The USA CEO?

After Obama's recent declaration of the termination of GM's CEO, some have come to see Obama as the new CEO of the United States. Where is all of this actually heading, if anywhere?

The US government has semi-nationalized the banks with the way the bailouts have been going so far. As well, the government has actually taken over non-bank corporations (like Freddie and Fannie), but these are still a part of the financial, near-bank, systems in the US. Now, for the first time, Obama has set his sights of direct, top-level government intervention on a non-financial company: General Motors.

To the political right, this looks like socialism, plain and simple. The government is coming in and taking ownership/control of the means of production of the most productive sectors of the economy in a bid to exchange wealth generation for security. Curtailing of civil liberties will invariably and immediately follow behind, etc. etc. Despite how easy it is to point the finger at socialism and shriek in horror, this isn't actually what's going on.

What's going on is a knee-jerk reaction, not a well-planned conspiracy to undermine America. People feel upset that CEOs screwed up royally. They're also upset because they are being affected by the screw-up, but they had no power to prevent the problem. In short, we can "fire" our public leaders when they go astray, but when we can't do it to our private leaders (CEOs), AND we can't secretly transfer some of the blame to ourselves (because we never put them in in the first place), it makes us all very angry. There is no end to our righteous cries for vindication when we are being hurt by a power over which we have no control. It's not a "no taxation without representation" so much as a "no taking risks that can destroy us all without representation". The wording is different, but the sentiment is very much the same.

We do, now, have a way of remedying this problem through those we HAVE elected. If CEOs do a cruddy job, Obama has now made it possible (if not the responsibility) of the government to remove them, and put in someone better, as we can't remove them by ourselves. Depreciation of shareholder confidence and consumer advocacy is NOT the same as ousting someone in an election.

This GM step isn't, however, a step toward socialism. In order to socialize, the government needs to fire the CEOs and replace them with government agents. Furthermore, everyone needs to be put on the payroll of the state, the non-government bureaucracy eliminated, and the state needs to officially incorporate it into their system. While it's done this with the FDIC, and has somewhat done this with Freddie Mac, it has most certainly NOT done this with GM.

Instead, the government simply exerted itself as a entity that sits above corporations with power over them. That way, it gets to go in and do occasional actions (like fire CEOs) without having to do the tremendously complicated and costly process of actually running the businesses. You get all the political benefits without any of the liability. Sort of like arming rebel groups.

This "socialism light" is actually a form of corporatism. Corporations still exist in their non-democratic, closed off, profit-seeking ways, but they have a connection at the very highest eschelons with the government. The government doesn't tell them what to do (every once in awhile, perhaps, but it's not a planned economy by a long shot), or how to do it, but it's allowed to step in and commit drastic action when their seats are on the line.

Of course, you just might be asking yourself now if corporatism isn't actually a pillar of fascism. It is. Of course, we're not taking steps in other fascist directions like hyper-nationalism or imprisoning people of ethnic groups we hate, but this recent step is one that takes us towards fascism, rather than socialism. Remember that just because fascist institutions were destroyed by a total, global war bent on destroying it (a testament to it's strength, in a way), doesn't mean that the ideas have gone away, even if they've taken on new names.

Government power-grabbing without necessarily getting it's fingers dirty in the nitty-gritty day-to-day has happened during an innumerable amount of crises. This time doesn't seem to be much different. Who knows, maybe we'll eventually get our old mercury dimes back.

Terrorism? Let us help (we insist)!

As Pakistan continues to crumble, it's ability to handle sworn enemies of the United States is decreasing. Will we insist on helping out like we've done in the past?

Today's attacks in Pakistan have thrown yet another point on the line that is pointing to Pakistan's downfall. As terrorism has been ramping up along with political corruption, paramilitary groups are staging even more and more flagrant attacks (if they can shoot up and capture a police barracks in broad daylight, how much more flagrant can they get?), while the government is less able to stop them. While the US may be able to otherwise overlook internal gubernatorial collapse of a third-world nation, this time the bad guys are people who we have sworn to destroy. This time, it's personal.

The US has had a long history of intervention in foreign countries where direct national security is possibly at stake. Can't stop the Zapatistas who are flooding Texas with gang violence? Don't worry, Mexico, we can take care of that problem for you... we insist. Don't care to take out Al Quaeda, Taliban? Don't worry, let us take care of them for you... we insist. Over the past century, there have been dozens of countries that the US has sent boots into from the more obvious (like the invasion of Afghanistan), to the dubious (like the invasion of Lybia), to the blatantly unnecessary (like the invasion of Iraq). No American president (including the current one) has been able to fully resist the seductive call to send American troops places where they're not really needed in order to fix a problem that someone else should have.

The real question, then, is how does the president handle this call? The last one clearly made no qualms about turning his desires into action. The current one, however, has chosen a more Clinton route of under-the-radar, more secretive things that ultimately yield far fewer results, but do so at far less liability. Rather than spending real money and putting real lives on the line, the strategy basically involves things like arming rebel groups that are fighting whoever we're also fighting, or launching a few missiles in and hoping for the best. At the most, US involvement involves dragging dozens of other countries into UN pacts (or NATO, in the case of Clinton in the Balkans) to help us fix other people's problems.

Of course, unlike Operation Desert Fox, Obama has a lot more technology to do the secret dirty work. Specifically, we have lots of unmanned aerial drones, the use of which has escalated since Obama's taken over. Of course, it's still an egregious breach of international law, but we haven't felt we need permission for these kinds of attacks in the past, and we certainly don't feel like we need it now.

Of course, with all of these "limited liability" strategies, they tend to be horrifically short sighted. Was it really a good idea to accidentally lose a bunch of stinger missiles for Islamic Afghan fighters to use against the soviets? Was it really a good idea to give Saddam Hussein a bunch of weapons to use against Iran? History is flooded with examples of limited liability tactics that both don't achieve the desired effect, but also are ultimately counterproductive.

And here we are shooting drones into Pakistan. If Israel has been able to teach us anything over the years, it's that aerial bombardment does NOT destroy terrorist networks (if anything, it has the opposite of the desired effect). Likewise, the flagrant disregard for Pakistan's sovereignty is further weakening the state, making them LESS able to handle the problem by itself which will require MORE American involvement down the road. If committing acts that we knew would cause a future environment that would allow us to invade Pakistan was the point of all of this, we're definitely on the right track.

Because once the Pakistan state looses it's last shred of legitimacy (no matter how much money we give to corrupt government officials in civilian aid), then the problem over there is going to get much worse, and we're going to feel obligated to handle the mess that the Pakistani's might have been able to fix, without our help. In all likelihood, we're going to put boots on the ground because the problem will feel like it needs to be fixed, and we'll insist that we're the ones to fix it.

The Obama War

With Bush gone, and Obama in, the war in Afghanistan is set to go off in a new direction. What will this direction likely mean for the ultimate outcome?

Earlier this morning, Obama gave a speech outlining his plan for the war in Afghanistan. As the conflict was a key part of his campaign, it makes sense that he was going to unveil something different than his predecessor's strategy of "do nothing and hope it works out".

His plan basically breaks down into two big camps. The first prong of the strategy is to throw more troops and more money at the problem by simply increasing the number of both that the US is to put into Afghanistan. The second is to go in with a second army: one of clerks, bureaucrats, engineers, teachers, and other civil servants to do some serious, hardcore nation building.

Obama was mocked during the campaign for following his party ('s leadership's) line that the surge in Iraq had failed. While towing the party line may be forgivable, it seems that it has betrayed a real lack of knowledge of why the surge worked, and why the first prong of the new strategy in Afghanistan is doomed to fail.

In Iraq, after the crushing victory over the Iraqi army, there was this definite sense that the US should just stick around for a little while, taking an unobtrusive role, but to get out as soon as possible. The strategy was one of handover: hand over security responsibility to the Iraqi police, hand over nation building to the fledgling Iraqi republic, and hand over a stunning victory for the US without handing over the mess. As such, the general Casey way of doing things was to take a very backseat role as an advisor, training Iraqi forces from the safety of their bases. When things would flare up, the army would go in for a quick strike, and all of the insurgents would just move somewhere else.

Under this strategy, the war in Iraq failed. The basic screw-up was believing that a weak state can provide security, rather than the correct view that a weak state requires security as a prerequisite in order to be able to do anything at all. Handing over responsibility to someone who couldn't be responsible ended, predictably, in failure. Obama is currently set up to repeat this mistake. The plan is to send in a bunch of observers and trainers for the explicit strategic purpose of handing control of security over to the Afghanis. If this failed in a country with a weak state, I fail to see how this will work in a country that has almost never even had a centralized state in its entire history.

