Mixed economy and Monopoly of market

 Joseph Stiglitz - Mixed Economy and Money Supply

"Before the East Asia miracle there were two dominant paradigms for development, one focused on markets, the other on government and planning. The first had its intellectual roots in Adam Smith's "invisible hand" - markets lead to efficient outcomes. All that government needs to do to promote growth is get out of the way. The basic slogan is "get the prices right." With the right prices, everyone will have an incentive to make the right resource allocations. Undermining this particular religion was the disturbing observation that countries that seemed to get the prices right—to follow all the advice of the visiting preachers of the free market—too often failed to grow. To be sure, like medieval medicine, there was always the allegation that the patient had not followed the doctor's orders precisely, and it was this that accounted for the failure of the remedy.

At the opposite side were those who had little faith in the market and who looked to government to ensure through the planning process that resources were deployed in a way that promoted economic growth. The lack of success of those countries that followed this paradigm has led to the virtual extinction of this school of thought. 

Ironically, almost none of the successful industrial countries followed either of these extreme strategies. They are mixed economies in which government plays an important role. The appropriate question to be asked is not whether government should play a role, but what role and how can it be performed most effectively." Stiglitz 1996 "Some Lessons from the East Asian Miracle"



Look at the homeless, the people in shelters, first they need to get a job, then save up for a few weeks to rent an apartment. But, homelessness keeps occurring! So are these folks voluntarily or involuntarily unemployed?


Some manufacturing jobs have left the US, there has also been a huge demand for service workers at all levels. The undocumented and many immigrants are willing to take the lowest service jobs: domestic servant and janitorial and food production jobs, although most legal immigrants are skilled or professionals. Most jobs available are service jobs - jobs related to marketing, not in production, because production requires skilled labor to be efficient which involves automated equipment, installation, operators and maintenance.


The issue of underemployment is relative since the issue is the relation between a worker and the employer and the coworkers and the clients/customers, not merely wages. Wages are low: one half of households - usually 2 workers - make less than 60k!


Increasing the minimum wage in several states means that entry level positions will be more likely to provide for basic subsistence: food, housing, clothing, transportation, etc.

The US has on average a high school educated work force where those with higher education - some college, BA, graduate degree or PhD/MD/JD account for 30% of the adult population, and all of them are not necessarily working: voluntary unemployed, retired, etc. The employment rate in the US is 60% of the population. Getting a professional job is for the majority impossible.

The workforce is not “highly” educated because the university system is still too small. In PA, there are 400 colleges and Universities, 200 of which are 4 year programs. The population of PA is 13M. To accommodate this many people in colleges would require that most of them expand to over 30k student population. Not likely as most can only take around 1000/year.


Higher education is too small and extremely variable, diverse, from college to college, department to department, courses and curricula. 2/3’s do not go to college at all!


When the Fed floats a bond to cover govt payments for wages and contracts because they are not covered completely by revenue, it is called a deficit and adds to the total debt. Quantitative easing is a method of reducing the government debt which equals the outstanding bonds and interest, buying back the bonds before maturity saves the government the interest and reduces the debt. 

When a bond is floated and bought by a private individual, money is created - there is a connexion between 'paper' and money. Some of the money can stay on the books, but some of it must be printed not because of a run on the bank but because some money will be withdrawn as cash. How much varies, but a shortage of actual cash will slow the rate of circulation of money, of exchanges, and slow the local economy down. So, either cash or credit cards are necessary for daily transactions and many people still live on a cash basis.

Population increases yearly, the number of workers increases, the number of people making financial/consumer transactions increases, so more cash money is needed.


When a loan is approved, the money supply increases by that amount, the total is printed in cash. The individual bank does not cover the loan amount, it approves the loan amount which is a part of an approval process totalized by the Fed. Each individual bank may make small temporary loans, business loans, but that is not how banks make money. Banks also invest their deposits in securities!

If I sell my house, I can immediately withdraw the money from the check of the sale. Where does this cash come from - it is printed on the basis of rules related to loans under approval as overseen by the Fed.

The money supply is related to the payments for all products, wages, resources, etc., to any activities related to the production of goods. This is called the transforming of money into capital. As money is needed, credit is generated and managed by the interest rate at several levels from the local banks up to the Fed and including - not bypassing - all of the financial organizations of states and corporations whose transactions are calculated by the Fed to ensure that all loans and checks are liquifiable!  On the other side, all capital goods must be transformed on the other side into money; sales. If the production is not covered by consumption, Capital would become stagnant - product would not move!

