Jamie Dimon’s Gift to Obama

The biggest political problem Obama has with both the Progressives and the Libertarians is that he pussied out on the Wall Street Bailout. No one went to jail, unlike the Savings and Loan Crisis of the 1980’s. We paid out the banks 100 cents on the dollar for billions of essentially worthless Credit Default Swaps and other forms of insurance written with no collateral behind it.

This week, Jamie Dimon gave Obama a do over. Obama needs to spend the next six months in a populist crusade to enact the Volker Rule is it’s strictest form. A form that would have banned the obviously phony “hedge” that JP Morgan is now going to loose $3 Billion on.

“The timing, prices and particular choice of index that people are saying that J. P. Morgan used seems to support the view that there was more to the trade than just a hedge,” said James Parascandola, a veteran credit-default-swaps trader formerly with MF Global Holdings Ltd. and Barclays PLC.

Already, Republicans like accused inside trader, Representative Spencer Bachus, the most powerful Republican on finance, are coming to Jamie Dimon’s defense.

“Even with this loss, I believe they’re one of the most profitable financial institutions in the country,” Mr. Bachus said at a House hearing on Wednesday morning. “There is no risk from this loss to depositors or to taxpayers.…They remain a very profitable, viable institution.”

Never mind.

For Obama, this is a Teddy Roosevelt moment. Roosevelt gave a speech in Provincetown, Massachusetts right after the Panic of 1907, which eerily mimicks the crash of 2008. He called out “the malefactors of great wealth” and went on to say,

“. . . [these men] combine to bring about as much financial stress as possible, in order to discredit the policy of the government and thereby secure a reversal of that policy, so that they may enjoy unmolested the fruits of their own evil-doing. . . I regard this contest as one to determine who shall rule this free country—the people through their governmental agents, or a few ruthless and domineering men whose wealth makes them peculiarly formidable because they hide behind the breastworks of corporate organization.”

For Barack’s whole administration he has followed his Harvard instincts and stuck with The Establishment. Thats why Geithner and Summers were his economic team and Gates was his defense team. Now, like Teddy he has to risk being called a class traitor and cast off his establishment team in the hopes that he could fulfill Tom Paine’s promise of our Revolution, “We have it in our power to begin the world over again.”

What is remarkable is that Obama essentially can fulfill this promise by doing nothing.

If he is able to defend the laws he already passed—the Affordable Care Act, the Women’s Equal Pay laws and the Sequester passed in the summer of 2011—we will have “begun anew”. Why?

Let’s start with the sequester.

Since 1955, Progressives have tried to cut the Military Budget, without success.But if nothing changes, starting in January the Defense Budget will take huge cuts.

For the Pentagon, that would mean about $50 billion a year in less defense spending from fiscal year 2013 to FY2021, according to the Congressional Budget Office. The CBO baseline already assumes roughly $450 billion in reduced defense outlays, coming from provisions of the Budget Control Act.

Lindsay Graham, Mr. Defense Pork is outraged at the very thought of the cuts.

“I have heard from people after every engagement: ‘why do you need this military?’ only to have to ramp up, go to war without the equipment, send the (National) Guard off with a shell of a force. What happens if China gets bolder, Iran gets a nuclear weapon, (or) we have to go into Yemen?”

I’m sure if Mitt Romney becomes President, Lindsay won’t have to worry.

So what about Bernanke’s notion that the Sequester will drive us off a “Fiscal Cliff” ? Well due to the brilliant negotiating by Barney Frank in the conference committee, there are no cuts to Medicare or Social Security in the Sequester. So does the “fiscal cliff” arrive because we are cutting the military industrial complex? Highly doubtful. The weapons systems now being built are on very long cycles and it is doubtful this employment would slow down. So what happens when the Bush Tax Cuts expire (the other part of Bernanke’s fiscal cliff)? Quite frankly, very little. The rich are not going to stop buying $100 million paintings, just because their income tax rate went up 4%.

So this is all Barack has to do. Push through the Volker Rule and threaten to veto any change to the Budget Control Act of 2011 or the Affordable Care Act.  An America with a radically reduced military budget, a decent and fair universal health care system and a financial sector under control would be able to face the future unburdened with Neoconservative fantasies of being the world’s cop and with an economy not built around speculation but around production and services sold world wide.

Now all Barack has to do is get reelected.

This entry was posted in Barack Obama, Economics and tagged , , , , , , . Bookmark the permalink.

52 Responses to Jamie Dimon’s Gift to Obama

  1. John Papola says:

    Riddle me this. What’s the difference between bank lending and “speculating”? The last time I checked, ALL investments are uncertain and thus “speculation”, especially startups.

    Please lay it out for me in a way that doesn’t amount to 100% pure discretion for unelected “regulators” but in a universally applicable doctrine against which we can all understand and know it when we see it.

    If you can’t… the volker rule doesn’t work.

    We’d have much smaller banks if the government simply stopped bailing them out. We’ve have fewer big banks today if Bush and Obama let the market participants take care of this cancer in 2008, starting with Bear.

    But no. We won’t get that. They’ll keep the bailouts and backstops in place. They’ll keep the Fed. They’ll keep FDIC in place. They love it. Having backstops and fake “regulation” gives them control and power. It lets them monetize the debts they run up buying votes.

    End the Fed. End the “Lender of Last Resort” as a policy and concept from other agencies such as Fannie, Freddie and FDIC. THAT will be TRUE reform. Empowering bureaucrats will simply produce more of the same crony rip-offs.

    As for this Obama v. Romney stuff, it’s pure garbage. Jon, you’re partisan posts blow. Obama made Timothy Geithner his Treasury secretary. He re-appointed Bernanke. He’s a crony. Period.

    ps.. economic growth doesn’t happen because of consumption by the rich. Malthus called. He wants his defunct 17th century nonsense back. And if you think the cronies-get-waivers “Affordable Care Act” is either “decent” or “fair”, you haven’t spent much time thinking or reading about it.

  2. Alex Bowles says:

    I think you’re right about a do-over, but enacting the Volker rule is the least of it. Here’sMichael Crimmons making the case for the prosecution of Daimon under Sarbanes-Oxley.

    More damning is Dimon’s tacit admission that the controls designed to protect the firm from these sorts of blowups were ineffective, due to lack of intervention. Ignoring internal controls, or red flags as Dimon characterizes them, is a failure in the control environment. The failure to disclose inoperative key controls in the CEO certification is a violation the law.

    Meanwhile, the folks at Newsweek are within half an inch of declaring Obama corrupt (to say nothing of Eric Holder, who comes out even worse).

    Levin publicly stated his view that criminal inquiry was warranted. Goldman executives, including the firm’s chief executive officer, Lloyd Blankfein, started hiring defense lawyers.

    Meanwhile, Obama’s political operation continued to ask Wall Street for campaign money. A curious pattern developed. A Newsweek examination of campaign finance records shows that, in the weeks before and after last year’s scathing Senate report, several Goldman executives and their families made large donations to Obama’s Victory Fund and related entities, some of them maxing out at the highest individual donation allowed, $35,800, even though 2011 was an electoral off-year. Some of these executives were giving to Obama for the first time.

    Justice insists that political operations such as fundraising are kept strictly distanced from the department, in order to avoid even the appearance of political influence. But the attorney general and his team are not unfamiliar with the process; Holder was himself an Obama bundler–a fundraiser who collected large sums from various donors–in 2008, as were several other lawyers who joined him at Justice.

    It would be a leap to infer these Goldman contributions were made–or received–as quid pro quo for dropping a criminal investigation. Still, the situation constitutes what one Justice veteran acknowledged is a “bad set of facts.”