The second prong of the new strategy is basically to give the Afghanis a government. The officials there are all apparently so corrupt, and have such a little idea of what governance should actually look like (once again, because they've had virtually no experience), that the so-called government really isn't doing anything but funneling American dollars into their Swiss bank accounts. This, however, is the very definition of occupation in everything but name. If we're sending in our army, and our foreign government officials are actually creating a nation by themselves, then any Afghani who stands on top is really more of a symbol. Needless to say, if the plan was to create an environment to hand over political control to the Afghanis, is seizing political control over the Afghanis the way to do it?

I would personally say that after a few decades of showing the Afghanis how to run a proper centralized bureaucracy, they'd catch on and do okay, but is that really what Obama is setting out to do? Likewise, can a true Afghani government ever exist if the state is under constant security threats (the kind likely to be perpetrated by the military arm of this strategy)?

I very much applaud Obama's clear thinking with regards to the fact that nation building is a better long-term strategic goal than hoping it all just works out by itself. However, the end result will not be good if the plan forward is worse than just doing nothing. If we've learned anything from Iraq it's that security must come FIRST before anything else can be done. This means that Obama needs to have taken the real lessons from the surge to heart. He needs to place a lot of troops in harm's way (in order to actually engage in the communities that they are in), even if Obama needs to abandon his foolish idea of working with other nations that have no real interest in the conflict's result. He needs to be willing to spand a lot of money in bribes, which will have a direct effect, unlike when the money goes into the same accounts anyways through corruption. He also needs to understand that the Afghani army is nowhere NEAR close to providing security for Afghanistan, and taking the standpoint of "the more that indigenous guards take over the better" is only going to end in disaster, just like last time.

The last thing left to see is if Obama will make good on his repeated threats to invade Pakistan if it can't stop the terrorists hiding just across inside its borders. If so, then Obama would truly, and, I might say, miraculously, be repeating every single major foreign policy mistake of the Bush administration. Until then, it's just time to break out the popcorn and see how this show plays out.

Save Us from the Dollar!

People are starting to buzz about a global reserve currency. Will it solve the world's problems? What will its ultimate effects be?

About a month ago, Russia declared that the world should have a new super-national currency to replace the U.S. dollar as the primary currency reserve. Just this week, China called for something similar, while the UN just got on board today.

Whatever the explicit reasoning behind this, the implicit reasoning is clear: other countries are getting sick and tired of being whiplashed by the US economy. When times are good, and the dollar is strong, everybody else gets a free ride on the stable-currency express. The problem, of course, is that if the US economy tanks, it takes everyone else down with it. You know what they say when the US economy sneezes...

Assuming that we're talking about a real currency (rather than just something neutral that helps facilitate trade, something which things like gold already do), that means that it's going to come with a real organization involved in real monetary policy. This is quite a bit to take on, and it's effects need to be thought through.

Firstly, will a single currency, sitting in reserve in all of the government's stockpiles, stop other nations from hurting when the US goes into recession? The answer, of course, is no. This economic recession, for example, was made global primarily by foreign investors buying bad financial products (like CDO's, or mortgage backed securities). When they went bust, so did the investors, including a lot of foreign banks. The particular country in which the risky investables were produced isn't important.

The effects on foreign lands were further greatly exacerbated when Americans, laden with fear and debt, stopped their orgy of consumption. Lack of imports by America destroyed most of the rest of the developed world, whose economies were heavily based on exports (mostly to America). So goes the developed world, so goes the rest. Countries all across Africa, South America, and Southeast Asia tanked as demand fell through the floor.

If the American government had some of it's cash reserves in a mythical global reserve currency, then the American government would be less effected by this. Of course, the American government barely imports things, and in any case it pales by comparison to private sector, consumer demands. This basic idea is also true of other governments. In fact, the only real place where a non-sovereign global reserve would do anything is to curb the fact that governments lost money when the dollar dropped compared to their currency. Of course, no national currency is going to have complete stability compared to a global reserve currency, so this problem will always happen. The problem, of course, is that it opens this problem to burn governments when the world has problems. This means that a calamity in Africa, say, would drag down the world currency, when little, if anything, would have happened if the government were holding dollars (the US government generally being unfazed by problems across most of the world). As such, a global reserve would be introducing new liability for no real gain.

Finally, we have to ask ourselves who gains and who looses in this reserve currency idea? If the reserve exchange rate was set too high (say, above the dollar), then developed countries would be okay (after all, the pound sterling isn't destroying Britain's economy). Less developed countries, on the other hand, would have to sacrifice years of GDP for just a small amount of currency. This means that it becomes more difficult to trade for anything, which means that people can less afford food and medicine. As well, it makes it cheaper for foreigners of the developed world to buy stuff from less developed countries. While this would seem good on the outset, we have to remember that while demand is going up because their money is so worthless, the system that increases the demand makes the money more worthless. In the end, poor countries work more to get less. While I'm not saying that a global reserve currency is advocated for reasons of economic imperialism, it can't have escaped everybody's notice that they can buy things like oil, diamonds, and slave-labor produced items for even cheaper than before.

Of course, if they set it too low, then there is problems with rampant inflation. If Rwanda is able to exchange one of it's currency for 10 reserve notes, then the United States will be able to purchase hundreds of trillions of them. Needless to say, inflation hitting a less developed nation's reserve currency would be disastrous, especially given that their national currencies tend to already suffer from this problem.

In the end, a global reserve currency would send a shock through world markets if they didn't set the level exactly right and it would then only serve to weaken the stability of global trade by removing the backing of the strongest economy on the planet and letting it float with the vagaries and liabilities of all countries. The US would still be able to drag other countries down, just like now, while at the same time the strength of the US wouldn't be able to single-handedly save the day when things take a turn for the worse somewhere else on the globe.

States Within States

Americans like drugs.

Just ask Mexico. That country is the biggest middleman on the entire planet between growers and consumers of drugs, which has put the 1970's French Connection to shame. Moral arguments about drug use aside for a moment, this whole affair is destroying the state of Mexico. It has spent billions of dollars, hundreds of lives, and decades of time to shut down the drug Cartels, so many resources, that the State is losing the battle, and may implode on itself soon.

The question is, why? Why would the state put it's very existence on the line to prevent another organization from having power over a particular facet of the country?

Take the corporation, for example. A corporation is a hierarchical power structure that handles resources and products for the betterment of people's lives (if they never made anyone's life better, then who would ever buy their product or service?). Oddly enough, this sets up an interesting Venn diagram with what the United States government is supposed to do.

Compare the mission statement of the preamble of the Constitition to what a corporation would want. It is definitely in the best interest of a corporation to ensure domestic tranquility as consumer confidence tanks in a crisis. No one wants to spend money when they're afraid, which is why investors tend to shy away from places around the world without tranquility, and why corporations lobby governments for this very thing in disturbed markets around the world. For this same reason, corporations are interested in the common defense. Note the massive and extensive use of the Blackwater corporation in Iraq. Given that promotion of general welfare is the reason we give them money, corporations have this interest at heart as well.

In the end, corporations and the federal government have a lot of the same mission statement, which, in the end, makes them competitors. At least in the US, the government tries to mostly step out of the way of corporations, and leech money off of them to pursue the state's own ends, rather than trying to shut them down. A part of this, perhaps, comes from the fact that corporations are able to do some things better than the government itself (for example, almost all of my material possessions, except for some postage stamps and my driver's license came from a corporation, not the government).

But sometimes these large, powerful, money-soaked organizations go afoul of the state, and the state decides to crush it no matter the cost. For example, the US put a vast amount of resources to break up the mob in the 1920's, and it applied basically all of its resources to blowing up several southern governments during the Civil War. Why is it that sometimes states can live in harmony with states within states, but sometimes they can't?

Other than some machismo confrontation of pride, it seems to me that the conflict occurs when an average group of citizens (people living within a certain territorial, geographic boundary) doesn't need to follow the regulations imposed upon them by the state. For example, making money isn't against the laws of the state, but giving people drugs is. If an organization makes it possible to use drugs, then it is in conflict with an organization, the state, that demands that its laws are always followed within its physical jurisdiction.

This is an affront to old ideas of nationalism. When states started hitting the scene a few hundred years ago, one of the things that they got was sovereignty: they could not be held to account by any other organization. As a part of this, they had complete sovereignty over anything in their realm, that is, they could judge anything below them while being immune from judgment on the top. While sovereignty has been eroding from the top from things like international law, it seems that states are still hell-bent on being able to control things underneath them.

