Tuesday, December 30, 2008

Time-Travel via Google

Damn! I can't seem to stop playing with Google Street View. One thing that I find seriously spooky: virtually traveling to other places can sometimes feel like virtually traveling to other times. Try visiting the first house you can remember living in, and you'll see. It's like visiting the past, though in some cases a past strangely, even horribly altered.

Here is a picture my Dad proudly took, circa 1958, of the garage of our house at 1800 Funston Ave. in Stockton CA. He had recently converted the attic-like upstairs room onto an elaborate den/study for use as he tried to get a law degree in his spare time (and attempt that failed). [All pictures are click-to-enlarge.]

Below you can see the same space today. Why would someone pull down a garage and a grape arbor and rip out rose beds in order to replace them with -- nothing? To the rear of this space, where there used to be a beautiful barbecue pit made from native rock collected all over the California, lies a rotting derelict automobile. (In case you can't relate these two pictures, the low peaked roof at the far left in the above picture is in the very center, to the left of the derelict, below. Also, the lamp post on the right above can be seen below just this side of the big dumpster: still standing, but decapitated.)

Here is the front of 1800 a few years earlier.

And here is the same space today. There is a car parked on the front lawn. Also a sofa and an old armchair.

Ah, but not all the news is bad. When I came home from the hospital after being born, I was taken to 5331 Strohm Ave, North Hollywood, a few blocks from the corner of Magnolia and Cahuenga. It was a house my father had just built himself (he was a carpenter at the time). Here is my mother holding me in front of the house.

Notice the two houses across the street. There are no trees in sight. This whole neighborhood was brand new -- built with massive government giveaways to house servicemen returning from World War II. And here are the same two houses today...

... virtually unchanged! Except now we have trees. So the whole world has not gone straight plumb to heck. Count our blessings!

Saturday, December 27, 2008

The SEC: Another Bad Idea from the New Deal?

Calvin Coolidge used to say, "If you see ten troubles coming down the road, you can be sure that nine of them will run into the ditch before they get to you, and you have to battle with only one of them." Herbert Hoover's comment on this was revealing: "The trouble with this philosophy was that when the tenth trouble reached him he was wholly unprepared and it had by that time acquired such momentum that it spelled disaster."

This is a beautiful example of the difference between strategies of anticipation and strategies of resilience, or solving problems when the occur versus searching out possible problems and preventing them from happening.

Part of the beauty of it is that Hoover is so obviously wrong: not all problems become disasters if you wait until they actually happen. Equally obviously, Coolidge has a point: switching from resilience to anticipation vastly increases the number of problems you must deal with: not only actual ones, but an indefinite array of possible ones. That is why your default strategy in life has to be resilience. Perpetual anticipation would be a form of insanity. (Maybe that's what OCD is?)

Some situations do call for anticipation, of course. The question is, When should we switch it on? The answer is no doubt complicated. When we consider institutionalizing anticipation -- basically, having someone watch over you -- the matter becomes even more complicated.

One layer of complexity came out in the wake of revelations about Bernie Madoff's vast Ponzi scheme. Madoff will be subjected to suits and criminal charges, just like he would have been in the bad old days before the Securities and Exchange Act of 1934. Criminal law and tort law are strategies of resilience. The SEC is part of the great transformation in which the American state moved from sole reliance on resilience to greater and greater reliance on anticipation. What it supposedly adds to the securities industry is that it somehow "regulates" it so that these things like the Madoff horror do not happen in the first place. This, of course, they failed utterly to do, despite repeated warnings about Madoff, going back ten years.

Arguably, the consequences of this arrangement are much more dire than the fact that a promise of providing some good thing (security against problems showing up) was broken. Here is an interview in which the brilliant Jim Grant tells us that the SEC makes things worse from the point of view of security: that it is merely the figleaf that conceals from us the flaws in the securities markets, that it lulls us into a false sense of security that is unsupported by the facts.

Anecdotally, I do see evidence that this is what happens. The very same evening I saw the Grant interview, I saw another one, with a Madoff victim who said in tones of pure shock, "The SEC assured us that nothing would go wrong!" She apparently meant that it assured us by its very existence. This was her explanation for why she and her husband trusted Madoff with their entire retirement account.

In the bad old days we had scams and frauds, of course. But then we had the SEC. And then we had a fraud bigger than anything that happened in the bad old days. A coincidence? Maybe not.