So, the income from production requires that the population consumes it and the population must be employed to earn the money to purchase the capital. Thus, employment is the GDP and not just a spurious correlation.

The reason for the Great Depression was unsupervised banks that extended their credit AND over invested in securities as detailed by Milton Friedman in his History of the Depression!

A misconception occurs over the use of the term socialist which today refers to ‘welfare economies’ in which the government actively intervene. The term 'communist' is pejorative and not the same as socialism. The dominant ideology of the US is 'anticommunist.' Russian communism collapsed in 1989 and has been turning capitalist, China also has been turning capitalist.

To understand this difference requires knowing how communist nations operated before this turn to provide their populations with the necessary subsistence goods. They appointed commissars who calculated the population's needs and the productivity of the population, and then traded with the West to make up the difference. This calculation and the resulting distribution was always wrong as Mises and Hayek proved in their works. The closed, state controlled market interacted with the open market. Today, there is only an open market which states regulate and supervise, not only through customs, tariffs and protectionist taxes, but also through quality control: inspections, accounting, traffic control, etc.

Socialism also gets derogatory attention, as does democracy! Socialism refers to the receiving of free money or goods from the government: subsidies, housing, food stamps, unemployment comp, Medicaid, etc., a myriad of government services! The social democratic states of Northern EU afford their government services with very high taxes. However, socialist-welfare policies benefit the capitalists, owners and executives of corporations far more than the impoverished millions.


Democracy gives married folk a tax break, and parents a tax break. The government intervenes into families financially and legally. However, where the federal government gives a tax break to the married and those with children, local jurisdictions increase property taxes. There is really no tax break at all.


The basis of conservative values is DUTY: the requirement that everyone works, over-relies on their personal self-reliance!

These meanings are changing: communism is changing into the ecological meaning of concern for the common land, socialism is changing into a concern for solidarity and common values, and democracy is changing into a recognition of diversity and a universal requirement to work! That job discrimination against women and minorities is illegal! And so is class, religious and regional discrimination.

Society means 'social order' where order is the name of the game, not ideology, ignorance, or hysterical anti-state populism.

China is not economically socialist, it is obviously capitalist.

In the US, there is an obvious division between the social conservatives and the fiscal conservatives. Conservatism suffers and lacks any credibility therefore. The same has happened to communism where socialism is like social conservatives - a set of supposedly dignified values which however belies their having to be instilled by torture and imprisonment, e.g. mass incarceration. But, the nature of capitalism varies from nation to nation.

This variability in capitalism is seen on several levels: whether the government permits, taxes or prohibits international investment! Whether the government expands social services or limits them to police! Whether exports are the remainder after providing for the populations needs, or before the population has been provided.

This latter problem is obvious in the present cataclysm in Venezuela where the oil exports keep the rich and the police in power while the population starved!

So, government plays a very important role in the economy by directing investment, employment and development, ie housing, education, etc.  The problem erupts when a nation is a client of other nations who invest in it and extract its products and profits!

US grew at over 4% in 2018 but at 1% in 2020. What exactly that means is in the shadows. To what extent does productivity, or unemployment, imply population control, incarceration, state terrorism?

Chinese GDP can grow, Chinese monetary controls can provide unlimited credit or low taxes or whatever, but the key issue is international investment.

As international capital investment - maquiladora and survival extraction - increases, the GDP increases also but at a very high risk. The stable economies around the world: South Korea, Germany, Norway, Iceland, etc., control, supervise and limit international capital investments, sometimes by taxation, by import duties even of intracorporate goods. Look at what just happened to Japan largest pension fund - caught between US-China trade war, it lost 1/4 of its international investments!

China is a nation within its borders, instead of an expanding corporate body of state-regulated corporations!

The real issue is the relation of productivity to population control.

When a govt floats a bond, they owe interest, not to mention the matured payout. Notwithstanding quantitative easing, who do you think collects the interest on these bonds?

The money supply is managed by the printing of money or the crediting of accounts on the basis of approved loans: credit. Improper procedures for regulating credit from the smallest bank to the hidden corporate financial services to the supervision of leverage in every bank leads to credit bottlenecks, loan rejections and the slowing of hiring thus the slowing of production and then the slowing of consumption. This business cycle is due to a government’s lackadaisical processing of the credit basis of the economy causing recession and stagnation, that is, the increase in unemployment.

There are many important works on this question from Schumpeter to Hayek to Keynes to Friedman.  

If during this year, 100B are generated in loan approvals, and those individuals with their loans withdraw even 10% in cash, the entire economy would then run out of actual cash and no one could get any more cash from the banks. It would be a total credit economy. If everyone could do this, no problem, but in the meantime, as loans are approved their cash basis must be realizable, the money supply must increase.