Of course, I must once again ask, why? Why does the state need to preserve a philosophical standpoint in which all organizations from the individual up to the state have to look like a jawbreaker, where every level is inside of every other level? Why can't it look more like a sandwich with the state as a layer on top, rather than an all-encompassing layer around?

It seems that as nationalism is fading, the state will have to accept its diminishing role in the world as higher and lower level organizations flex more and more of their muscle. Otherwise, we will continue to see things like Mexico's desperate gambit that threaten to destroy the state itself if it loses.


For further reading, click here.

AIG and the Civil War

In 1861, the American Civil War pitted the vastly more populous, vastly richer and more industrialized North against the Confederacy, which was sitting on a possibly-rebellious slave population that outnumbered their masters 10:1, and that had no navy and thus could never receive reinforcements or supplies. The outcome of this conflict was obvious from the get-go. The Union soldiers would literally be home by Christmas.

A man named George B. McClellan was given charge of the Union army to make short work of it all, after a brief battle that took the existing regional commander out of the picture. All he needed to do was take the Juggernaut union army on a three day's long march from Fort Monroe to Richmond, and all this nonsense would be over. Done and done.

McClellan, unfortunately, wound up being an awful general. He was cautious when he needed to be risky, risky when he needed to be cautious, and put his own reputation on the line less frequently than the blood of his soldiers. But personal reasons to hate him aside. He was a bad general. He drew his first major battle at Williamsburg, followed by a loss at Seven Pines, just a few miles from Richmond. His easy advance turned into a humiliating, fighting retreat that ended in the disaster of the 2nd battle of Bull Run. After this, the Confederacy was on the attack. The end result of his bungling was the battle of Antietam which managed to get more Americans killed on any singly day than any battle before or since. It did not, however, end in anything more than an indecisive draw.

With great disgust of both the people and the government at his actions, McClellan was replaced by General Burnside. Burnside set out to do what McClellan could not, beat up the numerically inferior Confederate army and actually end the war proper. The result was the battle of Fredericksburg: one of the most humiliating defeats for the Union cause of the war. Like his predecessor, all Burnside had managed to do was get a lot of Union soldiers killed for no real purpose. He also oversaw a general crumbling of the army as desertion rates soared.

Burnside was replaced by General Hooker (after whom we get the slang word for prostitute), whose own moral behavior aside, only really managed to enforce crony-ism in the army, and lead the Union to a crushing defeat at Chancelorsville, called "Lee's perfect battle". Though decisive, unlike his predecessors, he was sleazier, and a bad general, but he wasn't even all there as far as common Union ideology was concerned, once saying that "Nothing would go right until we had a dictator, and the sooner the better."

We are facing a similar type of problem today in our economic crisis. We have had a lot of CEO's, the proverbial generals of capitalism, who have had a massive amount of resources and large, powerful institutions, and one easy task: make us all some money. Economic growth should have been easy with the best people involved on the job. Like the Union generals, however, they were of dubious scruples, unclear in purpose, and most importantly, really, really bad at their jobs.

The end result, then as now, is disaster. Politicians and the populace alike are demanding the heads of industry giants, especially the ones at AIG, who have taken huge bonuses as a reward for leading our modern day Union into the dirt. It is clear with our Wall Street exec's as it was with the army's exec's back in the day that the old leadership was bad, and that new leadership is required. The question, then, is who do we get to do the job right?

When McClellan screwed it all up, they went for another general. When they got a worse one, they put another general in charge. They didn't put the army under the control of some random government bureaucrat or some other random person. They put the army in control of similar people with the same training, and the same experience, and the same expertise, and they did WORSE than the people they put in before them.

This is exactly the problem that we're having with AIG. Businesses have gone bust, the economy is tanking, and CEO's legitimately bear a big chunk of the blame. The government plan over the last year or so is to fire the CEO's and appoint a government bureaucrat because the other CEO's out there that are trained the same way and are doing the same things are still out there making it WORSE.

The problem, though, is that some random, everyday government bureaucrat is NOT going to be able to lead an army as well as a general, and they're NOT going to be able to handle a massive corporation as well as a CEO. In the end, even if they're making the problem worse, you need the same type of people who have the pertinent training and experience to be able to actually fix the problems. If specific generals and CEO's are causing problems, than those specific ones should be brushed away, but having a systemic change to hand over power to a class of people who we know are less qualified is an unjustified way of handling our anger.

In the end, Lincoln kept on picking more generals to command his army, even though it was the generals that were losing the war and destroying America. Hooker would be replaced by Meade, who beat Lee at Gettysburg but shamefully let them get away. Meade was made a subservient of General Grant, who had a vision of warfare that eventually brought about the ultimate victory of the Union army in the Civil War.

If Lincoln had decided to get rid of the commander of his army and replace him with a government appointee from the war department (or somewhere else in the bureaucracy), it is unclear what would have happened in the war. It is certain however, that it took a man who had spent his whole life in the army and had fought in the trenches and had fought his way up the rungs to the top, who was the person who had the experience and leadership qualities to be able to lead the army to victory, no matter HOW bad his predecessors had been.

Why should we expect it to be any different with our CEO's?


For further reading, click here.

Money and Wealth

To continue from my last blog, this time, let's talk about wealth.

Wealth is another one of those tricky ones, as it's also mostly relative. Wealth can, broadly speaking, refer to two things. The first is that someone is considered wealthy when they have a lot of what they value ("he hasn't a dime, but his family is happy" implies he's wealthy, even if it's just wealth in heart rather than a sum of money). The second is when people have a lot of what is generally considered to have a lot of value. For example, ALL people value shelter, ergo someone who had shelter in a community where nobody had any would be considered wealthier. The same goes for other broad, social things, like having fancy or nutritious food, a lot of shelter, at least one form of transportation (like a car), a refrigerator, washing machine, and a host of things that fit the Norman Rockwell vision of the American Dream.

It is important to remember that wealth is NOT money. Money, is an arbitrary human construct that allows us to quantify wealth when talking with other people about it. It is understandable to see why people think that money IS wealth, but it's important to remember that when we do crazy stuff with money, we're not affecting wealth at parity.

The first major difference is how wealth and money are made. Wealth, generally speaking, is generated through the creation of objects, or a continuous service. For example, you have running water and sanitation in your house. This standard of living increase is an actual part of wealth (especially if no one else around you did). Likewise, wealthier people are those who have better houses, cars or estates (goods), or better nutrition, health, or comfort or convenience (services). In any case, wealth generation is ultimately a creative process (even if it's just maintenance).

It is also divorced from money. If inflation suddenly caused the price of goods to increase by 100%, would the usefulness of the house (the value you place in it) as a shelter increase or decrease? Likewise, if your savings account were wiped out, what would that do to your car's ability to get you to work? The answer to these questions, of course, is "nothing". The only effect that price has on the wealth of a product or service is when people think that something is worth more or less because the price is different. Certainly, however, this confusion barely changes the wealth of only the smallest section of things (if any).

What is important here is that wealth is ultimately a by-product of production, whether of the durable, like refrigeration or sanitation systems, or the non-durable, like a haircut.

Money, on the other hand, is a very different beast. Money is created when people say that there is more money. The Federal Reserve, for example, recently increased the money supply by 1 trillion dollars. They may not have even printed a single new bill (due to most money being handled electronically), but yet the money supply drastically rose. Another way that money is created is through interest. If I borrow $10, and I need to pay $11 back, there is ultimately $1 more in the system that was magically created. Of course, this interest can be leveraged to extreme levels where debt upon debt upon debt creates a tower of money.

This creates an interesting set of issues. The first, of course, is "who should create more money?" If everyone could simply make more money, the value of the money would decrease instantly and drastically. Given the same amount of wealth and a higher amount of money (and a market system that allows for the transparency to see what those two numbers are), the prices will go up if the money amount goes up while the wealth amount stays the same. This, of course, is inflation.

The second, and more important question is "who should get the new money?". Obviously, when the Fed increased the money supply by a trillion dollars, they didn't do it by simply adding $3 to every American's checking account. Instead, the money is going to be mostly going into banks, and into the government itself. Likewise, when you create money through loans, the person who loaned you the money gets all of the increase in the money supply.

This is important because of inflation. When the money supply goes up, the prices of everything goes up (albeit, unevenly). So while everything becomes more expensive, only some people get more money. While some people are magicians with money, most people who get some of that new money only get enough to cover for the inflation that they caused by making more money. For example, if most bank savings account rates were 1%, and their loan rates were 10%, then they would be increasing inflation by 10% (because that's the amount of new money over the same amount of wealth), while the bank itself only actually makes 9%, because it has to pay me some. This is oversimplified, of course, but even stocks, which are considered one of the most risky ways to store your money, only goes up about 6% a year, while inflation goes up and reduces the wealth-aquiring power of that money by 3%: half of the gain. Currently, the Federal Government returns just about 0% to its investors, and banks do only slightly better (compared to the -30% of stocks last year).