    I’m not sure that overdue legislation is going to wipe away this stink.

  3. len says:

    Agree, Alex. The most corrosive damage done has been to our culture. We can wrangle the money and it is still about who gets it, not spending it. Like any family, we have to decide what and when and only then, who. We’ve gotten very good at lieing and denying. Go to the fb pages and read the rants from social conservatives fueled by prurient religious systems telling women to submit to their husbands while reading Shades of Gray on the same page with feminists trying to reclaim power by reading Shades of Gray.

    It’s masturbation fantasy to keep from having to actually sustain a relationship. Ok, but quality of life could be better with just a bit more open reciprocal conversation.

    DoD: Big ticket items under development will slow down. Planning for that is very long life cycle. However, what will get hollowed out will be the infrastructure just as happens in the public sector. Fewer spares, fewer improvements in housing, less fuel (understand the cost per flight hour for those GE turbine engines) and so on. It does have an impact but it’s simplistic to talk about that strictly in terms of weapons systems.

    While the Spy vs Spy of who gets the money drives the political advertisers, the top three budget items are still defense/offense, social security and medicare/healthcare. Anyone who wants a productive sane non-gotcha conversation has to keep those numbers in front of them and their audience. No free lunch.

    There may be 50 Shades of Gray to these situations but pain is pain and we’re all going to feel it as long as we let perverts run our lives backed up by bullies. Look at all sides and understand if they are dealing out pain, it really doesn’t matter that they do it convervatively or liberally.

  4. JTMcPhee says:

    Social Security is a “budget threat?” Really? Other than SSDI, and correct me if I’m wrong, FICA withholdings are basically earned income that we working people are wisely forced to save. Which then our Government takes to fund its other activities, like “offense/defense” and the other “without-much-discretion-ary spending.” Leaving little pieces of paper and the “promise” that those markers, those “debts” if you will, will be made good at some point, and the increasing sense, fed by a bunch of bloodsuckers, that our Government will eventually default on them just like corporations default on their defined-benefit pensions, leaving us working folks with the “401sucker” option or nothing.

    The Medicare thing is more complicated, and saddled with lobbying-induced weaknesses. But while Medicare is supposedly 15% of the budget, a massive part of that is just the pass-through of FICA and SECA collections, money out of the pockets of, again, working people. And Medicare ain’t “free:” there’s copays, and donut holes, and $110 a month off your retirement income for basic Medicare, more for “supplemental” private “insurance,” more for Part D prescription coverage. Over $6000 a year for a lot of folks. But it’s a fundamentally good social program, that needs constant attention to fixing stupid incentives, and a lot of enforcement activity to hammer shits like Rick Scott, Ruler of Florida, who stole $4 billion from Medicare and Medicaid and snapped his fingers and walked away free, to run a state with the highest percent of Medicare recipients and the worst fraud in the country.

    And the War Budget is still what, a trillion or so a year? And the “cuts” that are in the offing are “cuts” only to the RATE OF GROWTH of that bloated hyperbureaucracy that keeps popping out wars and Really Cool And Murderous Weapons to keep the rest of us in growing jeopardy.

    Good thing we live in a land with its own fiat currency, that facilitates all the war stuff and the financializational shenanigans of recent years… What kind of “austerity” do YOU recommend, to get us to “fiscal responsibility?”

  5. Rick Turner says:

    Gamblers…the house always wins. The suits of Wall Street will gamble with your money…you’re the gambler…they are the house. If they “lose” on your behalf, the tax payers will bail them out. If you “lose”, well, you lost, sucker. If they win, they get bigger bonuses than if they lose. The Wall Street game is rigged worse than any set of loaded dice or marked cards or fixed slot or magnetic roulette wheel. How is it that compensation is not tied to performance in the American capitalist system? It’s turned into a complete scam with that lottery fake promise of huge winnings that keeps sucking people in.

    Our medical system… Turn it into single payer system and watch admin overhead drop like a rock. There is an absolutely unbelievable amount of stupid paper work generated…it is hardly made efficient through “competition”. Oh, and the death panel brouhaha? We have them. They’re called “insurance companies”.

    I’m no fan of Obama, but the more I read about Romney, the more fearful I am about our future if he gets in.

  6. len says:


    I did not say it is a threat. It is one of the big three ticket items. Howsoever we do this, we have to stop lieing and denying the pain. To get the debt in line, we have to look at these items first and balance this out.

    I’m also not defending the mil-spec budget. Nope. If you want that money, close down the wars and return to a peace posture. IOW, America, get off your haunches.

    But serious about the debt we must get. My hobby horse otherwise is education. Fix the kids loans so they have a chance at what we have. They’ve done the due. Take the rest and fix the roads before we kill ourselves futzing over isms and ignoring the potholes.

    @rick: Romney? Geez. It only happens if the center left and center right get into catfights over the various totems being used to taunt the tiny dancers. Again cold and warm. The guy who does the best family we can work this out scthick wins. America is war weary, butt tired and in need of a really good weekend at cousin ernie’s.

  7. len says:

    “Even with this loss, I believe they’re one of the most profitable financial institutions in the country,” Mr. Bachus said at a House hearing on Wednesday morning. “There is no risk from this loss to depositors or to taxpayers.…They remain a very profitable, viable institution.”

    Sorry Jon.

    The fact is they lost other people’s money slim shady style. The risk is not limited to our wallet. Our integrity, what we believe we are and therefore who we become, these are also losses. And more valuable.

    The only way to get rid of Bachus is to buy every woman in this state guaranteed health insurance for her children for the rest of their lives and catch him with the check at the window. Or…. the Democrats in the rest of the country decide to reform Alabama. It would be a wonder to watch what was done to Huntsville done to the rest of the State.

  8. Roman says:

    “Now all Barack has to do is get reelected.”

    He will be his undoing, IF he opens his mouth. And a crusade like that proposed by Jon? Please…

    Don’t misunderstand, this will be his undoing – eventually. There’s no escaping it. It’s too big. When the dots are finally connected, as Alex notes Newsweek is beginning to do, it’ll be a toss-up between Barry and Buchanan for the bottom spot. Too harsh? You’re naive and too kind. It was the largest heist in the history of the world BTW.

    To get reelected, Barry needs to closely follow the advice of Mr. Axelrod by keeping his mouth shut. Maybe it’s just me, but there seems to be a correlation between Barry’s numbers and his adherence to Axelrod’s gag rule; they tend to rise when he zips it, and fall when he publicly broaches the crisis du jour.

    Zip it and he’s in. Open it and risk opening wounds that are only just begunning to scab over.

    A low boil has been simmering beneath the surface since Sep – Oct 2008. Most know they can’t touch those responsible for their misery and lost dreams, but they can assign a new face to their pain, and then do something about it in Nov.

  9. len says:

    I’ve been through the process of a Bain Fund type of dismantling of a company to send jobs overseas. I’ve no problem figuring out which of those faces represents my pain. I don’t see how Romney can get on the debate stage against Obama with a strategy based on that. “Look Obama bailed out his friends. I on the other hand dismantled your factories and sent them to your competition, and by the way, I don’t want you to hold hands in public while I am privatizing your social security.” Yeah, real winner that guy.

    The buzz around FB is Biden will step aside and Hillary Clinton will get the nom for VP to set up for a 2016 run. I don’t buy it but that’s the kind of stuff that will keep the bailouts on the back burner. That money is gone. But we were being screwed blue long before that by people who look a lot more like the former Governor.