Legislation and Morality

 LEGISLATION AND MORALITY

Many laws are based on moral rules, even rights are considered to be rules. The main principles of morality like good, right, just, care, fairness, even love are coded in judicial and law enforcement procedures and statutes.

However, moral reasoning is considered to be practical in that the individual weighs the reasons for following a moral rule or norm in terms of rightness and in terms of consequences as punishment or perhaps happiness.

Where laws are like rules and rules do not quite get at intuitions or evaluation of evidence and state of mind, e.g. preponderance of the evidence or propensity of the evidence standards - two different things. Kohlberg and Piaget for example make a key distinction when describing moral development between a rules orientation and an intentional orientation. Likewise, moral philosophy contains the key distinction between utilitrianism and deontological ethics, or consequentialism vs. rightness.

The individual is always faced with the difference between "following the law" and deciding whether s/he really has to act in a certain way under given circumstances (the Normative Problem: Why do I have to do that?). This dilemma can also be portrayed in terms of positive rights to act in a certain way or negative rights to refrain from acting in a certain way.

Morality is clearly legislated and legislative decisions are usually moral. In the US, when SCOTUS finds a legislative decision suspect, it rejects that legislation as law, but on the basis of Law and not necessarily as moral depending on your moral perspective.  Since moral perspectives are plural, governments tend to narrow the moral issues down into categories or statutes, a rule orientation. But, courts must deal with interpretations of situationally conflicting values like obligations and ends and rights. The two levels of the judicial government: law enforcement and prosecution must also contend with practical discretionary reasoning or weighing of which rules and principles are appropriate in a particular situation.

Legislation addresses moral concerns which are modified by the judiciary.

An Augur’s ‘Taking of the Auspices’

 An Augur’s ‘Taking of the Auspices’

I notice a common theme in both Foucault and Lacan where ideology is not about beliefs or concepts, or even signifiable, but about silence or the Real in contrast to discourse and reality.

Now, don’t get me wrong, I do think that our social institutions and political institutions are not ideal, are incomplete and harbor problematic ideological practices. They are not always discursive: the Syrian Civil War, the Libyan Civil War, the wars over conflict minerals, the Iran and Afghanistan Wars reveal deep ideological problems with US and many other nation’s foreign and military policy. In the 60’s there were anti war protests and a movement, today nothing, a few books and a few NGO’s covering the carnage.

Foucault claimed that ideology operated by silences, that silence warped our understanding and epistemological descriptions.

Lacan claimed that the Real was unsignifiable and related to an obscure command to “enjoy” the sadistic terror from the “law” and the superego. This is doubly problematic from a Heideggerian view where the subject is always already eclipsed by social institutions and tribal or communitarian “obligations.”

Schopenhauer posited ideology as the Will, Freud as desire, Lacan as the Real (in contrast to reality as the place of fantasy, a set of fictions to shelter from the terror), Levi-Strauss as the structural unconscious. The ‘command’ essence of the real or superego distorts any ideal of reason as operable by a subject who wants to navigate like a pilot through life. Lacan discusses the masochism of ideology, the way we follow the injunction to enjoy the sadistic other, but it is also the obedience to the order to reproduce and work, purposelessly. Similar to the way a planet or star refracts and diffracts space around it, bending and skewing symbolic systems, and discourse itself. The hard core of the person is a repressed traumatic kernel - a hole filled with ‘necessary!’ fantasies!

Ideology is not beliefs but injunctions; not concepts but libidinal impulses!

Zizek’s first 10 books were all about ideology!

Nietzsche's idea of 'Eternal Recurrence'

 Nietzsche's Idea of 'Eternal Recurrence'

n Nietzsche's scheme of history and the universe, there is either order or disorder, extremes. He does not see order, so eternal refers to the idea of one will that in increasingly unstable. It is the one will, the will to power, which is eternal and the only commonality across all events. There is no stability the world and life does not develop. The energy of life rises and sinks, becomes organized then dispossesses but remains constant, at equilibrium! There is merely the repeating of high points and the reverse which leads to ever more complex forms of potency.  There is no end point or goal, and all events are the same.  Nietzsche follows Heraclitus who posited change and a cyclical history of building and destroying. Nietzsche does not follow Heraclitus completely and rejects the idea of inner patterns that endlessly repeat. Instead the world is repetitious, a play, a game without any final state - an endless alternation back and forth, up and down, of transformations, like fire!