As such, it's less of a case of the people who make and keep money richer, while the rest of us stay the same, it's that the people who make the money stay the same, and the rest of us get poorer. In the struggle to get ahead, people are actually just staying where they are while they push everyone else behind.

Ethical questions aside for a moment, this is clearly a bad system. What we want is a system whereby people can become wealthier, rather than just richer (have more money). Instead, we have a system where people's wealth levels stay the same, or go down as their money doesn't go as far.

This can be seen by a disturbing trend in America. My grandfather worked hard, and was able to support a wife and several children, all while being able to accrue new wealth as technology provided it. My father worked hard, and was able to support a wife and a couple of children, but not with a whole lot of bells or whistles, and he had a good, white-collar technology job (compared to my small-farm grandpa). I have to work a part time job AND my wife has to work. Not only can we not dare to think about how much children would cost us, but we're not able to accrue as much wealth as our parents (we can't afford cable TV, 2 cars, etc.) The rate at which people even younger than me return home and live with their parents when they are done with their run through the education system (including college) is absolutely massive compared to my parent's generation, and nigh infinitely more than the near zero of my grandparents. The fact that most households have to have both parents employed just to get by also shows this trend.

In short, people are working harder and harder for more and more money that gets them less and less wealth. Billions of families live paycheck to paycheck, even in the developed world. Americans may make thousands of times more money than an equivalent worker in Africa, but they're both just a few paychecks away from their families literally starving and being homeless. As the CPI continues to soar, it's clear that the system is broken, and the more we put into it, the more broken it gets.

Then, of course, there is the hitherto avoided ethical question. "Who sould have more wealth?" and "Who should see their wealth decline?". Currently, the answer seems to be "Those who are movie stars or who can commit fraud on Wall Street" and "everybody who isn't in the first camp", respectively. Is this what we want? If fraud and celebrity status and professional sports are the only thing that gets you ahead, and everything else causes you to lose, doesn't that just teach us (and our next generation) that if you can't play football, you should learn white-collar crime?

Instead, we should have different values, and have a system that gives wealth (NOT just money) to those who participate in those values. If we value teachers, we should give them more wealth, rather than just hoping that a little more money will fix the problem. Likewise, we should be encouraging behavior that increases the wealth of others, rather than penalizing laborers by sending their jobs overseas, just so someone else can have more money. Yes, money can be used to acquire wealth in individual instances, but due to the fake nature of money, it's not stable or certain (other than it's certain to get you less wealth over time).

It seems to me to be a simple confusion in priorities along with a confusion that the capitalist notion of "make more money" automatically results in "have a higher standard of living". While that may be true for those with a LOT of money, the vast majority of everyone else only sees the decline. While the re-enactment of usury laws may be a tad harsh, it seems to me that people need to be un-brainwashed from the idea of making money for money's sake, so that those who only have a little aren't pushed too far behind.

The Economic Crisis, Deflation and the Louisiana Purchase

In order to make this connection, I'm going to need to spell out a few terms, so bear with me a moment.

The first term I need to define is "value". While value usually refers to a state that is a function of worth divided by price ("that's a great value on that can of beans" is a statement about cost/benefit). Because I need a transitive verb, I'll be referring to value as the worth that someone applies to some thing ("I value your trust" for example).

That said, value is something that is very relative. You may value a high-performance sports car while I might value a well-crafted wine or a meticulously painted Repan or Degas. Furthermore, you may think very lowly of my grape juice and old paintings, while I may assign little value to your brightly polished chunk of metal. The important thing is that no one thing has the exact same value to more than person.

The other term here is money. Money is a fictional construct that allows people to quantize the value that they put on something. It helps us see the relativity of value (and to a lesser extent, wealth), and allows us to trade things of equal value, (not objectively, but subjectively based on the person and item). In the end, if we feel that we've given away something that means more to us than what the other person had to part with, we feel treated unfairly. Money both reveals and alleviates this to a great extent. In any case, the important thing to remember about money is that it isn't real. It doesn't represent the actual value of anything. This is why we're allowed to do really goofy stuff with it, as it's pretty much all math, and hypothetical, fiat-based situations.

Anyways, let's get to the heart of the matter. So we've got this economic crisis going on (click here for a really good, simple explanation). What's of particular note of interest here is how money and wealth relate to each other.

People value houses. This idea of value, over a period of time, caused the amount of money required to get that to go up. In theory, this was just matching the price with the value (trying to make things even), but in reality, the price vastly outstripped the value. Eventually, people started to figure this out in a very brutal way.

So, through a complex series of financial services multiplied by time and events, it all came crashing down. This lost a lot of investors their money. They did not, however, lose their wealth. Remember, money isn't wealth. All the things that the investors valued, like their house and their children and their Degas in the living room were left untouched. Some people did lose these things, like the deadbeats who couldn't pay their mortgages who lost their homes and the investment bankers who lost their shirts, but most people lost things like pensions, college savings, and other things where nothing was physically taken away from them.

Of course, these people (ie. everyone) did lose something. They lost their ability to be able to afford things they value, like food, once they retire. They lost their ability to give their children a valuable education. These things are worrying, but far from immediate. These things, rather, are relegated to the world of "wall street", a fake world where people trade around worthless scraps of paper and electronic bits. If this were the only result of the economic collapse, there wouldn't be much of a problem. This crisis, however, has bled into "main street".

For example, few people are going to have enough things that other people value enough to buy a home by trading it in. Instead, people usually borrow the money to do this. Said money has mostly dried up at the moment. Likewise, there are a lot of businesses out there that create things that everyone values, like cars, who, due to stupid stuff that they've done with labor unions and risky investment, taxes, etc. are forced to take the money they get and basically throw it away, rather than exchange it for things that are valuable (such as parts to make new cars). When this happens, businesses go bust, and people lose their jobs.

So what? All a job gets you is money, and money is fake anyways, right? Of course, a vast majority of people are completely ignorant about how to get the things that they value without just handing over money to someone else to get it. This means that a person who becomes unemployed is left with two choices: learn how to grow food real quick, or get a new source of money so that you can just buy things again.

In the end, it's a breakdown of value. When we're faced with a situation where we can only purchase so much value, we tend to rank things, and just as quickly bump up the value of the top things and bump down the value of other things. We start ranking things into needs and wants, and statements like "we don't need new rotors on our car yet" start showing up. It's not that people intrinsically want working breaks less, but its value is decreased relative to other things when the money is tight.

Of course, what this brings is deflation. As we value things less, the prices go down to match the value. As prices go down, so do the balance sheets of companies. In a perfect world, this would be fine, as employers would simply match the cost of living decrease to a pay decrease and everything hits equilibrium again.

Of course, to some people, particularly people who big into big labor, are horrified at even the idea of wages (money) going down, even if it allows them to buy the same, or more goods and services (value). Likewise, modern economics are big into inflation, in part because of what their ideologies tell them about deflation. In the perfect world of most modern economists, people who have a lot of money will loan it out as interest, which creates more money (I borrow $10 and give back $11, there is now an extra dollar of money in the system). Of course, more money spread around the same amount of wealth (value) causes the price to go up. They have more money to deal with it, the rest of us who aren't lending out money at interest don't. See THIS map of US inflation and how it's changed since modern monetary policy started being implemented in the 30's and 40's).

So, when prices are not allowed to deflate, yet the value of things is going down (due to a system which has created a crisis), eventually things collapse, and the money price of things goes up while the value of things continues to go down. In the end, you have "stagflation". When this happens, anyone is in a tight jam, especially if you're literally fighting for your survival.

France had just such a problem. Back in the early 1800's every single European country was sending it's armies into France in order to remove a particular political leader and return France to it's old, pre-revolutionary, autocratic, bureaucratic self. No one was buying French goods, as their value was decreased for political reasons (and because they might be just about to be blown up by English cannons). As exports tanked, jobs started bleeding like neck wound (like today). Suddenly, people made things which were valuable to themselves, but less valuable to others. As jobs went away, nobody had any money, and scarcity suddenly kicked in to drive up prices. It was Jimmy Carter meets the industrial revolution.

So, what could France do? Napoleon, in his genius, decided to take the millions and millions of angry, unemployed French people and press them into the army. Now people had jobs, AND France was less likely to immanently collapse due to foreign invasion. Two birds with one stone. The problem, of course, was how to fund it all. In the end, the French needed to take something that they had that had little value to them, and find someone for whom it had a lot of value. The money gained from the sale could quickly be turned over into something that France actually valued, like muskets.