  10. Jon Taplin says:

    @john P-The difference between a loan and speculation , as an amateur economist like yourself should know, is that a loan has collateral that can be collected if the borrower doesn’t pay up. There is no excuse for Dimon or his firm.@John Papola

  11. Rick Turner says:

    OH, but the collateral is the mass of US citizens. We the people are the gold standard, are we not? Private gain and public loss is the game of Wall Street. Too big to fail…remember that? Yeah, and I remember Jack and the Beanstalk, too…

    We got sucker punched, and while we’re down on the ground writhing in pain from the hit to our gonads, our pockets are being turned inside out, and our future has been found and stolen in the lint of our linings…

    All you have to do to be filthy rich these days is to steal a meager ten bucks from every American… Too little for any one person to feel it…much…but times 300 million or so, you’ve got it made. Steal a little from a lot. Stay just under the radar…if possible…and if you get outed, “just talk to de lawyer man…professional liar man…” to quote David Lindley…

  12. John Papola says:

    @Jon Taplin

    Don’t suggest I’m making any excused for Dimon. I’m clearly not. Rather, I’m asking for means of making the “Volker Rule” compatible with the “rule of law” and not the “rule of captured crony bureaucrats and political operatives” as is politicians like Obama’s preference.

    Your definition of “speculation” is made up. Loans are made without collateral all the time and not considered “speculation”. They’re simply unsecured loans. Are you suggesting that all unsecured lending is “speculation”? So credit cards are “speculation”? That’s not a broadly accepted definition, Jon.

    All financial activities involve risk. The distinction between “investing” and “speculating” is subjective.

    Why not just stop having the damn government backstop these companies? They’re over leveraged because of the backstops and bailouts. No other corporate sector is as leveraged and no other corporate sector is as backstopped and “insured” (by the taxpayer). End the lender of last resort and these problems will return to reasonable blips.

  13. John Papola says:

    @Rick Turner
    Rick, you’ve just made the perfect argument against government redistribution power along classic “public choice” grounds. Concentrated benefits attract serious attention and rent-seeking while dispersed costs go unnoticed and lack an interest group to stand against them. Now apply it universally.

  14. Rick Turner says:

    John P., we’re all here so close to agreement…it’s kind of amazing.

    The government only got into the backstop business to try to convince folks to pull the gold, silver, and paper money from out under the mattresses and into the banks and onto Wall Street to churn it all, and churn it did. And then some really smart folks got even smarter…and greedier…and realized that as all this cash could be spun into such a mass of froth that maybe nobody would notice a significant percentage of it being turned into compensation and bonuses for what? Light shows projected upon bubbles?

    And now we have stage appearances of holograms of dead rap stars… Check it! Tupac…

    The technology of spin has exceeded the capacity of ordinary folks to grok it. You have to be full time in “the game” to play it at all. You can’t be a small time investor, a share holder in a pension plan, even an owner of mutual fund shares and have any fucking idea of what’s going on with your money. This shit is so far from Main Street that it’s just incredible. And look at that word, “incredible”. What does it mean? “not believable” “without credibility” It does not mean “awesome”, nor does it mean “bitchin”, nor “fantastic”, though if you go back to the origin of that word, maybe it does…

    We’re living in a future where the winners are the scammers who manage to piss off the fewest.

  15. Rick Turner says:

    John P.

    There has to be a future where and when the pendulum does not only move from left to right, but from forward to backward as well. I would see the backward as being cognizant of our history without being immovable bound by it, as I see some of the neo-constitutionalists being.

    There is a lot of convenient ignorance of the conditions of the late 18th Century when the constitutionalists get to blabbering. They seem to completely ignore slavery, the standards applied to allow voting (as in no women, just for instance), the fact that the right to bear arms was based on single shot pistols and rifles that took at least 35 seconds to reload, etc. So I just don’t particularly want to hear about “the Constitution” as a holy document second only to the “Holy Bible”…the most conveniently edited text in the history of human kind…

    These days when anyone has the balls to ask my political affiliation, I say “Libertarian Socialist”, or I say “Socialist Libertarian”. And I happen to believe that “Progressive” is not a leftist political leaning, but rather a movement toward the future…a better future…which should be seen as being straight down the center and moving forward.

    So I keep coming back to some sort of center position that can take into account our need to interact as a society…and that’s maybe the “Socialist” part of it all. Infrastructure owned by society. And then the “Don’t tread on me” aspect of letting folks live as they like as long as they don’t mess with my rights to live as I please. And I’m sorry, but that does mean limits on “personal freedom”…like don’t fucking smoke a cigarette anywhere that I might breath in our socialist air…yes the very atmosphere that we all share. It means that we, for our own good and well being, may just agree to certain “rule of the road”, as in who gets to go first at an intersection.

    And it doesn’t mean that whoever has the most money to use lawyers to “protect” their “rights” should win every time. Therein lies the major problem with the libertarian fantasy…that a “free market” even could exist, and that it could uphold the rights of the less wealthy against the most wealthy. Just as we have now, he or she who can pay the most to the lawyers has the best chance of prevailing. Monetocracy, it might be termed…

  16. Rick Turner says:

    The more I ponder this, the more reasonable seems the strategy of money in mattresses…

  17. len says:

    Bad place to sleep, Rick. Lumpy.

    Too big to fail? Too complex to manage. That is a sign a dynamic system is about bifurcate.

  18. JTMcPhee says:

    @Rick Turner
    The reason ordinary people, and a lot of trained physicians too, should not be allowed to write prescriptions is that they don’t have the depth and wisdom to “do no harm.” Papola’s fixation recalls a family doctor my folks took us to when we were very young — great manner, but for him everything was an allergy. The final straw was when I broke my arm, and rather than a cast, he suggested another round of microdoses of allergens, to see whether my immune system could fix the fracture.

    And agreement on a few of the bits of a diagnosis does not seem to me to be any reason to buy into the neat, carefully tended, wrapped-around-reality, seemingly rational and logical world view of a quack. Ancient physicians, for a big fee, would bleed and blister and shave and freeze and prescribe pills of colored chalk and inject toxic enemata to “cure” the ungratefully dying patient. For those that maybe wonder about what a “libertarianized” world looks like, jump on over to the workings of an Ideal Libertarian Mind, laid out by Yves Smith at Naked Capitalism. There’s so much dreck, it had to be broken into several parts, and here’s Part I: http://www.nakedcapitalism.com/2011/11/journey-into-a-libertarian-future-part-i-%E2%80%93the-vision.html

    Papola and his associated True Believers have antecedents. Maybe one might recall the dynamics of the “socialists” in Olde Russya, the Mensheviks on the one hand and the Bolsheviks on the other. Or how about the English and French revolutions, and the stuff those untidy spans spawned? Seems to me that from all the “libertarians” I have encountered, the most of them come down on the Bolshevik side, of diktat, THEIR diktat of course, which they are convinced is True Freedom, as the governing principle. For all their BS about Noble Free Market Uncoerced Transactionalizationalism. They contend for an environment in which they believe their tribe, their subspecies ,can thrive, (at the expense of others of course.)

    Humans are messy, greedy, too usually ignoble creatures. Until somebody has a fix for that, maybe some ineluctable genetic jump-switch programmed into a rhinovirus, good luck with all that complex, carefully scripted, fully fraudulent, Apparent Utopianism.