One difference between using resilience yourself and institutionnalizing it: If it's just you, you know whether the search for possible problems is actually being carried out. You also have a lot of information on whether it is working. When you institutionalize the strategy, you transfer these responsibilities to someone else, and so lack this sort of information. And if the institution is one about which you have a quasi-religious awe and trust, an institution for instance like the state, then you are lulled into the frame of mind that Grant describes.

Ironically, the criticism that Hoover foolishly levels against resilience actually works against his own favorite strategy of trusting an anticipatory state: when a problem reaches you, as it will, you will be caught flat-footed, unprepared. The system assured, after all, that nothing would go wrong.

Thursday, December 25, 2008

Christmas Message

Chris Hitchens tells us, amusingly enough, that he hates Christmas because it gives us a glimpse into the nightmare of living in a one-party state, such as North Korea or Chicago. You go around hearing the same music, seeing the same images, etc.

Actually I like it because, though you do hear environmental music all year long, this is the only time of the year that most of it is actually half-way good.

Partly, I suppose, this is because a lot of it has some religious meaning, so that people feel a responsibility to measure up to the exalted subject matter. Also, just because the Christmas repertoire consists mainly of a few dozen tunes, they had jolly well better be things you can hear year after year, for centuries (Praetorius' "Lo, How a Rose E'er Blooming" dates from around 1600) without going mad.

Also, again because of the extreme age of some of them, they are often in minor keys that you don't hear too often nowadays. The copy of "God Rest Ye Merry, Gentlemen" I just glanced at is in E minor. (Who says minor keys are sad?) Some, like older versions of "What Child is This?" are in modes yet older and more exotic. Such a refreshing break from the monotonous mediocrity of popular music nowadays!

But I suspect Christopher is not a musical person.

(Photo of the 2008 Madison Community Orchestra Holiday Concert courtesy of Nat Hunt.)

Monday, December 22, 2008

The Google Street View Function

I discovered something amazing last night. I don't remember why, but I googled my home address. Then I clicked on the map, which took me here. In the little prompt window, I clicked on "street view ." Amazingly, I found myself looking atthe picket fence in front of the side yard of my house. I hit one of the sideways direction-buttons on keyboard and saw Deborah's gray toyota parked accross the street. Turning again and going left (in relation to the original position), I see Nat's maroon Cadillac in the driveway. My Jeep is missing. Hm. I must be at work. So I go to the University looking for my car, but the robot picture-mobile (or whatever it is) won't go into the parking lot. Darn!

Someone has created a staggeringly huge array of panoramic images of many of the streets of the US, enabling you to travel, pleasantly but pointlessly, while sitting at your desk. For the moment, the people who did this are to me like the mound builders of the midwest, or the pleistocene cave painters. I wonder how the heck they did this but even more I wonder -- what the heck for? What's it supposed to do?

As civilization teeters on the brink of destruction, as the industialized world contemplates suicide in the shape of monstrously stupid governmental policies, I pause for a moment in amazement at the wonderful things humans can still create -- in some cases for no apparent reason.

Sunday, December 21, 2008

Of Social Security and Pyramid Scams

My old friend Dan Shapiro sent me an email about a recent post of mine, in which I denied that Social Security is a Ponzi scheme. Dan actually wrote a distinguished book that is partly about Social Security, so he is not be trifled with on these issues. He had this to say:
You said: "The SSA pays Grampa Jones with money extracted from Jones Jr., who will eventually be paid with money extracted from Jones III. There is that much resemblance to a Ponzi.* The difference of course is that everyone knows from the outset that this is what Social Security is like."

Sorry, but this "everyone knows" is flatly false. I have discussed this issue in class with my students for many years and many of them don't know this. They think that the money is being saved for them. The "Trust Fund" rhetoric tends to make them think this. Furthermore, there is a lot of evidence for most of the history of SSA (or SS, as I abbreviate it in my book Is the Welfare State Justified?) the government deliberately did its best to obfuscate the truth and sold SS as akin to a private investment scheme, whereby your taxes are saved for your benefit.

Perhaps the most thorough account of the deception involved in SS and how it succeeded in confusing and bamboozling much of the American public can be found in in John Attarian, Social Security and False Consciousness. Also, look at my website isthewelfarestatejustified.com , which has some juicy quotes in this regard.
I suppose that every statement about what "everyone knows" is bound to be false unless it is utterly trivial (eg., "everyone knows the Pope is Catholic"). What I should have said was "it is public knowledge, available to everyone," or something like that.