The answer was land. Just like state governments and movie stars today, France started selling off the assets it didn't need to afford the ones it did. In France's case, it literally decided to sell its global empire (which hadn't been doing much for it). The prime slab was in the Americas: Louisiana.

Back, long ago, North America was divided up like a jawbreaker. There was the hard center between Boston and Charleston on the Atlantic coast that belonged to Britain. Outside of that was a concentric ring that went through the Caribbean through New Orleans and St. Louis up through Quebec. Outside of that was lands claimed by the Spanish, or were considered to worthless to take from the native populations. Of course, after the American Revolution, the need to contain the British was drastically weakened, as their only holdings were Fort Detroit and Ottowa. Combine that with a string of successful slave rebellions in the Caribbean, and all the sudden France's desire for empire waned. Simply put, there wasn't nearly as much value in North America as there had been when they took the trouble to carve out the territory in the first place.

But if there was someone who was willing to buy the land from France, especially for an amount of money greater than France valued it, then it would be in their best interest to sell it and turn the money into something it did value. The United States was only too willing to oblige. They needed space, they needed stable trading ports, and, most importantly, they needed the lowest number of threatening European powers bordering their fragile near-confederacy as possible.

Thomas Jefferson was willing to shell out $10 million (in 1803 dollars!) just for the port of New Orleans and the immediate surrounds. The French, on the other hand, needed more money, so they were willing to throw in the entire rest of the Louisiana Territory (all 1 million square miles) in with it for a mere $5 million more. The Americans were stunned. The deal was just too good to give up.

In the end, America bought the territory and doubled in size. France was able to get the funding it needed to raise 3 million soldiers and win the battle of Austerlitz a few years later. Win-win.

Perhaps, assuming we don't change policy to actually fix the problems we're in right now, we could consider something likewise for our current economic woes.

Judicial Reform (Part 3)

Judicial Reform (Part 2)
Covering the application of justice in the modern world

Judicial Reform (Part 1)
covering a brief philosophical history of justice

So, what are we left with?

We are left with a judicial system in which the state takes over as prosecutor when a "crime" has no victim, and the way in which the scales are balanced is by the method which has the least utility, while at the same time is the most expensive, destructive, and ultimately detrimental.

So what can we do?

The first thing, of course, we need to do is to completely eliminate any form of attempting justice that relies on coercion. No fines, no fees, no prison, no capital punishment. Period.

Of course, this does cause a few loose ends to show up. The first is, "how do we do justice?", that is, how do we balance the scales? In the end, a victim who is unable to find justice can be worse than a perpetrator who has chafed under the coercive punishment of imprisonment. The best answer is restitution, as it is the most satisfying way of vindicating the victim, and thus the least amount of action is actually required for the victim to feel that justice has been done.

If you burn down my house, for example, and you go to jail, the fact is that I still don't have a house (and to add injury to insult, I now need to pay for your jail time). This is clearly an unsatisfying way to vindicate my pain, and, as such, more of it is required to go the same distance. This is, of course, disastrous when more of the most expensive means is the only option.

Furthermore, being the victim of crime and injustice is a deeply personal thing. What is troubling to most people who have had their house broken into is less the stuff that's been taken, and more the deep feeling of invasion of privacy and fear for their families. This personal aspect is left unsatiated with the application of justice in our modern world. As such, not only is punishment bad for the criminal, and only gets worse the more you apply, punishment is also unsatisfying to the victim, which means that more is required in order for justice to be served.

This is why restitution is by far the better means of handling justice than retribution and revenge. After all, if someone broke into your house and stole something, which would be more satisfying, the perpetrator returning the stolen property, sincerely apologizing, and buying you a new and improved front door lock, or to have the perpetrator worked through a sterile system and have them sit in a prison, get free room and board, and you have to pay for it all? You can take pleasure in the actual mental anguish of imprisonment, but it is invariably far less satisfying compared to a solution that is personal, applicable and appropriate, and, most importantly actually fixes the problems caused by the crime.

The other major loose end is how to deter crime. Obviously, we would all like to have a judicial system that helps prevent crime in the first place, rather than just trying to clean up the mess. Again, I turn to John Burton:

The axiomatic element in all human behavior is relationships. No progress can be made in the study of any level of behavior unless there is description and explanation of relationships, how they evolve, how they are learned, what patterns emerge, and why there is observance of and deviance from them.

At the ground floor level, conflict is an aberration, a breakdown in social or authority relationships. Having thus deviated, the subject is required to experience a form of punishment or negative satisfaction. Punishment, even physical punishment, by a parent is usually in the context of a relationship. It is not the physical hurt that has any effect. What is at stake is the relationship, and to preserve this the child is prepared to conform if necessary. But punishment by a parent, teacher, or authority with whom there is no valued relationship rests entirely on the physical pain or the deprivation inflicted, with which the human organism has a physical and mental capacity to cope. It is this form of punishment, unassociated with valued relationships, that the court, authorities and society inflict. Behavior is not altered by it in the direction intended.

The point being made is that coercion is temporary, abstract, and resistible, actual deterrence comes from things that are permanent and personal. For example, if the relationship with someone you love is damaged by something you do, it will have a deeply personal effect, that is permanent until you can make up for it (that is, until justice is served). In this way, the perpetrator is given a positive goal of how to make amends for their crime, and plenty of reason to do so (what they have with the other person is lost until they make amends). Rather than the idea that a crime will create a temporary, abstract problem that can be resisted, such actions would create a sense of personal loss that will endure until it is eventually undone. Clearly the latter is not only more deterring, but provides much more impetus for the criminal to actively correct their problem in the way that will be the most satisfying to the victim. Compared to the current system that provides no impetus for restoring the world to its pre-crime state, and is less satisfying to the victim, and is expensive and destructive, clearly this method is the one of choice.

Of course, this requires there to be something out there that any given person would be loathed to allow to be lost or negatively altered. Again John Burton:

Modern industrial society tends to destroy and not to build relationships. Technological developments require shifts in occupation and changes in living environments. There is no identity, or relationship on a personal basis, with a monopolized industry, a large company, or the society as a whole represented by the tax gatherer. In the absence of internalized norms you do not pay your fare or for your shopping unless clearly required to do so. This is a situation that will get worse as industrial society gets larger and even more anonymous.

If relationships are the backbone of deterrence, and the lack of them is the result of modernity, what are we to do? I mean, how much different is your life from prison actually, other than that you have to work and your family is already there? Clearly, without this excommunication (exile) and public humiliation (capital punishment) have little utility.

Of course, it would be easy to just say "death to modernity" and try to recreate a feudal system (which might not be so bad now that we know how to combat the plague), but such a drastic social overhaul would be a bit of a challenge. That being said, in a targeted way, this would actually be possible. After all, if people don't hold people they care about at gunpoint for their money, or steal their car, or whatever, wouldn't it make sense to do things to make people care about each other? After all, would it be better to spend $10,000 per year per poor, urban youth to get them to know and care about their neighbors, or would it be better to spend $10,000 per year to destroy that same youth's future while leaving the victim unvindicated after a crime has already been committed?

The answer is obvious. If you spend even half that amount, you're still spending $100 per person per week just for them to get to know people in their community. You could just GIVE them the money for helping the elderly, and you'd be relatively sure that you're clearing out a whole class of people that the person won't commit a crime against. Plus, the more involved a person gets in a community, the easier it is for them to get involved in their community. The more involvement, the more personal risk to the person who might commit a crime (and, arguably, the less likely they are to commit a crime in the first place).

This is not an idle pipe-dream, while spending most of our focus on prisons. Why should we abandon the better, cheaper system for the vastly more expensive system that causes more problems than it attempts to solve?

On a final note, I believe that we need to systematically end any court case that begins with "the people of..." Crimes against the state, unless they are actual, honest to goodness crimes against the state itself (like embezzlement from a state fund, or defacing state property, etc.), should be completely thrown out. There MUST be a victim in the courthouse (or perhaps their family in the case of a murder) who has actually been victimized by the defendant. If there isn't then such a case is CAUSING injustice to the "defendant", rather than meting out "justice" in balance for a "crime" that has no actual victims.

If the state gets on the ball and throws out victimless crimes and it throws out the methods that require a lot of pain and destruction just so that the victim remains unsatisfied, we can have a working legal system which finally stops creating more suffering than it attempts to alleviate.

Judicial Reform (Part 2)

Judicial Reform (Part 1)
covering a brief philosophical history of justice

Judicial Reform (Part 3)
The conclusion to how the justice system should be reformed.