  19. JTMcPhee says:

    Too big to be ALLOWED to fail, or so big that “it” can beat back the engineers and mechanics trying to “fix” it — so many sci-fi stories that include giant intelligences that resist human resentment (“Open the pod bay doors, HAL…” At least in that one, Dave was able to Innovate a work-around. I don’t see BofA or GS or the latest distraction from the central failure mode, Jamie Dimon, giving out that fading plaint, “I can feel myself going, Dave…)

    Is that “dynamic system,” or “dynamic system of systems of systems,” going to bifurcate, or more likely http://www.youtube.com/watch?v=-MAFvUwSHB8 (Yeah, I know — this particular failure mode doesn’t happen any more. Does it?)

  20. len says:

    I can’t see YouTube from this desk, JTMc so don’t know what the alternative is, but once a system exceeds its control ranges too frequently, it’s a prime candidate for breaking up into manageable pieces or barring that, it augurs in hard and takes the crew and passengers with it with the exception of those who see it coming and bail out early or take to the lifeboats.

    My sense of what Jon talks about in terms of the new states rights (Obama is the new George Wallace of gay marriage but I digress), is a way to talk about reorganizing the controls to shorten the signal distance/time for necessary and immediate change. He is living in a state that one writer described as quickly spawning internal hell holes and that is what one expects to see in a poisoned body, yes, little fistules erupting and in their case, the Cali neighborhoods that are literally imploding in the middle of other gated neighborhoods of unbelievable wealth. California is not the model of how to get it right but of what precisely has gone wrong. Y’all can sort the causes but the symptoms are right there on the blotchy faces of the rent maps.

    Jon goes long on kicking Alabama ass. Truth is, he never comes here and seldom actually understands what is going on here. It is beneath him and that is the surly issue at hand for this country. Some things are working but they defy the cultural frame of the pundits and so must be overlooked or explained away as aberrant outliers. Alabama is not a great cultural oasis (the Muscle Shoals folks might argue with that) but it tends to manage the money frugally and buy what is worth keeping (first 911 system, first state wide PBS, first man to moon and so on). Lots of room for improvement but getting there. It turns out that the immigration law may be ugly, but it is working. Go figure.

    Don’t like the MIC? Me either but if they are letting out contracts you don’t want there on the Left Coast, send them here. Somehow I don’t think that will happen. Glorying in Pepperland didn’t send the Blue Meanies into exile and I don’t think bragging about Appleland means they are ready to send Lockheed Martin packing.

    If we don’t get the big three ticket items under control, all of this economic ranting is spittle in the campfire. If we don’t get serious about taking the more vicious bears on wall street to the remote woods and dumping them, no one is coming to Jellystone this fall. What we are experiencing is not as much an economic collapse. That is a symptom of the disease. The disease is cultural rot and in this domain, Jon and his MerryMakers can step up to the camp bandstand and do a number that moves the campers. They don’t and that means they don’t actually have a set ready or they are just too good for this gig. Either way, very soon they won’t matter.

    David Crosby, on the other hand, put together the artists and materials for an album to help the OWS folk survive another hot year, and for that, the groundlings say thank you, sir.

  21. len says:

    @jtmc: take a look at this


    and the notion of values. Note that values are not controls. They are inputs. In the case of Dimon, somewhere in the black box of JP Morgan, the system is overdriven and the time to measure a reference and the impulse to exceed it are too great. System fail. Now look at David Crosby: he wasn’t there to initiate the movement but once he recognized it, he gathered his friends with similar values (his clan) and used their best resources (skills) to initiate a corrective and sustaining act. He had the time and he understood at what intensity and timing to input the value (change the reference).

    Both will affect the culture. Which clan do you think has the most impact on the environment for longest duration, a clan of bears devouring kills and leaving bones bleaching in the sun or a clan of byrds spreading seeds and a little bird poop?

    This may be a failure of economics but economics are bird poop. Culture rot is a failure of the seeds. Consider that metaphor in terms of an election where we have to finally decide what we want to be on the other side of the chasm. Me, I’m a Joe Biden fan. He does get it.

  22. Rick Turner says:

    This just in from “Music Trades”, lifted from an article on how Guitar Center is opening more brick and mortar stores while losing on-line sales to Amazon:

    “Notwithstanding solid operational performance, Guitar Center has been hobbled by a crushing $1.56 billion debt burden that was incurred in late 2007 when Bain Capital acquired the business for $2.2 billion. Since the acquisition, the company has consistently operated in the red, unable to cover the approximately $160 million in annual interest expense. The steady losses have triggered regular credit “downgrades” from the ratings agencies Standard & Poors and Moody’s.”

    Way to go, Mitt!

  23. JTMcPhee says:

    Re Dimon, since he’s unlikely to suffer any consequences and is still walking around with (almost) everything a self=pleasing greedhead might want, and since the sun rose and my Social Security check will be direct-deposited today, it’s hard to figure how a multi-billion “trading loss” in the casino that is “making people obscenely rich” is a “system fail.” I can at least hope that David Crosby’s music will be one little bit of what might lead to Something Better, but then did Dylan or Peter, Paul and Mary bring “an end to war”? (Bears poop too, I am reliably told. Fertilizer is everywhere.)

    That wiki piece seems redolent of what the critique notes is “compliance to a conservative view of the broader social order.” There’s a lot of reasons humans do things, and a lot of labels people attach to emotions and sensations and their manifestations in the “real world,” as a way of sorting and ordering and rationalizing, and my notion is that there are some broad categories that can point in the direction of understanding, but nothing accounts for everything. Especially in the collisions and exchanges and “fails” that are humanity, day to day and over longer spans. The wiki piece was nominally about delinquency in young people, I guess, but what I see and think or claim to understand of local and larger culture and society is a whole lot more complex and chaotic and incomprehensible than even the fuel control unit for the T-53 series of turbine engines. Which reportedly produced eventual madness in the guy who designed it.

    And I still do not get in what possible way SS can be considered a part of the “national debt” that so many are concerned about, since it’s not funded by “taxes” but by forced contributions to a broad savings program to protect against the worst efforts of the Henry Potter Rich Shits to strip all wealth off the rest of us, as in http://www.latimes.com/news/opinion/commentary/la-oe-ehrenreich-stealing-from-the-poor-20120517,0,7201749.story. What sort of control function applies to that sort of behavior? I guess there’s an open question, mediated by the relative power of people who make up “the market” in their various roles, whether that set of behaviors (600% interest, unpaid labor, etc.) is value=”good” or something else.

    And the video was that little clip of that early V-22 bashing and crashing itself and its crew to death. Don’t have film of the UH-1H, just being delivered from the depot ship in like November 1967, crashing in my company area because an impaired Textron worker over-torqued one of four 1/4″-20 bolts through the left front swashplate horn where the up-rod from the left cyclic control system attached, starting a tiny crack that resulted, after 10 hours on the airframe, in an instant, “uncontrolled” roll left and crash, on top of one of my crew-chief buddies, from about 200 feet up. (Pilots and door gunner survived, battered.) Shit happens.

    Seven billion of us mostly don’t care about PERRT charts and flow diagrams and neat theories of “control.” Even if we are, in part, nothing but nodes on vectors…

  24. len says:

    @Rick Turner

    Consider the rude effects Guitar Center has on the local music shops and there is a rough justice in this with the exception that Bain walks away with the money from both. He is of the Clan of Prep School Locusts who discovered digital money Dyson vacs and put them to work in his neighbor’s living room sucking up the dust bunnies and the carpets. He created nothing.

    Job creators my fat patootie…. The only way to create a job is to create a demand. If the Republicans wanted to create jobs they’d be sure the middle class has jobs and then flood the market with good blue jeans made in America.

  25. Rick Turner says:

    No argument from me, though I’ve been a supplier to GC as well as an observer.

