Rationalist Arrogance

On display here.

Don't get me wrong.  Charles Hugh Smith is still one of my favorite bloggers and thinkers out there.  I will not change my opinion of him because he is as human and "irrational" as everybody else.

But the man is just as trapped in a box as all the ideologues he bemoans, he just can't see it.  And the reason he attracts so many readers is that his custom-made box (as opposed to pre-fabricated box) is the same as 99% of the pre-fab box that attracts most of his readers, i.e., the Austrian-inspired libertarian creed.  To one or both of his two minds, that makes everybody else a chimpanzee to his true human, but the fact is that he needs to evolve a little bit to reach the lofty heights which he claims to have attained.  When he starts questioning whether fiction (what he calls "mental constructs") should rationally lead to global instability, perhaps a bit of his conviction will crumble, even though it is based on logic, i.e. what he considers being rational.

If your logical chain of reasoning starts with a fiction, your conclusion will be a fiction.  Under such circumstances, being logical does not make your conviction any less false or irrational than those who do not try to rationalize their belief system.

Heirloom Humanity

Think of heirloom varieties of fruit, vegetables and livestock as compared to those bred for commercializtion.  Then think of modern society, which has been bred to be a consumer.

There's an analogy there somewhere.

The Fruit of the Digital Age: No Fruit

I am watching a PBS special on Mayan civilization, and I am struck by the fact that a the lack of permanent physical records of today's civilization means that it cannot be studied and understood by anthropologists even half as well as the Maya.

Then I realize that future anthropologists won't have any of a harder of time than we do. Truth in the Digital Age is a nose of wax that can and will be manipulated to serve the interests of the power structure.

The Reason "War is Good for the Economy" = Debt

Here's a half-formed thought that just struck me.

So often we hear that war can be good for the economy.  I recall that George W. Bush prescribed war as a way out of recession, for example.

From the other side of the alleged political spectrum, we often hear that war is all about empire and plunder, i.e., the reason war is good for an economy is that the victor subjugates the resources (and income) of the vanquished.

But the bottom line is that the financiers of war win regardless of the outcome, and in this sense finance (and the debt it creates) drives war.

Combine that thought with economist Steve Keen's credit-based model of economics, and it is easy to see that George W. Bush was right, albeit for the wrong reasons.

The Real Aim of Debt-Ceiling Kabuki: Corporate Tax Holiday?

I just ran across this over at Taibbi's blog:

I’ve been in and out of DC a few times in recent weeks and one thing I keep hearing is that there is a growing, and real, possibility that a second “one-time tax holiday” will be approved for corporations as part of whatever sordid deal emerges from the debt-ceiling negotiations.

Personally, I'm okay with a tax holiday, so long as strings are attached (i.e., you can bring the money back in tax free, but ONLY if you invest in creating real jobs in the U.S.), but that is not what we're talking about here:

Here’s how it works: the tax laws say that companies can avoid paying taxes as long as they keep their profits overseas. Whenever that money comes back to the U.S., the companies have to pay taxes on it.

Think of it as a gigantic global IRA. Companies that put their profits in the offshore IRA can leave them there indefinitely with no tax consequence. Then, when they cash out, they pay the tax.

Only there’s a catch. In 2004, the corporate lobby got together and major employers like Cisco and Apple and GE begged congress to give them a “one-time” tax holiday, arguing that they would use the savings to create jobs. Congress, shamefully, relented, and a tax holiday was declared. Now companies paid about 5 percent in taxes, instead of 35-40 percent.

Money streamed back into America. But the companies did not use the savings to create jobs. Instead, they mostly just turned it into executive bonuses and ate the extra cash. Some of those companies promising waves of new hires have already committed to massive layoffs.

The difference between now and 2004 is that, reminiscent of the events leading to the bank bailout and TARP, an existential economic crisis is being manufactured to justify something that is manifestly not in the American people's interest, but this time it is being peddled directly to the American people. 

All this smacks of desparation.  There are only so many times you can play the "financial fiction will doom economic reality" card.  The next phase of this game of managed deflation (as I call it) is war.  Nothing less than patriotic fervor induced by a perceived physical threat will be able to distract the populace from the fact that it is being mugged.

Seriously, does anybody think that this kind of story gets published without the complicity of the Fed, the entity managing deflation?

(Reuters) - The Federal Reserve is actively preparing for the possibility that the United States could default as a deadline for raising the government's $14.3 trillion borrowing limit looms, a top Fed policymaker said on Wednesday.

Charles Plosser, president of the Philadelphia Federal Reserve Bank, said the U.S. central bank has for the past few months been working closely with Treasury, ironing out what to do if the world's biggest economy runs out of cash on August 2.

"We are in contingency planning mode," Plosser told Reuters in an interview at the regional central bank's headquarters in Philadelphia. "We are all engaged. ... It's a very active process."

Plosser said his "gut feeling" was that President Barack Obama and Congress will come to an agreement to increase the Treasury's borrowing authority in time to avert a default on government obligations.

And sites like zerohedge eat the news up as confirmation of their theories, rebroadcasting it to confirm their readership's religious (i.e., economics), never realizing that they're aiding and abetting the system they claim to oppose.

Fractal Dysfunction

I've recently taken to describing the two most important factions of "the Elites" (note: I did not say "major" factions) as "rationalists" and "realists."  I did not coin these two terms, but I've come to use them in a peculiar way.  In particular, I view "realists," as exemplified by modern realists in the tradition of Carl Schmitt (Hitler's lawyer) and F.A. Hayek (neoliberalism's primary architect) as power addicts, and I view "rationalists," as exemplified by pretty much every other intellectual as enablers of the power-addected realists ("he beats me because he loves me").  Applying the Pareto Principle, I'd argue that 10% of "the Elites" are realists, and almost all of the rest are rationalists.

Interestingly, if you look at the broader adult population, "the Elites" are probably only 10%, leaving almost everybody else-- who I've come to think of as the SSDD (Same Shit, Different Day) crowd.  By the way, I celebrate the SSDD crowd precisely because they are just normal folk trying to get along and enjoy life.  I'd love to be half as happy as the SSDD folks I know, who include the majority of my family.

If my ballpark estimates are correct, that means that no more than 1% of our population dictates how all of us live, which is consistent with economic data.  And I'm sure that we can drill down further and discover that the core power-a-holics that drive society represent only between 0.0001-0.1% of the entire population.

Does that make any sense?  Should the societal equivalent of a desparate heroin addict dictate society's mores and actions?  I don't think so.  The fact that people like me are instictively compelled to fill any perceived power vacuum does not mean that people like me should dictate how everybody else lives.  I am not superior to the SSDD crowd.  Indeed, I'm so far away from the mean that I should be classified as deviant, but people like me are elevated to leadership roles every day.  Unfortunately, the vast majority of people like me view "leadership" as an opportunity to prey upon the rest of society as opposed to an obligation to serve.

Comments Fixed?

I switched back to the pop-up method to see if that helps.  Seems better.