Recurrence implies an occurrence, an event, but Nietzsche does not define event. Instead, development is the occurrence of high points; the highest types are forms of existence of the greatest complexity and highest potency and the most energy, but also the most fragile, unstable and least durable which hence lead to a reversal, a sinking. For Nietzsche, the world does not strive for stability or an end point; nothing posited, not even nothing itself, has been reached. Change and becoming, emergence and dissolution, collapse of power relationships and the establishment of new power relationships that reorganize into new systems of increasing complexity and potency. This greater complexity comes under tensions and strains becomes unstable and vulnerable, and collapses. The world he says eternally retraces the general sequence of states, a cyclical pattern of transformations that is eternally self-creating an eternally self-destroying.

The 'eternal return' he says thru Zarathustra is a test; it is the challenge to live without any hope that life and the world will have a different character than they do. Eternal Return is the great culminating idea! It is a selective principle in the service of "strength" (Nietzsche relates will to strength repeatedly, as often as Freud relates the ego to danger) in humans who are capable of enduring it and craving nothing more!

Free will

 Why the concept of “free-will” is nonsense:  A microessay.

Before making the argument alluded to in the title of this piece, it is necessary to distinguish “legalistic” from “metaphysical” free-will.  Legalistic free-will refers to the kind of freedom that a person can be granted by law, or, by virtue of the fact that he/she is not physically confined, restrained, or forced to act under coercion.  There’s little to debate about “free-will” (or “freedom”) in this sense.

  

Metaphysical free-will is the kind that can only be granted by God, or, alternatively, by the act of disobedience exhibited by Adam and Eve in the Garden of Eden, which is rather difficult to explain if Adam and Eve did not already possess the freedom to disobey.  There is a great deal that can be debated about “free-will” in this sense, starting with whether or not the concept makes sense.

What is free-will?  That is the problem.  It is impossible to describe what free-will is or how it works, except in supernatural terms.  Why?  Because metaphysical free-will requires that we (human beings) cause actions or events to occur without ourselves having been caused to initiate those actions or events.  In effect, we (human beings) must be uncaused causes or unmoved movers.

Why would anyone want to entertain such a flagrant violation of the second law of thermodynamics?  There are 2 reasons, the first of which pertains to the assignment of responsibility, guilt, or blame.  The underlying assumption is that whatever causes action A is responsible for action A, so, if you caused it, then you are responsible, guilty, or blameworthy for A.  (The reasoning works the same way with regard to moral credit or praiseworthiness, but that is neither here nor there.)  The second reason why people are tempted to disregard the second law of thermodynamics pertains to getting God off the hook for the existence of evil in His creation; however, I shall ignore this metaphysical motivation for the moment.

Suppose that, instead of causing action A freely, you were compelled to cause it by influences outside your knowledge or control; suppose you were caused to cause action A.  Suppose you were caused by your upbringing, your social milieu, a disease, a malfunction within your brain, etc.  In that case, you would NOT be responsible for action A, because you had not caused it.  However, if we are to accept the second law of thermodynamics as true, then ALL actions are like this. Everything you have ever thought, said, felt, or done has been caused by something beyond yourself.

But what, then, becomes of moral responsibility?  There is another way to account for this very important notion, but I have already done this elsewhere (q.v., available upon request).  My purpose here is simply to show why the concept of metaphysical free-will is nonsense, or what philosophers call “incoherent.”  This incoherence can be demonstrated very simply by asking, “How does free-will work?”

Assuming the second law of thermodynamics as true, and that human beings are not uncaused causes or unmoved movers (i.e., we cannot create something from nothing), then there is no possible naturalistic mechanics of such phenomena.  There remains only “the” supernatural explanation; but what is the supernatural explanation?

The supernatural explanation is that, every time a human being performs a voluntary action, God performs a miracle.  So, if you decide to raise your right arm and your arm goes up – it’s a miracle!  There is no other means (or none I can imagine) to account for such supernatural causation.  But, if correct, this explanation has two highly undesirable outcomes:  1) Every time anyone, all throughout past and future history, performs a voluntary action – it’s a miracle!  But it would seem that such miracles are a dime a dozen; so cheap, in fact, that we can probably find better explanations without them.  2) If God performs a miracle with every voluntary action, then God is responsible for every voluntary action which does evil, like premeditated homicide.  The second motivation for disregarding the second law of thermodynamics – to get God off the hook for the existence of evil in His creation – fails, by the way, rather miserably.

Unless, and until, some great thinker can provide us with what we might call “a mechanics of free-will,” then we are well advised to disregard the concept of free-will in its metaphysical sense.  At the same time, I also believe that we should fight to the death to defend free-will in its legalistic sense.