    In fact, manufacturing is coming back to the US in my industry. We’ll see how that plays with the money wallahs.

    What I’ve told several people who were interested in starting up music stores is that they should locate next to or across the street from a Guitar Center and then carry absolutely nothing that GC has in stock, not even strings. Go all boutique products and piggyback on the advertising draw that brings people to GC. Set up a fantastic repair department, and have some great locals teach music lessons. Allow for a McCabe’s-like little concert venue. When clients come in wanting strings or cables or picks, tell them to go to GC and see some particular designated sales person.

    Where the Bains and GCs and WalMarts are, there are also opportunities for picking up on what’s between the cracks.

  26. len says:


    The thing to note is the notion of the Clan where shared values define them. Another thing to note from non-sociology control theory is the transfer function. Somewhere in the system a function (controller) is observing outputs and comparing them to the inputs, checking the value range (enumeration or min/max) and making adjustments to the inputs to get the system back within normal operating ranges. The Clan values keep the clan from bifurcating but if there are irreconcilable differences among members about those values, the Clan bifurcates. Think about a church that splits into two churches.

    IOW, Dimon can claim this is all abnormal but either he is rapidly adjusting those inputs, or he is lieing and if he is lieing the greater clan to which he belongs, say the US social system has to bag his ass or the US Social System itself is bifurcating. I suggest the latter is what we are seeing and it isn’t a good thing. What Jon said about no prosecutions…. What John P. said… Obama did not take heads. He said in effect to the country, “my friends are above the law”. Bad thing to do and he would be out of a job if his opponent weren’t an even more glaring example of a Clan gone rogue or let’s be clear, criminal.

    Crosby? In the beginning the old schoolers sat on their royalty checks and watched but something somewhere moved them to react. Their core values took over and then Arlo and Pete went to the park, then David and Graham, and others have followed. They do understand that artists such as they are the transfer function. Sir Elton stepped up after 9/11 and told the rest of the superstars to quit whining and get on those planes and start earning their keep. That’s what I mean: they measured, they compared and they acted. And that means to me they are still the heroes of old: grayer, calloused, not as much wind, a bit slow on the upbeat but they still hold to those values that made heros of them and there is at least one good fight worth fighting. They are still the clan that care. They still Give a Flyin’ Fuck as Callie said.

    What the pundits didn’t get about OWS and still don’t is that it isn’t a political movement at least not as they are used to putting a pin in and putting on a chart. It doesn’t have a set of claims fo them to disect and sensitivity test. It will not become a possession of the big data server farms ready to be analysed, addresses extracted, ads and inquiries targeted and fired, and ultimately smothered.

    OWS is the cry of the human heart, the real human spirit. It is not a cause; it is an expression.

    Not to speak for the Arab spring or others although I think the cause is the same, but in America, it is that we will not forget that we came here for freedom, died for freedom, worked for freedom, and live free. We know that freedom made us great, satisfied our hungers and feeds our souls. We reject NDAA. We reject laws designed to keep us safe at the cost of making us compliant and docile. Freedom is the one value we hold in common and if at the end of a process we measure the output and discover we are less free than when that input was offered, we know what we have to do. Find out who is putting that signal into the box and take away their encoding rings. And if they try it again, take them out of the system. All the way out.

    Stills sang it. David works for it: find the cost of freedom. They did not stop a war but they made us remember we weren’t going to be better for it. Shit happens but we clean it up. Today, I am prouder of them than I have been since I wrote Reefs of Contentment 20 years ago because I looked around and all my heros were turning stone faced stupid. It seems they finally remember their own names, look in the water and see their own face in a two moon sky, and they act. That… is beautiful. And the clan says thank you.

  27. len says:

    Rick Turner :Set up a fantastic repair department, and have some great locals teach music lessons.

    Exactly right! Go with the Clan that brought ya!

    Good for you, Rick.

  28. len says:


    To answer one question: a PID controller (Proportional Integral Derivative). The concepts are simple enough.


    Note the behavior when the integral is the only focus of attention. Note the emphasis on tuning.

    If the Clan fails to pay attention to the controls or the maintenance of the system, it augurs in. The last fifteen years and probably earlier have seen the wealth of a nation lavished on keeping us from doing precisely that. What is simple is overcomplexified; what is complex is left to others to maintain. But if the basics of this are practiced at appropriate scales, it will work.

    99% of what we debate here regards the Interregnum and the New Federalism avoids the problems of applying PIDs to the right scales. Do that and the relationships that seem to occupy so much of the debate tend to vanish in importance. They simply work. It would be interesting to see the economists here try that approach instead of continuing to play Spy Vs Spy to influence an election.

    As the sign says on the wall: You Can Point to Blame or Own The Problem.

  29. John Papola says:

    @Rick Turner
    I’m in a whirlwind of business right now, but I really like the space you’re groping around in. I’d love your thoughts on this:


    I see this as where our two concentric circles can meet.

    PS. government backstops and cronyism with banking are as old as time. They not only pre-date the Fed in the US, but are in large part the cause of the panics and problems that became justification for that horrible institution. For whatever reason, Canada faired much better with a much safer, more free-market banking system. Even today it’s better, despite the “regulations”.

  30. JTMcPhee says:

    @John Papola
    What’s with the duplex notion of “bankers?” Back not so long ago, it was the “Scottish bankers” of the Powered Loom and Coal Burning Age that were the supposed models of freemarketry, driven to do right by reputation alone, even though they were pretty straight crony types with the usual feet of clay. Yards, actually. Now it’s the “more free-market” Canadian bankers, of whom and by whom it is said that “Canadian banks prosper thanks to strict regulation.” http://www.greenmountaindaily.com/diary/8738/canadian-banks-prosper-thanks-to-strict-regulation Take a moment to google “regulation of canadian banks” and gee, pretty exclusively there’s praise, even from the bankers themselves (who don’t get to play with Dimon), the Canadian central-government-regulated regime has worked pretty good in hard times.

    The trick, as our systems designers point out, is having the RIGHT control/regulatory frame, without all the complex cross-talk that goobers up the sensors and warps the feedbacks into divergence rather than convergence on steady-state. But then libertarianism is not about “steady state,” is it?

  31. len says:

    Not steady state. On course below not to exceed. A flying pendulum.

  32. len says:

    One alien asks the other, “If we have so much advanced technology, why are we building this pyramid with rocks?” The other alien answers, “Because monkeys maintain it.”

  33. Jon Taplin says:

    @John Papola -I like Hayek’s UBI idea. What would be a fair amount per year?

  34. John Papola says:


    I was talking about the Canadian banking system in the 1920s and 30s. No central bank. National branch banking. Private note issuance redeemable in gold. In short, a free market banking system. It had ZERO failures during the depression.

    The same can be said of Scotland during the Scotish enlightenment relative to Englands increasingly monopolized system under the Bank of England and it’s many crises.

  35. John Papola says:

    @Jon Taplin


    I’m not sure. Morgan actually has a brilliant idea to use a labor auction system ala ebay meets craigslist so that those on the system aren’t disincentivized by the entitlement (which is what our current system still does, includeing/especially SSDI).

    Amount wise, it should be enough to ensure protection from privation, but not so much that people just live on it by choice as is the case with the broken, hopeless Euro welfare states with their 20% plus youth unemployment during boom times.

    It should replace welfare, UI, social security and medicaid. I’d like it to scrap medicare as well, though that is more complicated (though maybe not, since medicare is largely an inflationary over-consumption mess).

    So, shooting in the dark, I’d say somewhere between 12k and 15k. I’m inclined to say it should not be indexed for regional cost of living at the federal level. If a rich/expensive state wants to supplement it, fine.

