eggs
• Mayo
• Lime juice
• Fresh cilantro
• Dried oregano
• Cumin
• Queso blanco.

I was pleasantly surprised at how well it turned out, so I snapped a pic with my phone and decided to share. 

You're welcome.

Towards a Rational Gun Policy

Gene Callahan has suggested (as has Fran) that any debate over proper gun policy would best be done rationally and without reference to emotional arguments. I concur, and though I am very much pro-gun, I would even extend it (as Gene suggests) to attempting a non-ideological argument to determine more exactly what a 'realistically ideal' policy would look like.

What do I mean by non-ideological and 'realistically ideal'? What I meant in the last several posts -- resisting the impulse to assert an abstraction of reality as reality itself, or to construct a set of rules which flow from a direct translation of the abstract even when it flies in the face of reality. By this, I certainly do not mean thinking as a political moderate, especially as I see the facts of the matter very much in favor of something close to present policies, though perhaps somewhat more lax.

WWPD?

To begin, I turn to a suggestion by Plato, which I think is eminently helpful, as would anyone who had spent a substantial amount of time wading through arguments attempting to divine (or obscure...) the 'original intent' of law.

Plato thought that an ideal law should consist of two parts -- a clear statement of the purpose of the law, followed by the concrete legal stricture itself. This structure makes very clear the intent and purpose of the law, so that any later reading and interpretation would be greatly facilitated and much less controversial, as would determining whether or not the law had been a plain failure in securing its purpose and needed to be altered or abolished.

Oh, had only the Framers followed this advice!

Technologies That Will Change Everything

Every now and then, a technology comes along and changes things so radically that it disrupts whole economic structures and ways of life.  No doubt, just about anyone can name quite a few of these off the top of his head -- the internal combustion engine, the printing press, the computer, etc.

Here are three technologies which I think are on the cusp of doing just that.

Banking as a Rent-Seeking Enterprise

A little bit back, Gene Callahan favorably quoted economist Hyman Minsky in support of the argument that the banking/finance industry benefits from market instability ... --

Why Investment Banks Like Having Booms and Busts

"In an unstable economy, speculation dominates enterprise." -- Hyman Minsky, Stabilizing an Unstable Economy, p. 17

... the veracity of which was questioned by commenter Prateek by pointing to a break-down of operating profits at Goldman-Sachs --

Investment banks largely earn their revenues from underwriting IPOs, helping stabilize IPO prices with a stabilizing mechanism, and arbitrating negotiations between merging companies. These are activities that directly channel funds to the real economy, rather than just shift funds between financial assets. So they are very vulnerable to the state of the real economy.

The last time I checked Goldman Sach's financial statements, I saw that their revenue breakdown was 40% deal-making, 40% wealth management advisory, and only 20% trading in the markets.

Gene stood by his assertion, but declined to elaborate -- I suspect mostly because he didn't feel like it at the moment, not because he actually couldn't.

I think Prateek raises an interesting objection, though.  If trading only accounts for 20% of revenue, then how much can Goldman-Sachs really be profiting from unstable markets -- which would presumably put a big dent in the sectors of their business that actually make most of their money?  Since Gene declined to take on this objection directly, I thought I'd take a stab at answering it myself.

Great (And, Occasionally, Mediocre) Minds Think Alike

From George MacDonald's Robert Falconer:

My reader must understand that Andrew had never been a man of resolution. He had been willful and headstrong; and these qualities, in children especially, are often mistaken for resolution, and generally go under the name of strength of will. There never was a greater mistake. The mistake, indeed, is only excusable from the fact that extremes meet, and that this disposition is so opposite to the other, that it looks to the careless eye most like it. He never resisted his own impulses, or
the enticements of evil companions.

This is a simply brilliant observation about children.  Children who are 'strong-willed' are not strong at all; in fact they have no 'will' of their own to speak of, only impulses which they cannot control because they are actually weak.  They do not need to be 'weakened' in any way, what they need is strengthening.  True strength of will is not a vice, in whatever proportion (though, obviously, imprudence and ignorance certainly are, whether or not they are married to a strong will.)