JJ

Resentment and Ressentiment

 Resentment and Ressentiment - Double Whammy

Nietzsche presented the notion of ‘ressentiment’ which means that the past oppression and domination continues emotionally or affectively. The contrasting notion is ‘resentment’ or the desire to punish - the indignation one feels when confronted with injustice inflicted on others or oneself. You can just read "The Genealogy of Morals" but there is more to it today.

Resentment consists of this dual dimension: the sudden anger of ressentiment and the deliberate practices of prevention of injustice and injury, eg policing, prosecuting and the politics of security.

The reactive attitudes on the one hand and the policies on the other constitute this dual dimension.

Nietzsche however labels the hostile reaction aimed at the world as ‘slave morality,’ as ressentiment - waiting, provisionally humble and not forgetting.

The noble man with noble morality forgets and cannot take his enemies seriously for long. 

The slave morality constructs evil, the evil enemy, and then counters herself as good! The noble person conceives the basic concept ‘good’ and then creates an idea of bad.

Values thus emerge from opposite logics: ressentiment transforms good and bad into good and evil - a moral category; the noble ones conceive of bad and good in practical or aesthetic terms. The unsatisfied hatred, the thirst for revenge, in ressentiment is contrasted with resentment: a legitimate response to a wrong committed and lead to a fair punishment of the perpetrator!

Both resentment and ressentiment are negative moral emotions but with a different sense and intensity. Perhaps the worst aspect of ressentiment is the repressed feelings that “legitimizes” the reaction of envy and impotence, like grudges and junk yard dogs!

See Fassin, D 2013 “On Resentment and Ressentiment”

I like Fassin’s take because he contextualized Nietzsche’s motif in terms of the aftermath of the Rwandan genocide (which occurred around the same time as the Serbian genocide/ethnic cleansing and both followed ongoing civil wars), the problem of AIDS "non-intervention" - the rejection of distribution of antiretrovirals in Africa, and the crisis of policing in the French banlieus, and by extension in certain other cities in the US and East Asia!

From Jeremy Engels 2015 "The Politics of Resentment - A Genealogy"

"In times of suffering, it is human to point fingers and cast

stones. Blame gives meaning to suffering, and for this reason civic resentment is intimately related to the problem of scapegoating. It is an economic system that is to blame for much of the pain that Americans feel today—yet it is difficult for us, as rhetorical actors, to condemn a system. It is easier to blame individuals. While Rawls might be correct, and resentment at times might be associated with a desire for justice, Friedrich Nietzsche demonstrates how easily those who are willing to name a scapegoat, and who promise redemption through victimage, can dupe the resentful soul. To be resentful is necessarily to be vulnerable to manipulation." p18

There are many books out with the title "Politics of Resentment,"

Betz 1991

Engels 2015

Resnick 2001

Kramer 2016

Fukuyama 2018

Metzl 2019

not to mention books with 'resentment' or 'ressentiment' in the title, nor articles, like Fassin's.

Truth and Goodness

 Truth and Goodness

Horkheimer’s critique of Kant was over the assumption that the good brought happiness!

‘Good or happiness’ - many philosophers believe that “good” means happiness, which is not always clear cut. Good is too often a non-cognitive term. And, good does not necessarily lead to happiness.

Truth also is somewhat vague. Truth as truth-telling is different from truth as factual. One can be telling the truth in terms of their (emotional) state of mind or consciously while being completely erroneous about the facts. But, many philosophers equate truth and rightness, that in being “right” they articulate the truth which is not appropriate. 

The standard for truth is rationality which means that the truth or rightness claim is rationally motivated by a justified, warranted and grounded consensus which includes the perspectives of all. In other words, evidence is necessary.

There are unpreventable preventions of nature’s wrath. Humans are part of nature, can understand nature and rationally control it. Humans can prevent catastrophes.

Truth in your description adds to 'facts' both values and metaphysics, i.e. "beyond factuality" you said!

 Truth addresses the accuracy, or adequacy of descriptions about facts. Truth includes several dilemmas beyond the fact-value difference. For example, to explain an event or a happening - why it emerged and how to formulate it, truth must address both teleology or goal-directedness - how certain goals or aims determined or influenced the event, and causality, the causes, reasons and intentions that led to the effects and consequences. 

Formulating the truth about events, or changes, involves interpretation and reinterpretations, like attributing properly the teleological and causative elements of the event, and the dilemmas of fragility between impulses and morality, and between rules and meanings.