    There’s a difference between the social insurance state and the corrupt regulatory administrative state. The former is likely wasteful but and somewhat harmful, but could be a force for egalitarian protection. The latter is a hopeless, destructive central-planning crony-empowering nightmare with no redeeming value that should be completely abolished.

  36. John Papola says:

    Here’s a quote that I’d love to hear refuted as it’s very germane to this notion of “regulation”.

    “If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reason also reject every kind of government action” – Mises.

    Now, I’m not posting this to be a total narrow dork pontificating pithy truisms, even though, in effect, that’s what I’m doing. Rather, I’d love to hear a refutation that actually makes sense, because I’ve never heard one. I hear, including from Jon, that my worldview is somehow predicated on an assumption that people are good and will do the right thing. I find myself having to repeatedly reject that assessment and point out how it’s pretty much the exact opposite. It is precisely the fallibility and moral weakness of mankind that leads me to wish for the most defused structure of power possible. This interaction between man’s nature and the system of rule and institutions which will help give rise to the best possible society is the classical liberal agenda. It’s what Mill and Smith and Hume and Hayek had all explored.

    In contrast to that stands the “progressive” or “platonic” view, which is rooted in the perfectibility of man and the use of the state by topdown “experts” as a “scientific” mechanism. The imposition of “standards” by said experts is part of this flawed, “objective” fake science agenda. It has always been the progressive approach which REQUIRED infallible men, philosopher kings, who would dispassionately guide us to moral and national greatness.

    Put another way… the classical liberal believes that we should toss the Ring of Power into the lava because we see that it transforms whoever wears it into a monster. Absolute power, the monopoly power of the gun, corrupts absolutely. Always has. Always will. Put yet another way… people are fallible, and so are politicians.

    The “progressive” approach seems to protect the ring of power and hope beyond hope that the “right guy” will put it on and deliver us to valhalla.

    It continues to confound me that very smart people flip these two orientations, treating the liberal order as if it requires saints and the progressive order as if it checks our flawed nature. Why does this happen? What am I missing? Is it as simple as “social signaling” where political views are generally held because of the surface rhetoric and the emotional appeal it imbues? Saturday blather while I take a break from doing my shot list…

  37. JTMcPhee says:

    >}~` ,WD/

  38. JTMcPhee says:

    @John Papola
    What possible reason would one have for wanting to “refute” a sentence that happens to make the well-trained, salivating neurons of a true believer sit up and sing? But it seems to me that two words let the gas out of that bag pretty directly: “history,” and “reality.”

    Re Canadian banks, which did their work pretty well through this latest Rich Shit-induced collapse, both the bankers and the ordinary people of Canada seem for some foolish reason to believe that their system of central regulation (that horrible word) saved their Canadian bacon. I don’t know where you dig up your references for your breathtaking generalizations. And you still believe that Olde Scottish Bankes were well-self-what?-balanced?-regulated? And your authority for the proposition that little old Canadian banks back in the ’20s and ’30s were the same? No rules, nothing but people seeking their own selfish interests, all humming along? http://www.jstor.org/discover/10.2307/2077768?uid=3739600&uid=2129&uid=2&uid=70&uid=4&uid=3739256&sid=47699015942217, and a whole bunch of other complexities not accounted for in your blanket approbation.

    Never thought you think people are inherently good. Pretty clear the system you contend for is based on the basest of behaviors somehow magically balancing each other.

    What we got is not so great, for sure. There may not be any way to fix the whole thing, but I keep coming back to that series Yves Smith put up, on how your libertarian world would work. Got any “refutation” for that dystopioeconomacallifragilisticalisia? Or any part of it?

    Keep working on those videos, though… great propaganda.

  39. Fentex says:

    Here’s a quote that I’d love to hear refuted as it’s very germane to this notion of “regulation”…

    “If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reason also reject every kind of government action” – Mises.

    Well, because you asked, it’s a logical mess because it relies on presumptions in the first part (how fallibility and moral weakness might contribute to a failure of laissez faire) then ignores them in the second (how faillibility and moral weakness might contribute to a failure of laissez faire).

    Because if what may lead to a failure of laissez faire is particular to laissez faire there is no reason to suppose it applies to something else selected precisely because it is thought to avoid the failures of laissez faire.

    Which is to say that if, for argument and illustration, laissez faire is thought to be subject to moral fallibility because of a lack of peer pressure and using a plan of elected governance to explicitly apply peer standards the quotes presumptions are incorrect.

    In that example a different thing is done for governance for the second part of the quote explicitly because it addresses the concern in the first part and it is an error to ignore the difference which deserves it’s own consideration.

    After all it isn’t hard to see the flaw in this invented quote I write to highlight the logical flaw…

    “If one rejects gambling to increase fortunes on account of luck’s fallibility and moral weakness, one must for the same reason also reject every kind of risk and investment.”

  40. JTMcPhee says:

    Worgon and Papola love anecdotes and carefully selected microbits of text that tenuously link to their Hard-Rock Worldview.

    So here’s an illustrative bit about the new sweatshop-piecework-vastly-and-fastly-growing micormacroscamworld of “crowd sourced labor.” A great way to outsource, with none of the expenses (externalities?) of setting up call centers in foreign lands and having to deal with “regulation” of any sort. And of course, when it comes to packing the internet with fraudulent “reviews” of, say, hotels infested by roaches and “professional women” with a flood of micro-reviews, for which “Turkers” pay a buck or two, what a great and growing (133% last year!) Land of Opportunity!

    The title of the little piece is so gentle and neutral: “In crowd-sourcing, doing piecemeal work for peanuts.” http://www.tampabay.com/incoming/in-crowd-sourcing-doing-piecemeal-work-for-peanuts/1230896 Sweet! Dumbo, learning to fly! Magic Feather held high!

    Papola has a nice bit he can extract, and cite elsewhere, to show how his version of the New Economics actually works! See?! And of course Worgon, and now Papola, LOVES the IDEA of “contracting for work.”

    The community, says Mechanical Turk’s vice president, Sharon Chiarella, is largely self-policed. “Workers and requesters earn a reputation on Turk,” she said. “And we make it clear to requesters that if they treat workers poorly, they won’t work for them anymore.”

    This from one of the New Entrepreneurial Overseers, of course, who would NEVER overstate the case, right?

    But of course the reporter, presumably salaried, with benefits, was honest enough to add this:

    While some workers can make six-figure annual salaries on more sophisticated tasks, one of the fastest-growing job segments, up 133 percent last year, is micro-tasks, such as the ones Amy Ellis of Alpine, Texas, does when her 2-year-old daughter is at school.
    “I’ve done things like 100-word product descriptions that pay $2.25 each, like why you should buy this brand of fluffy towels,” she said. Like many of her fellow microtaskers, she gets her work from Amazon’s Mechanical Turk, an online labor market that pairs businesses, or “requesters,” with “Turkers” who compete for HITS, or “human intelligence tasks,” for a specific price and time-frame. One recent job listing on Turk, for example, offered to pay 2 cents to “copy text from business cards.”

    Like others, Ellis has also discovered the sleazier side of crowd labor, starting with scammer workers doing product reviews who just rip off content from other sites, and scammer requesters who are looking for fake reviews of businesses.

    “My favorite one,” she said, “was a hotel in Virginia that had all these negative ratings on Yelp — cockroaches, hookers in the neighborhood, that sort of thing — and they were paying Turkers 4 bucks to read about the hotel online and write a 4-star review, even though they’d never set foot in the place.”