Of course, widespread misconceptions about this become extremely problematic, both politically and ethically, if, as Dan suggests, the government has deliberately misled people about this. As to whether it has done so, I can only take his and Attarian's word for it. I agree that further that this deception on a point like this is extremely irresponsible at best, since it would tend to contaminate public discussion of these issues in a number of ways.

One aspect of this contamination, I must also admit, is that it makes SS more like a Ponzi scheme. The Ponzi artist's lies serve to conceal from his victims the fact that the scheme is doomed to collapse when he eventually fails to get enough new victims to pay his old ones and so bamboozle them out of trying to withdraw their non-existent assets, in which case many contributors will lose what they paid into the system.

Broadly similar things are true of Social Security. The system will have financial problems if it should ever have a deficient number of paying contributors. This could occur if there is a sudden surge in the number of retirees (eg., boomers like me) or a rise in the jobless level. (And -- guess what? -- both of these are about to happen soon.) If voters have been fooled into thinking that SS is not a pay-as-you-go system, they will be ill-prepared for such a crisis. One of the many possible scenarios -- though a remote one -- is that of the system collapsing and many contributors losing what they have contributed.

For this reason, the claim that SS is a Ponzi operation can be an illuminating metaphor. I don't deny that.

But I do say that the claim that this is literally what it is is untrue and has the effect of a cheap shot. It is also a distraction, since it will be too obvious that there are big differences as well as similarities. One is that Ponzi and Madoff are doomed to run out of fresh victims because they are using fraud and not coercion. As private-sector criminals, they can't force anyone to pay into the system. The SSA does not labor under such a constraint. Their system rests on a reassuring thought: Don't worry, we can always steal more.

Social Security is to a real Ponzi scheme as coercion is to deceit.

Saturday, December 13, 2008

Gov. Blagojevich, Meet Lord Acton

Karen DeKoster over at Lew Rockwell had an interesting moment while listening to NPR. Speaking to someone about the Illinois Governor's scandal an NPR interviewer asked, "So is there something about politics in particular that brings forth this sort of behavior and corruption and gives rise to these types of events?" Amazingly, the guest, unnamed in this account, said "no."

Much of the commentary on this incident has consisted of tortured attempts to deny the bloody obvious. Thus the repeated claims that Blago must be insane. Nothing else, it is said, could possibly explain his behavior. People have repeatedly asked, why would a governor who knows the Feds are investigating him, try to extort a million dollars out of the appointment of a senator on the phone. My answer: Part I: For the money, stupid! Part II: Because he had done things like this all his life and, never having suffered any bad consequences, felt bullet-proof.

Both these factors, access to staggering quantities of other people's money, and insulation from real consequences, are absolutely inseparable from political power. Blagojevich is not a madman but, quite simply, a government official.

Government is the only institution that is routinely judged by its stated purposes and not by what it actually does.

This deep habit of mind conceals the truth from us. What is that truth? It was Lord Acton who said it best, in a letter to Bishop Creighton: "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."

Given that we do seem determined to give others political power over us, we must face these questions: To how much money should they have access? How much should we insulate them from the consequences of what they do (that is, how many of these consequences are to be absorbed by their victims)? And finally, the root question underlying these: How much power over us should they have?

Wednesday, December 10, 2008

Yes, Blago is a F***ing Jerk, but ...

In case you have been living at the bottom of the proverbial mineshaft, or possibly studying for finals, the Gov. Rod Blagojevich of Illinois has been arrested. His most interesting offense: soliciting bribes for -- in other words, attempting to sell outright -- Barack Obama's vacated Senate seat.

Obama wanted him to name one of his (Obama's) assistants, Valerie Jarrett to the seat. When Blago asked what he would get in return, he was told "appreciation." A modern,sophisticated politician would play along and wait for the "appreciation" to come his way. But no.

Blago's reaction, according to an ABC news story relayed at Reason Hit and Run, included the following:
"I've got this thing and it's f***ing golden, and, uh, uh, I'm just not giving it up for f***in' nothing..." [said Blagojevich].

Told by two other advisers he has to "suck it up" for two years, the FBI says it heard Blagojevich complain he has to give this "motherf***er [the president-elect] his senator. F*** him. For nothing? F*** him."

The governor is heard saying he will pick another candidate "before I just give f***ing [Senate Candidate l] a f***ing Senate seat and I don't get anything.
It seems another candidate for the appointment had offered him a million dollars.