Now that some of the background of why we do justice the way we do has been laid down, it's time to move on to how we actually practice justice in the real world.

It is clear to see that justice, as it is practiced today, is first and last focused on punishment. While some small programs exist (such as anti-drug campaigns) to preempt violent or otherwise subversive or harmful behavior, a near total majority of time, focus, and funding is put towards figuring out to do once a person has already committed a crime. While civil courts tend to place their focus on adequate restitution, that is, forcing the guilty party to compensate the afflicted party for the damage that they have done, the criminal courts, at least in the United States, have a complete fixation on punishment and retribution. The point is not to restore the world to a pre-crime state, but to inflict damage on the offender to an equal amount that they damaged others by committing their crime.

This relies, 100% on coercion. Armed police officers arrest you, and powerful people put you into prisons where you are forcibly detained by more armed officers. It relies on power, and it relies on force, and, in rare circumstances, it relies on violence. More over, it is difficult to do (in part because people tend to resist punishment, compared to restitution or forgiveness), and it has become atrociously expensive. Nowadays, it costs $50,000 per person per year to keep people in prison. If I embezzle $10,000 from a government agency and am locked up for 10 years as a result, the state is burdened by $500,000, a fifty fold harm to the state than if I had just walked away with the money. Clearly there is something wrong with this system if the entire point is to restore balance.

But apart from the horrendous inefficiencies of our current justice system, we have to ask the more crucial question: "does coercion even work?" The only real strategy that a system that can only attempt justice after crimes have been committed is to see if the way in which they meted out justice prevented future crime. While the system may be able to bring the scales back into balance through coercive punishment, I think it would be difficult to find a person who disagrees with the idea that the justice system should also help keep things in balance. If coercion can not do this, it means that the only use of coercive justice is to balance the scales in the least popular, most expensive way possible. Such a system, naturally, should be done away with and replaced.

Allow me to reference John Burton from his essay "International Relations or World Society?" (International Studies Association, "The Study of World Society, the London Perspective", 1974):

There are those at the ground floor level who claim to be "political realists". They have a Calvinistic conception of behavior related very closely to traditional normative notions reflected in legal thinking. Their assumption appears to be that, generally speaking, persons and states conform to agreed norms of behavior because of coercion and threat, together with some sense of moral obligation. The questions they ask are why does the minority not conform and how can it be made to conform? ... The role of the state is to control [peoples'] behavior and is given a legitimate monopoly on violence.

However, there is a false assumption inherent in the ground floor notion of coercive authority... The assumption that policies of coercion deter. The average prison sentence in Britain was 28 percent longer in 1971 than it was in 1961, but there was no apparent positive effect. In education, in industrial relations and in communal relations, threat and coercion are found not to be effective deterrents. This is the empirical position. At all levels, the tendency is to respond to failure by applying more of the same medicine and not to acknowledge that the initial analysis was probably faulty. When "law and order" fails, the level of coercion is increased.

It is this form of punishment... that the court, authorities and society inflict. Behavior is not altered by it in the direction intended: on the contrary, the behavioral response is to damage the person or property of that authority as soon as opportunity offers.

Of course, John Burton was not the first person to notice this effect. As Confucius once said "a man will be good only while he is punished, and, once the punishment is over go back to his ways. A man of propriety, on the other hand, will shun evil ways always."

In fact, I believe it would be difficult to find someone confident that punishment is a serious deterrent, and the fact that 1 in 30 Americans is currently behind bars should testify to this (and the Department of Justice presumes that 1 in 15 people will have spent some time in prison as of this year). In fact, rather than thinking about this abstractly and empirically, we can also bring it down to the concrete level. Ask yourself, have you ever known that doing something had a punishment attached to it, but you did it anyways? This is so pervasive that it because the prime statue for burning people at the stake during the inquisition: auto de fe (or, as Mel Brooks summarizes: "Its what you oughtnt to do but you do anyway.")

So, if coercion is not, in fact, much of a deterrent, then why do we continue to use it, despite its enormous costs, both monetarily and socially? This brings us once again to the history of justice. Hundreds of years ago, the application of justice basically boiled down to two forms: exile, or capital punishment. Firstly, these two options were very inexpensive. Exile, of course, was free, while capital punishment required someone to spare a few moments to slap someone in the local pillory, or some other form of public shaming. While this type of coercion may lack utility, at least it doesn't absorb massive amount of resources and destroy lives while getting the same amount of nowhere.

The second main thrust is that it is actually possible to deter someone from doing something if you remove the person altogether. A brigand exiled to the other side of the ocean is physically unable to terrorize your populace. Likewise, if someone is put to death, it will be challenging, to say the least, to lapse into recidivism. Once again, exile is free, and a single rope can be used at more than one hanging. The important thing to consider, though, is that neither of these methods are designed to level the scales per se. While it definitely may have a balancing effect, the point is clearly focused on deterring further crime, rather than punishing someone and hoping that they won't do it again (which we know doesn't work).

While prisons are thought to have this same effect, they are not the reason we use them. Instead, the rise of the prison system as we know it today, comes on the back of the "penitentiary" movement. The point of the court sending you to prison wasn't so much so that the scales would be re-balanced, or that you would be taken away from society so you couldn't cause problems (although these were both intended side effects) but rather to place criminals in a place where they could do penance for their sins and come out as a reformed person who would not commit crime again. These old penitentiaries were built in the spitting image of old monasteries with rows of cells which contained an ascetic nothing but a bible, and a church in the middle. Criminals would pray until God healed their souls. Free from sin, they would be let out to crime no more.

As noble of an experiment as this was, it clearly failed. In the end, prisoners did not reform simply by being placed in a whitewashed room and told to pray it out. Unfortunately, the prison system lurched on as a zombie. The rows of cells would stay, as would the idea of keeping dangerous people away from society. However, rather than being a place that temporarily housed people while they waited capital punishment or while they prayed, being incarcerated became a PART of the punishment itself. Soon, it would become THE sole punishment for criminal offenses. Gone was a way of punishment that deterred crime (like executions), or reduced recidivism (monastic prayer), and what was left is a non-deterring coercive force of punishment that is as expensive as it is ineffective. It's interesting to note that prisons today are still called "correctional facilities" as if they actually correct anything.

Finally, there is a more insidious side of punishment. That is, that punishment invokes a deep-seated human desire for revenge against our punishers. Not only does punishment fail to deter in the first place, but it actually increases the afflicted's desire to be a violent person. This is easy to understand when the process of imprisonment rips families apart and causes people to be much less likely to get employed or be able to do other things to start a new life once they've been in prison.

The idea that cruelty, even in the name of balancing the scales of justice, creates more problems than it causes is pervasive in the course of human events. Heavy "strategic" bombing in World War 2 sought to break the morale of civilians by bombing them. In fact, strategic bombing increased the resolve of the afflicted population. Likewise, putting down rebellious behavior by force quickly gets re-branded as "massacres" from Waxhaw to Baghdad. While it is easy for our minds to drift to the few times when coercion worked, like the ending of the Boer War with concentration camps, or the end of World War 2 with nuclear weapons, it betrays the fact that coercion almost never works, and when it does, the coerced party must be utterly destroyed. Is that what we want to do to people who park the wrong way on the street or sell insurance with an outdated license?

The way that our modern societies apply "justice" in the real world is an abhorrent mess. Based on a failed experiment over a hundred years ago, we now choose to use the most expensive, most demeaning, least utile form of meting out justice and deterring crime. The only way such a system can be ultimately successful is if all people are born and die in a cell, or if the state is willing to use the equivalent of nuclear weapons on its own population. Clearly, the system must be thrown out immediately.

For further reading, click here.

Judicial Reform (Part 1)

Since the dawn of civilization, mankind has striven for peace.

While such peace may inhibit the reckless ambition of some, in the end, most people prefer security: the freedom of fear for their lives, their loved ones and their possessions. As such, civilizations since their inceptions have existed, in part, to create a peaceful environment for those who are part of them. The primary way of checking the few who are willing to be coercive to attain their ends is the establishment of justice.

While opinions of the exact nature of justice are as varied as the opinion holders themselves, few would disagree that the main purpose of justice is to "right wrongs". That is, when someone breaks the peace and inflicts harm for personal gain, we want to have some way to commit actions that will "fix" the problem of the harm being done. Ideally, we'd want this to be done by a third party, or else things tend to devolve into feuds where neither of the parties is able to enact the proper corrective action without going too far and creating new wrongs.

It was this basic idea that founded the very core of justice as we know it today. In ancient times, this began by giving power to certain individuals to handle these social problems. The Pharao, for example, could settle disputes, and his decision about how to right wrongs was considered to be final. Likewise, ancient Jewish culture was ruled by, aptly named, judges.