    And the takeaway, for those of us who maybe are a little more honest, is this:

    The larger question — and one with huge global implications as crowd sourcing redefines and, in some cases, kills traditional jobs and long-established labor-management models — is whether the crowd labor pool could essentially become one big worldwide digital sweatshop. While industry studies show that average hourly earnings across all categories range from about $7 in India to $16 in Western Europe, the fast-growing segment of micro-taskers earns half of that on average, and some make only $1.50 an hour.
    Lilly Irani, a doctoral candidate in informatics at the University of California at Irvine who has studied crowd labor, says these unrepresented workers remain ripe for exploitation.

    Which of course behind the “libert” part of “libertarian” is the real nature of the beast.

  41. len says:

    @jtmc: one of the first things first noted about the world wide web was how easy it was to game. TimBL blithely labeled that a “social problem”.

    So witless technology amplifies our weaknesses not our strengths. The emperor’s nightingale.

  42. JTMcPhee says:

    And for those who have the cramped notion that “austeritoabstentionism” is the cure for what ails us, a simplified explanation, pointing out the unconscious genius of the “crowd” that apparently created the “Monopoly” game version you get from Parker Brothers, complete with realistic features like “Get Out Of Jail Free” cards that you can buy from other players, a redistributive “Luxury Tax” that’s apparently needed to keep the fiat money flowing, and of course that massive, ineffable “Chance” pile, in recognition that innovation and skill and diligence and hard work can still wind you up in bankruptcy, there’s this little reference:

    “J.D. Alt — Playing Monopolis Monopoly: An inquiry into why we are making ourselves so miserable.” http://www.nakedcapitalism.com/2012/05/j-d-alt-playing-monopolis-monopoly-an-inquiry-into-why-we-are-making-ourselves-so-miserable.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

    Could it be that “austerity” is really just a scam by banksters, of all stripes and spots, to keep looting the wealth the rest of us labor to create? Even if it’s just pieceworking fake reviews of roach-infested hotels? The model that Papola and Worgon and so many others contend for, where old Henry Potter, the “richest man in Bedford Falls,” ends up owning and renting back all those homes and businesses? Because of the way he is able to play the game?

    Waiting for someone to “refute” this…

  43. John Papola says:


    For all of your talk, you don’t attempt to lay out any alternative. Mine wouldn’t (and couldn’t) be a perfect world. The question is, how good can we get compared to the available alternatives? How can we establish and maintain rules for social order that allow the maximum of freedom and prosperity for the most people? You don’t offer any positive vision. It’s all criticism. Everything sucks. Okay, fine. I don’t know why you bother commenting.

    PS… there’s been very very little “austerity”. Sounds like you’re buying into political rhetoric. Total government spending throughout Europe and the US is still near all time highs. Propaganda abounds.


    Mises point isn’t as broken logically as you’re making it out to be. It does make assumptions, though.

    Because if what may lead to a failure of laissez faire is particular to laissez faire there is no reason to suppose it applies to something else selected precisely because it is thought to avoid the failures of laissez faire.

    You are treating “laissez faire” like it’s some sort of “system”. It’s not. “Laissez Faire” is allowing individuals the ability to do whatever they want provided they respect contract arrangements, established property rights and operate honestly. But the “failure” of “laissez faire” if those classical liberal rules are working would simply be the “failure” of people themselves.

    What you’re missing is establishing what “failure” actually is talking about. Of course, the quote doesn’t do it. But I think he’s talking about “failure” as in “sub-optimal outcomes”, or perhaps so-called “market failure”.

    Now, let’s take your example:

    Which is to say that if, for argument and illustration, laissez faire is thought to be subject to moral fallibility because of a lack of peer pressure and using a plan of elected governance to explicitly apply peer standards the quotes presumptions are incorrect.

    The quote applies to this. If free people won’t hold each other to account through peer pressure… why should anyone expect those same people to elect a government which would do it for them, composed of members from that very group? You see?

    “If one rejects gambling to increase fortunes on account of luck’s fallibility and moral weakness, one must for the same reason also reject every kind of risk and investment.”

    This is not an equivalent, despite the clever similarity. Gambling and investment are similar but not the same thing. Gambling is random and there is no potential for productivity-based return (it’s a zero-sum game between you and the house). Investment can (and should) involve actual review of the actual activity and it’s potential to deliver productive return (success grows the pie for everyone). So “luck” is not the main force underpinning both gambling and investment.

    But people ARE the central force of any order in political economy. If the people are too flawed to create competitive rules (laissez faire) that lead to progress, then any government of the same people shouldn’t be expected to behave any better.

  44. JTMcPhee says:

    @John Papola

    people ARE the central force of any order in political economy. If the people are too flawed to create competitive rules (laissez faire) that lead to progress, then any government of the same people shouldn’t be expected to behave any better.

    In my experience at least, “the people” are not fungible. There are good ones, in many flavors, and bad ones, in more (and less appealing) flavors. You still got a big old logical fail going there.

    As far as who bears the burden of proof and persuasion on how to make a system that fosters goodness, however you want to define that, we are engaged in a little polemical deal here, a “voluntary transaction,” and you have made it absolutely clear that you are wedded, neck and foot, to your carefully constructed set of notions, so all that seemingly is left to others is to point out the fallacies and failings and flailings in what you are selling. You talk about overlapping circles, a nice little Venn diagram, where non-“freemarketeers” might buy into and support and help you make manifest some parts of your manifesto. But your circle, if one steps back, looks a lot more like Ms. Pac-Man than a nice bland equipotential Other Circle. It’s an old game, getting the tentative squishy “on the other hand” liberal types to open themselves to “agreement,” on the way to being absorbed and submerged by the more driven, better-organized, more self-interested folks – turning those who ain’t just in it for the money or the clout into the spear-carriers, and spear-catchers, for the more Machiavelliean types.

    Who, asked the Caterpillar, are YOU, who is claiming to want to develop and maintain rules (also known as “regulations,” at some level) for that “freeing” social order? I look at where your version of the rules would take us all, hiring our own security forces and paying “insurance” like the small business people on the South Side of Chicago did to some guy named Capone, who did impose a kind of social order that sure freed up certain people to do whatever. The “legal system” you would have to have for your magical world to work is itself a chimaera, an apparently all-powerful, all-wise legislature and judiciary and some kind of enforcement, that would create and impose just the perfect limited set of frames for all commercial endeavor, and provide a place for those who are equal enough to sue one another when the ol’ debbil greed got too good a grip on one or the other.

    What I would propose? Guess what!

    And as a person who rejects any mite of “keynesianism,” worried as you are about “government spending” and how tax receipts are less than government outlays, blowing past the reality of nation-statism, you of course have no truck with MMT, and the reality of fiat currency. Made any headway into Grabauer’s tome on “Debt: The First 5,000 Years”? or is that just anathema to you?

    Seems to me the realists, the sensible people, the ones who are acting in ways consistent with species survival, are the ones developing “intentional communities” with a goal of local self-reliance, with the hope that there will be a larger revulsion at Kleptocracy and some bits of bigger government forms that aren’t as sick as what your basic human nature has produced presently, which libertarianism can only foster, faster, far as I can see.

  45. John Papola says:

    So you think I’m engaged in a conspiracy to convert people driven by nothing but evil craven self-interest? You think that my like-minded friends are more organized than the big government crowd? You don’t know me at all or my motivations. It’s okay. You only know me from this tiny forum. But it’s not okay for you to think that you know. You don’t. I’m not a trickster. I’ve got nothing to hide. My hope to win people over to the ideas I like is plain as day. And why shouldn’t I?