I disagree with him about 'extremes meeting' in any kind of a real sense, certainly not in this one, but occasionally they do show a superficial similarity.  But that may have been what he meant.

Secondly, from The Last Psychiatrist:

No one knows what Liriope and Cephisus did [to leave Narcissus vulnerable to the curse by trying to satisfy a prophecy which they thought would give him a long life], but whatever they did, it worked: he didn't even recognize his own reflection.  That's a man who doesn't know himself. That's a man who never had to look at himself from the outside.

How do you make a child know himself?  You surround him with mirrors. "This is what everyone else sees when you do what you do.  This is who everyone thinks you are."

You cause him to be tested: this is the kind of person you are, you are good at this but not that. This other person is better than you at this, but not better than you at that.  These are the limits by which you are defined.   Narcissus was never allowed to meet real danger, glory, struggle, honor, success, failure; only artificial versions manipulated by his parents.   He was never allowed to ask, "am I a coward?  Am I a fool?"  To ensure his boring longevity his parents wouldn't have wanted a definite answer in either direction. 

He was allowed to live in a world of speculation, of fantasy, of "someday" and "what if".   He never had to hear "too bad", "too little" and "too late." 

When you want a child to become something-- you first teach him how to master his impulses, how to live with frustration.  But when a temptation arose Narcissus's parents either let him have it or hid it from him so he wouldn't be tempted, so they wouldn't have to tell him no.  They didn't teach him how to resist temptation, how to deal with lack.  And they most certainly didn't teach him how NOT to want what he couldn't have.  They didn't teach him how to want.  

The result was that he stopped having desires and instead desired the feeling of desire.

Nemesis had an easy job, she only had to work backwards: show him something that didn't return his love, and he'd be hooked.

Narcissus's parents were demi-gods-- didn't they know how to raise a good son, what a proper parent needs to do?  Yet they listened to a charlatan anyway.  They were given meaningless information by a supposed expert and abandoned all common sense, and so created a monster who brought death to at least one person and misery to all. 

(emphasis mine)

Almost the exact same idea, from an actual psychiatrist.  (By the way, if you aren't a regular reader of The Last Psychiatrist, you are missing out on one of the best thinkers on the Web.)

And lastly, from some other mediocre half-wit:

[I]f virtue can be 'taught,' or in some way 'conferred,' it is not likely to be accomplished in the same way as knowledge is through education. Rather, virtue is probably more a capacity to be trained in -- or disciplined to -- through practice. And as self-control is the common root of virtue, then it stands to reason that the clearest method of 'teaching virtue,' at least at its earliest stages, is through simple discipline. 'Spare the rod and spoil the child,' as they say. In a way, what discipline does is to provide a sort of strength -- the strength to assert will over impulse -- and it is the developing of this strength which is the beginnings of virtue.

Emphasis...uh....mine?

So, as election day approaches, forget about all that politics and voting stuff for a minute.  Remember that the one thing that you could do with the best chance of actually improving the future of this nation is to --

SPANK YOUR KIDS!

A Taxing Epiphany: An Unfortunate Defense of Loopholes

As I have been enduring these early not-so-glamorous-or-rewarding experiences of landlording -- which I think come to anyone who tries to do this and have more or less totally consumed all my free time and energy of late -- a sad epiphany has come to me.

I have long been an advocate that taxes be as simple and un-meddlesome as possible and have looked with absolute loathing upon attempts to carve out 'special privelege' by inserting 'deductions' into the tax code.  So, it is with much chagrin and a difficult and embarrassing wince that I must admit that I appear to be very wrong with respect to at least one 'deduction' -- interest.  It seems that, even though I very much dislike this conclusion, it is absolutely necessary that interest payments be deducted from income for the purposes of taxation, otherwise it appears that all hell breaks loose.  And if it is true for interest, it is likely true for many other expenses which I have yet to think through quite as thoroughly.