It took the ancient Greeks, however, to really reason through justice all the way through and codify the ideas of the ancient world. The core idea of justice, according to them, is balance. Namely, if one party committed a wrong (such as looting your village) the proverbial scales were unbalanced. There was loot on your side, and there was an absence of loot (plus perhaps the loss of a house or women) on my side. The whole point of justice, then, was to balance the scales. Because I, as the afflicted party, am unlikely to make the punishment exactly fit the crime (I would probably propose a punishment that unbalanced the scales in my favor), an adjudicator was most often called for.

The important point is that judges always sat between two parties, meting out the proper amount of restitution, retribution, and other punishments so that both parties could feel that they were treated fairly, and life could go on without further violence.

Along the way, in a touch-and-go fashion, there was the creation of legal codes, like the Hammurabi Code, or the Ten Commandments. Generally speaking, these were designed to be an aid to local arbitrators. For example, if someone kills me, how is it possible to have justice? What can you put on my side of the scales to make things even again? Likewise, what should be the punishment for rape, or perjury? In these confusing circumstances, having a civilization-wide approach would be very helpful for keeping an even peace across the entire land. For most other things, though, non-guidelines like "an eye for an eye, a tooth for a tooth" helped people to remember to keep things fair and equal in the pursuit of justice.

But then things changed, and we're still reeling in the mess it's created. Stunned by national losses and tragedy, many ancient civilizations were at a loss for how to achieve justice. For example, when the Caananites were repeatedly crushed and sent of to Babylon (among other places), it created a serious problem for ideas of justice. "Why was our civilization completely wiped out?" In the end, the only way to keep the ideas of justice consistent was to come up with the natural conclusion of "because you earned it". The destruction of your armies, the rape of your women, and the utter destruction of your people was actually what was required punishment in order to make the scales even again. But what could a whole nation have done to deserve this?

The answer, in many places of the world, was that the nation as a whole had committed an offense against a god, or gods. For example, God gave the Israelites a massive, complex legal code (the entire Book of Deuteronomy, for example). When these laws were broken, it wasn't that they were commiting acts of injustice against their neighbors, but against God himself. Now, for all of the imbalances against God, he was simply re-balancing the scales. National retribution was the result. This idea was pervasive in the ancient world.

And then something massively important happened with this story. Christianity, in its fledgling state, eventually hit the Roman empire. The core Christian message was that God was now a god of forgiveness. Now, rather than enforcing retribution in order to even the scales, God would pardon you. The scales would be even, no retribution was required, forgiveness made everything even. This radical new way of thinking about justice, however, wasn't all that well recieved in the ancient world, and, invariably, it wound up getting corrupted as the ideology came into conflict with existing ideology, and existing legal institutions.

The foremost of these was Rome. Rome was founded as one of the world's first republics. Central to this idea was that the state was created by the people, but it was also owned by the people (well, at least the percentage of ones who had any say). This created a new problem. If I were to deface a public building, who would be the other party on the other side? In a monarchy, the answer is simple: the king owns all public and state-held property, so the king would be the plaintiff. In a republic, however, no one group of people payed for the building, because everybody had. Clearly, the scales needed to be balanced (and someone needed to pay for the repairs). This created a new idea: a crime against the state. Now, the government, representing everybody the government represented, would stand as a single, united party on the other side.

While Rome didn't stay a republic forever, the idea of a crime against the state would continue on as a new legal precedent. While some decidedly Greek thinkers, like St. Paul, were able to reason through how Christianity was supposed to be expressed in the real world, it fell tragically short once it combined with a Roman civilization that took its law and ability to mete out justice very seriously. The end result was the Roman Catholic Church.

Starting with Constantine and his immediate successors, Christianity would be formalized and homogenized (a very Roman thing to do) to make it simple, and most importantly portable, to all corners of the empire. Doctrine was codified, and any who resisted lost their heads and had their "heretical" works burned. While Christianity had brough forth a radical new idea about justice, the Romans wouldn't have anything of it. Bereft of old, pagan, Roman laws, Roman Christianity came up with new sets of Christian laws, based primarily on the old Jewish legal system. Combined with a new way of understanding the cosmos and the supernatural, God was once again put at the heart of it.

Born was a new legal system. Now, God would dictate what was right, and the state would enforce it. Furthermore, through the power of the church, legal officials were able to clarify and create new laws in Gods name (they would know what God intended, after all). Thus, in the end, if you didn't follow the law, you were now commiting an injustice not only to god, but also the church/state. Out was the message of forgiveness, in was a new system that was just as much Catholic as it was Roman.

This shift was crucial. Now, rather than being a party that sat between two parties, the judicial system now also stood above parties between them and God. Furthermore, the judicial system was now authorized to be a party in and of itself on God's behalf. This caused the church to often wind up as both adjudicator (between you and God) and as plaintiff (the other party in the court case). Needless to say, this was a recipe for disaster, which such things as witch hunts and inquisitions would eventually prove.

While the Protestant Reformation and the ensuing political re-writing of the political system would do a great deal to break up this power, the core idea would continue on into the modern time. For example, many believe that homosexuality is a sin against God. As such, they get their state's legislature to make laws against it. Anyone caught in the act of being a homosexual no longer simply commits a crime against God, they simultaneously commit a crime against the state. But how could the state justify being the plaintiff, when the state itself hasn't been wronged in any way? Because, according to the advocates, if the state does not mete out justice on God's behalf, eventually God will mete out justice on his own behalf, which will be the destruction of everybody.

Of course, this is a denial of the entire point of Christianity, but it isn't a denial of an ancient way of thinking, kept alive by fundamentally Roman institutions.

Where this leads us today is a judicial system that has completely run amok. While the judicial system aptly arbitrates disputes between two parties, and they are still capable of prosecuting people who commit legitimate crimes against the state (hijacking a mail carrier for example), they are also in an insane position where they are bound to adjudicate between average people like you and me and arbitrary, morals-based legislation.

Now, it's possible to have "justice" done to you when you don't even inflict harm against anybody else (nothing has been put out of balance), but when you are doing something that isn't in line with what the legal code tells you to do. You can't grow marijuana on your property, not because you're doing any damage, or hurting anyone, but simply because "drugs are bad". Likewise you can't possess automatic rifles because "guns are bad", and you can't park your car in a loading zone for more than 30 minutes, because clearly you're a terrible person (and, by extension, a criminal) if you do.

We now live in a world where criminal law is top-down, and where you get thrown in prison if you don't meet an arbitrary consensus of an idealized moral life. No wonder 1 in 30 adults are in prison, if you can get put there even if you never hurt anybody.

Demand-side? You're on the wrong side

With current economic woes finally starting to influence regular people over the past few months, it has created this feeling over time that "main street", that is, you and me, are losing out. That is, of course, because we are. While it may be little comfort to know that things aren't getting worse on purpose, we've got to understand that things are getting worse, in part, due to the economic systems that we have in place.

In order to understand this, we've got to look at the "demand side" economic model, as it's definitely the most popular way that politicians look at things at the moment. The basic premise is this:

Demand creates Jobs (to produce the supply) which creates disposable Income (from wages) which creates demand (because people have money, and want to buy things with it).

Assuming you're paying attention, you're getting bombarded by demand-side messages all the time. For example, people are concerned about consumer confidence, because if consumers aren't confident, they won't generate demand, even if they have the income. Likewise there is a concern about unemployment, not just because people suffer when they're out of work, but because job cuts decrease income. As well, there is this constant talk about the "credit crisis" which is a problem because people can no longer raise the income they need (through loans) to have enough demand (for things like cars and homes, which few have 100% down-payments for).

The thing is, though, that while this particular philosophy is very cohesive and internally consistent, it also has serious problems once it starts interfacing with the real world. Problems, which make average people like you and me lose out in the end.

The first of these problems comes from technology. Efficiency creates redundency. Likewise, we have seen thousands, if not millions of jobs simply disappear over the past decade or two because jobs that human beings were doing got replaced by machines. In any case, improvement in technology always leads to job loss, which can sometimes be substantial. Consider, for example, the fact that a single human with only hand tools can farm a few acres of land by themselves, whereas a person who has a few pieces of large farm technology, like a tractor and a combine, can farm hundreds of acres just by themselves. As such, if you introduced technology to a non-modern farm society, you'd instantly get a 99% unemployment rate as the one farmer with the machines can do the work of the 99 others. See THIS for example.