    My motley crew of classical liberals lives in the political wilderness, JT. Look around. Look at the world. Look at this year’s election choices. Nobody is listening to us or using our ideas. It’s the ideas that animate me. At the center of them is peace. Not money. Money is medium of information and exchange. A tool. Nothing more.

  46. Fentex says:

    Gambling and investment are similar but not the same thing.

    Exactly the point; as one form of governance and another are similar for both being forms of governance they also may not be the same thing and may not have the same flaws.

    Pointing out the logical flaws of the quote is not arguing the merits of models of governance. I only responded to a request to test the quote.

    Obviously what was meant, but not said except by metaphor, is that if people fear laissez faire for it’s opportunities to be abused by people unconstrained by regulation why not fear a strong government with the tools to oppress built in that may be captured by the same enemies?

    On the subject of quotes expressing that I like this from C.S Lewis…

    Of all tyrannies a tyranny sincerely exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.

    The libertarian argument is that all things being equal in the first instance your enemies have less ability to oppress you. While others often believe our common interests require, in the absence of anyone and everyone having the ability to serve them, institutions constructed to do so.

    I agree that in the first instance the banks should have been allowed to fail. I think that privatising profit and socialising risk is a corruption of both capitalism and socialism and prima facie evidence of oligarchy rather than democracy holding power.

  47. JTMcPhee says:

    @John Papola

    Uh-oh, did I say anything about “conspiracy?” Were the Founding Fathers “conspirators?” You’re just proselytizing for your worldview. Right?

    I just challenge your faith. Since there are hierarchies, as an inevitable given, which always end up being run by grasping, corruptible, even evil humans, because that’s the traits that prosper, by history and observation. I question whether the rest of us will be served even as well, let alone the likelihood they will be served (‘serf-ed?’) worse, by the advent of a Randian-Hayekian-Misesian-sounding structure, like the ones laid out in that series of “real Libertarian” pictures from Yves Smith, than by the inevitably present forces of benighted self-interest that subvert and manipulate institutions that nominally are supposed to be driven by Enlightenment-inspired insights and aspirations. Which at least carries along the seeds of cognitive dissonance, where the reality of subjugation and predation might finally break through to people steeped in notions of “equality” and “liberty” and of course “fraternity,” who can see that there’s enough of everything that matters to go all the way around the table, except that the greedy, organized, motivated few hog all the goodies and have figured out how to sucker the rest of us into fighting over the scraps. A sloshing of the stew, as seemingly is happening in places like Tunisia and Egypt and even Syria. “This far, and no further.”

    As to “evil, craven self-interest?” There’s a range of self-interested behaviors, from A. Hitler and J. Stalin and Pol Pot to L. Blankfein and J. Dimon and pachinko balls like Boehner and Reid and even Obama and his band of merry men and women, down to some doctors and nurses I know and the bits of human spirit on the “good” side revealed in stuff like the body casts excavated from Pompei, what seem to be parents trying to shield their children from the pyroclastic flow. I can say that from what I understand, maybe just “believe,” about what would go along with the advent of the rules of social order that you contend for, I personally would not feel any kind of “peace” living in that kind of world.

    It would be interesting, and mostly futile, to test the parameters and perimeters of your notion of what constitutes “peace.”

  48. John Papola says:

    Challenge my ideas all you want. I love that. But I won’t abide by the assertion that my goal is to secretly ruin the world for my own gain. My goal is the same as most normal people when thinking about politics: how do we get to a better world with more opportunity and material wellbeing for all, especially the least among us.

    So, let me ask you something. You question how well we’d all be served by a more classical liberal world. Okay. Compared to what? My liberalism isn’t about living in a world without rules. It’s about living in a world where the rules set by the monopoly state must be applied universally to all people. No picking winners. No corporate welfare. No bailouts. No “regulation” that hurts everyone but the cronies.

    Yes, it’s hard to imagine how we get there, given the power of the cronies. My best hope is through education. Build a cultural demand for classical liberal governance.

    So what’s your alternative?

  49. JTMcPhee says:

    Re gambling and investment: If you read the WSJ and FT and all that stuff, and if language has any meaning, the hugest part of what used to be “investment” is very blatantly and bluntly and “See, we warned you about ‘risk'” obviously “betting” and “wagering,” on money moves that have little to nothing to do with accumulating capital to make or do socially useful stuff. As I see it. The “London whale” (current lightning rod and prurient distraction from derivatization) worked in “investment bank,” making obviously huge wagers with counterfeit “notional money” that gets its “value” from the expectation that real people doing real productive work will create wealth that can be stolen to pay off on the bets that both sides, both “counter-parties,” know are nothing but a giant fraud on the rest of us.

    Re C.S. Lewis, of course he had a problem with a busybody female relative as I recall, and I remember an associated phrase that might have colored the observation you cite:

    “Some people live for others, and you can tell the others by their hunted looks.”

    I recall a conversation with a Vietnamese while I was in Vietnam, about the nature of politics in their version of oligarchy, which ours was seeking to cement in place. “We” were nominally going to bring “democracy” to them, well actually shove it down their resisting throats.

    This brought out the observation that (I forget the Vietnamese) in his world, there are two kinds of “politicians:” “empty,” and “full.” When first “elected,” the empties have seemingly insatiable demands for baksheesh and “stuff.” As they age in office, the demands lessen, until they stabilize at the background level of “normal corruption,” which I’m sure is as present at a locally developed level in NZ as it is in our own large complex nation, at which point the politicians are “full.” “And you want us to take a chance, every two years by the system you want to impose, of trading our ‘full’ politicians for ’empty’ ones? Why should we ever want to do that?”

  50. Anonymous says:

    they stabilize at the background level of “normal corruption,” which I’m sure is as present at a locally developed level in NZ as it is in our own large complex nation

    I have no idea what the background level of corruption in the U.S may be, but here it’s indiscernible (yay for us, least corrupt country in the world ever since Transparency International started measuring).

    You want us to take a chance, every two years by the system you want to impose, of trading our ‘full’ politicians for ‘empty’ ones? Why should we ever want to do that?”

    You seem to confuse me for someone else (at least for this post) as I’ve made no suggestions about U.S governance in these comments at all.

    Perhaps you misunderstood my point in rewording JP’s quote to cast gambling in place of governance – I wrote that simply to highlight a logical flaw by using terms that clearly conflicted to raise obvious arguments about how one cannot compare risking your fortune on a roll of dice to making a calculated investment in a promising business.

    With the purpose of demonstrating choices of governance aren’t so bland that one can dismiss them all as being trivially equivalent.

    I did say I think the banks should have been left to fail, but not because I think government had no part to play. I think governments should have bought the remains at cents on the dollar and provided the cash flow needed for routine business to continue.

  51. Fentex says:

    That last comment was me, oops.

  52. JTMcPhee says:

    No digs at you, at all. My take on humankind is that there’s always going to be some slack in the system, more or less, depending on local tolerances and customs. I recall some remarks a year or so ago about the people who have recently taken power there in NZ, which is no reflection on your tribe — I would like to be free to move to NZ myself, at times. Congrats to all of you on keeping the corruption to a tolerably minute level.

    My recitation of that conversation in, and about, Vietnam in the mid-60s, was just a broad observation about the relative attractiveness of “democratic” processes in different cultures — where corruption is endemic and burdensome, even now from what I read, versus places less subject to kleptocracy.

    And for what it’s worth, I think we agree that there’s a necessary role for “government” to play in the modern world, the trick being to keep it from capture by the kleptocrats.

Leave a Reply