This is crude, blatant corruption, but it seems to me that in its smooth, sophisticated way, what Obama was doing was corrupt as well. By law, these interim Senators are appointed by the governor of the relevant state, not by the senator who is resigning, and not be the president or the president-elect.

In requesting Jarrett as his successor, Obama was asking for something to which he had no legal right. By the tacit assurance, which the modern, sophisticated politician understands well enough, that those who play along will be taken care of, he was in effect offering something in exchange for it.

The difference can be put in the language of economic anthropology. By refusing to hand over the goods unless specified, sufficiently attractive payment is made, the governor was engaged in a trade. By requesting the goods, with the understanding that some non-specific future benefit to be decided on by the donor will come the recipient's way in the future, Obama was engaging in gift-exchange.

Both are forms of exchange. There are powerful arguments against trading political power for stated amounts of goods and services, but the best ones are also good against the other sort of exchange as well. In other words, what Obama was doing is wrong in basically the same sort of way as what Blago was doing. That's why we have a lot of odd-sounding laws against lobbyists buying lunch for legislators and policemen accepting gifts from people they serve.

Of course there is one big difference: What Obama was doing is not illegal and in fact is constantly going on in our system. It was by similar methods that JFK got his brother Teddy into his Senate seat.

In the days of George Washington Plunkitt, the tendency of officials to be corrupt was understood. The solution then favored was to not give government too much to do, so that the inefficiency, venality, and hypocrisy of officials could not do too much mischief. The solution now favored is to pass laws against every possible transgression and then to kid ourselves about what is really happening.

Blago is a crude jerk, but he does have one virtue that crude jerks do have: a certain sort of honesty. He gives us a glimpse of what is really always going on.

Thursday, December 04, 2008

The Bond Series Hits a New Low

The above is not a choppily edited, mind-pummeling trailer for Quantum of Solace, designed to make you wonder what the heck is going on here, so that you will come see the movie and find out. It is an actual clip of the film. It gives a good idea of the editing style of all its action sequences is like.

These people don't seem to realize that suspense is all about causation. "Given that this is happening, that is probably going to happen next. Yikes! I don't want that to happen! How is the hero going to avoid that?" For this to work, the viewer needs to be very clear about what is happening. Confusion kills suspense, creating instead an annoying sort of vague anxiety. (Compare this sequence with the greatest of all action sequences, the chariot race from Ben Hur -- a model of narrative clarity.)

This movie is confusing throughout. The confusion begins with the too-busy opening titles, which go by too fast to read the credits (don't these guys want to be famous?). It doesn't end until the Bond's pointless, ill-explained last encounter with the baddies, in which, after all the villains we know about have been killed, he arrests one that we haven't seen before and, as far as I could tell, wasn't especially important. As Nat pointed out to me, it doesn't seem to answer any questions raised by the earlier portions of the narrative, unless it is "will he ever turn a bad guy over to M for questioning, instead of just bumping them off?"

In a number of ways, this movie marks a low point in the Bond series.

This must be the first Bond film that is openly and belligerently anti-American and anti-capitalist. The dialogue contains occasional comments like “You don’t want another Marxist in South America giving natural resources back to the people, do you?” The villain is an evil capitalist, backed by the CIA, who pretends to be an environmentalist (a pretense that of course would automatically make him a saint, if it were true) but who actually kills political leaders who do things like passing minimum wage laws and replaces them with evil business-friendly dictators. His ultimate goal is to accumulate all the water in Bolivia (a public utility in private hands? gasp!) so that he can charge ruinous prices for it, bleeding the poor workers and peasants dry.

The fact that the film attacks private enterprise and plugs people like Hugo Chavez ("... another Marxist ...") creates a coherence problem for the film. The filmmakers don't project Bond as if he were motivated by their anti-capitalist animus -- that would be obviously absurd, as Bond is a long-time servant of British imperialism -- so they have to give him a motivation that is quite separate from the point of view of the film itself. Throughout the film, his motive for the death and destruction he wreaks seems to be revenge for the death of Vesper Lynd in Casino Royale. Given that, that is this movie about? It would be nice if I could say, "it's not about anything -- it's just an entertaining revenge tale." That is what most of the reviews of the film seem to be saying. But it is actually worse than that. It's also an evils-of-capitalism tale, and these two thematic elements interfere with each other annoyingly. The result is a movie that is not merely frantic and confusing but incoherent.