In any case, improvements in technology and labor methods (like improving efficiency) cause unemployment, and unemployment drives down incomes which drives down demand, and the whole system enters a death spiral. While it is possible to use technology to create new jobs, these efforts are usually forced, and not only do they not replace all the jobs lost, but those new jobs will also continue to be lost as the technology used to create the jobs in the first place improves.

A second major problem that demand-side economic thought creates relates to incomes. In the ideal world, the most income would be distributed to the people who would generate the most demand (that is, they would go out and spend it). In the end, the best, most organized, most dedicated organizations to the purpose of spending money are governments. Thus, it's not surprising that when times are tough, demand-side thinkers will take money away from average people (who aren't spending "enough") and give it to the government, which has the will to blow around cash and always too many ideas with regards to how to blow it. FDR created the New Deal, for example, and Obama is currently touting rhetoric of government-backed infrastructure projects, and whatever. The point is that if the government has the income for us it can have the demand on our behalf, which will create the jobs that we'll all fill, which will give us money to buy things on our own.

This idea, though very internally consistent, carries a bathtub full of problems. The first is that just because the government has the willpower to spend money doesn't mean that it has the ability to spend the money well. Large organizations with lots of money invariably have lots of corruption. Corruption means that there will be money sitting in bank accounts rather than money being paid to new employees. Secondly, the whole point is to spend money for the sake of spending money. Thus, it doesn't matter what kind of jobs are created so long as jobs are being created. This can mean that jobs are quickly lost once the government subsidies fade if what the jobs were creating wasn't something that anyone would ever buy. For example, if the government paid a million people to make buggy whips, they would be providing a false demand that couldn't possibly be filled in by the private sector once the government backing left. As such, this type of spending ultimately only prolongs problems, rather than fixing them.

Most importantly, however, the government is taking money away from people who aren't spending it in order for the government to spend it on their behalf. This is one way in which you definitely lose, as normal people are now losing money. As well, with less money in the hands of people, they are now less likely to spend what remains, which works to offset the increase in demand caused by the government.

As well, this decreases saving rates. While saving is an anathema to demand side thought, wiping it out is actually very hazardous. When savings goes down, it makes it so that small economic units, like you or your family, are more likely to go bust. Not only does this further decrease demand, but it also causes problems with people you're indebted to (I'll get to that in a minute), and it causes organizations like the government to come in and bail you out. When this happens, a lot of money is spent (and lost in overhead) without necessarily all that many more jobs created at the local unemployment office.

Also, the people who save the most also tend to be the wealthier, who are also the people who get taxed more (in part precisely because they're saving, rather than contributing to demand). When wealthy people save, they tend to do it in the form of investments (like stocks) or in large sums in banks. Without this, companies, like families, have less capital to fall back on when things go bad. In the case of corporations, it results in the government bailing them out, as we've seen recently. This, yet again, is an expensive way to add little demand or income to the system. More critically, however, if there isn't savings in banks it creates very brittle banks. Let's all remember what happens when there is a systematic collapse of the banking system...

This brings us to a final problem, that of debt. Remember that all three parts of the tripod of income, jobs and demand need to be going up in order for the economy to grow. When technology guts jobs, and inflation guts income (and globalization guts both), there is invariably going to be a crash in demand. As we've seen over the past decade, the only way to prop up the whole system is to create fake income in the form of consumer debt. If you don't have any money, but you have the ability to buy things with your credit card, you will continue to buy things (create demand) because you have the ability to buy things.

This, of course, has the potential to be absolutely disastrous, as we're seeing right now. Remember, credit is FAKE income. While you have more money now, you have to actually give it back at some point because it was never yours. In fact, once you put your interest rate into the mix, credit actually decreases income, even if it very temporarily props it up. In the end, however, debt must be repaid. If you and I have been good economic citizens and have been spending rather than saving, it means we will be unable to pay the debts back, especially if there is a shock.

The only result is a proverbial day of reckoning where homeowners default on their mortgages, families file for chapter 11, and all the fake income comes crashing down, revealing a lack of demand, freezing the ability to create more fake wealth to keep the system going (cf. the credit crisis), while jobs, created by fake wealth disappear (cf. current unemployment numbers), which creates a loss of income which causes you and me, on the wrong side of this whole equation to shudder in fear and darkness as we scrounge to find food in a world with no jobs, inflating food prices, while trying to find shelter when our homes foreclose and we desperately try to use jobs we don't have to pay back debts we can't afford.

And here's the real kicker: we're going to the government for help. The government, meanwhile, is horribly strapped for cash (see THIS, for example) because the tax revenues they're bringing in have plummeted as Americans have lost, on average, 40% of their wealth last year. So, if the government has LESS money, and they're called on to spend MORE money, the end result is a massive increase to the government's debt (projected to increase by 1 to 2 TRILLION in 2009). Remember how I was just talking about what happens when you and I go into debt to artificially keep the economy going? Yeah, now imagine that the debts you're defaulting on were to the tune of $14 trillion dollars. The world, as we know it, will end.

So, what does demand-side economic thought mean to us all? It means we have a system in place that is corroded by technology, quick to implement protectionist policies, makes you, me, and the whole system more vulnerable by stripping away savings while forcing you, me, and the government into debt that will ultimately destroy you, me, and all of civilization as we know it.

Remember, the demand-side philosophy is a neat little internally consistent package, but when it comes into the real world, the natural results of its ideas (policy) hurt you and me. While I'm not about to ring out the virtues of supply-side thought (they'll get a bloggal tongue-lashing later), we've all go to realize that we are most definitely on the wrong side.

Fascism and GeoCaching

Life is boring.

I have two cats, and, like all animals who don't need to worry about where their next meal is coming from, just sort of sit around all day. Humans, on the other hand, are an odd species out. Rather than simply accepting that there isn't, latently, anything more to it all than just sort of lying around, we demand that life has some sort of ACTUAL meaning to it. We assign meaning to things: we come up with grand ideas, we choose careers, we join causes, etc. in part because without meaning, life to human beings is boring.

But just because humans tend to become depressed when they realize that life has no default meaning or universal overarching point, doesn't mean that it does. As such, in the end, it winds up falling upon us to MAKE that meaning (which we then tend to turn around and believe was there all along). In the end, religion has done an excellent job in giving people meaning along with other ideologies and organizations. We get meaning and purpose, but also identity and understanding, even if we have to make it up ourselves. Life is boring otherwise.

This brings us to fascism. At it's heart, fascism is little more than a rejection of modernity (itself built on a series of systems). The old, medieval systems of giving life meaning and purpose were out, and now, two to three hundred years later, we still haven't figured out how capitalism, industrialization, secularism, liberalism, urbanization etc. is supposed to fill the void. Fascism's answer is to reject modern ideas and return to a life where understanding is governed by an abstract idea of faith, a die-hard sense of community, and purpose in one's occupation. The end result is a quasi-mystical, iron-clad state that is based on a corporatist model.

If I get my sense of identity and propose from my volk, I don't need to frantically scramble for it in a world that is undirected where everybody's way of finding meaning is equal, and thus relative (and thus fundamentally unsatisfying to most people). Of course, this idea of nationalism can quickly lead to an exclusion of non-volkish people. Combined with the power of a state, fascism showed us very well in the 1930's how genocide can be quickly orchestrated based on a warped search for personal meaning.

So herein lies the problem. On the one hand, we have a very old mindset, in one form or another, that assigns people deep personal meaning and understanding, while at the same time causing inquisitions and genocides. On the other, we have a mutual respect for everyone's story, along with the tacit understanding that there is no ONE story, which leads people to vainly attempt to ascertain meaning on their own in an unsupportive, relative, constructivist, post-positivist world. No wonder fascism is making a comeback.

But this brings us to geo-caching. For those who don't know, the basic idea is that someone hid a nalgene bottle really well somewhere and all you get is the GPS coordinates. With some sort of a hand-held GPS reciever, you go tromping through woods and parks and wherever trying to find these sometimes very well hidden, sometimes very difficult to reach containers. When you finally find it, the reward is getting to put your name on a little notebook in the Nalgene along with a note. I got to do this for the first time today, and let me tell you, it was quite an experience.

The thing is, the world is still the same, with the same park benches, and the same bridges, and the same boring everything. Now, with geo caching, there is a quest, a purpose to it all. Now you have something that you need to explore, and something that you need to achieve (and the sense of achievement when you finally find the things is quite satisfying). The plain old boring, has been transformed into the creative and meaningful, while exploring and learning about your community, rather than ritually murdering a particular group out of it.

In the end, fascism and geo-caching have a core problem that they both address. As such, it seems to me like there should be other systems out there like geo caching that can allow us to have meaning in the otherwise mundane, while at the same time actually supporting the search and results thereof, while causing happiness without needless bloodshed.