Occupation by co-optation is, predictably, what we see going on in Washington right now.
Occupation of the current policy space is what we see transpiring to limit the extension of the risk proportion (extension of the public debt). This space has been very carefully defined to adversely affect the vast majority of citizens without risking the counter-party structure that perpetually pushes responsibility into binomial oblivion (which, in this case, adversely restructures the extended risk proportion by redefining it as welfare reform).
It is foolish, however, for lawmakers and their wealthy patrons to think that the benefit derived from exacting this extreme, economic detriment can be politically structured and processed to reduce the risk. The risk will not be reduced--it will be fully gamma. Risk accumulates coefficiently with reward despite the best practices to co-opt it.
As the drama unfolds, we observe how risk can be shifted to a counterparty with that party appearing to have co-opted the principals to occupy their otherwise self-determined (binomial) space.
The two principal parties have handily co-opted the Tea Party delegation while making it look like the Tea Party has forced the principals into exacting an otherwise highly unpopular and economically detrimental political agenda. It is the perfect example of how to counter-party the risk.
Keep in mind that offsetting responsibility to a counter party does not reduce the risk, it accumulates it, and accumulating more risk is the problem, not the solution.
Rather than blind acceptance, when politicians are willing to challenge their own theories of what produces the public good, the probability of it increases exponentially in the republican form. Our founders knew that the impetus for this self-actualization comes from the bottom up, not the top down--it is why "We the People" are sovereign.
Friday, July 29, 2011
Artificial Risk?
A common assessment of the current sovereign-debt crisis is that it is artificially constructed. What this analysis is essentially saying is that the risk does not present as ontological.
If we thought philosophical analyses are not important or irrelevant, we were wrong.
We detect a lack of apparent ontology because the analytical space is packed with artifice. Just because we tend to nurture nature toward specific performance does not in any way mean that these artifices are unnatural. In fact, this concept of "natural" is completely wrong and analysts that rely on this false valuation of probable risk will get burned by unexpected, trend reversals.
Manipulating nature (risk, for example) does not make the outcome any less ontological, and this is where analysts are presented with the angst-principle and the gamma-risk dimension.
Since angst is a feeling (which tends to be politically accumulated and expressed in the gamma dimension), empirical analysts tend to ignore it as unmeasurable (and, wrongly, unreasonable). Market analysts use the VIX indicator, but it is largely post-hoc data with limited predictive value. Ignoring the angst-principle, however, is like trying to land on the moon by ignoring the effects of gravity. The probability you will be successful is nearly zero, but successfully landing would not be in any way unnatural whether it is by chance alone or not.
The debt-limit debate (the sovereign-debt crisis) is no different. Just because the ceiling can be raised with a routine stroke of the pen does not mean that this is a false crisis. Yes, it may be artificial (a political artifice) but it is not false. The crisis it presents is real and easily predictable in the gamma dimension.
Understand, for example, that the political artifice is packed with retributive value--it is saturated with angst. Not only was the angst (the motivated level of determination) the determining variable that predicts the crisis, but its support and resistance predicts the probable political-economic trend after it.
Without the necessary, conceptual tools, analysts, both political and economic, will quite naturally miss the target.
If we thought philosophical analyses are not important or irrelevant, we were wrong.
We detect a lack of apparent ontology because the analytical space is packed with artifice. Just because we tend to nurture nature toward specific performance does not in any way mean that these artifices are unnatural. In fact, this concept of "natural" is completely wrong and analysts that rely on this false valuation of probable risk will get burned by unexpected, trend reversals.
Manipulating nature (risk, for example) does not make the outcome any less ontological, and this is where analysts are presented with the angst-principle and the gamma-risk dimension.
Since angst is a feeling (which tends to be politically accumulated and expressed in the gamma dimension), empirical analysts tend to ignore it as unmeasurable (and, wrongly, unreasonable). Market analysts use the VIX indicator, but it is largely post-hoc data with limited predictive value. Ignoring the angst-principle, however, is like trying to land on the moon by ignoring the effects of gravity. The probability you will be successful is nearly zero, but successfully landing would not be in any way unnatural whether it is by chance alone or not.
The debt-limit debate (the sovereign-debt crisis) is no different. Just because the ceiling can be raised with a routine stroke of the pen does not mean that this is a false crisis. Yes, it may be artificial (a political artifice) but it is not false. The crisis it presents is real and easily predictable in the gamma dimension.
Understand, for example, that the political artifice is packed with retributive value--it is saturated with angst. Not only was the angst (the motivated level of determination) the determining variable that predicts the crisis, but its support and resistance predicts the probable political-economic trend after it.
Without the necessary, conceptual tools, analysts, both political and economic, will quite naturally miss the target.
False Valuations
In the previous article we explored the disconnection between risk producers and consumers. The incentive to offset risk rather than take it is, obviously, the profit motive.
Risk is detriment but it can be manipulated to be beneficial. It can be structured and processed to produce a profit. Since deliberately deriving benefit from detriment has civil and criminal liability associated with it, techniques designed to derive value from it are reasonably suspect and much effort is spent to minimize the liability through regulation and legal prudence.
Arguing that outcomes are unintended is a philosophical argument of ontological legitimacy. It is an affirmative defense because it is nearly impossible to prove a negative despite it being reasonable to infer that a benefit is being deliberately derived from detriment by either causing it or offsetting it.
Ontology is an effective argument applied to offsetting risk. When risk is disconnected from the reward we naturally infer that the risk is intentionally shifted to unassuming parties to make a profit. There is really no other reason to do it because, by taking the risk, success comes by consent of the consumer who governs with the full power to sanction the risk taker who, thus, retains the risk. The detriment is not consumed unless the risk taker is sanctioned by the consumer. Capturing this power is highly rewarding and easily defensible, which is why offsetting risk is so pervasive, and why valuations have a strong tendency to be false.
False valuations occur, and accumulate as econometric errors, because the probability that the risk will be retributed to its source is a political function. It is purely gamma risk that is largely unaccounted for because it has been offset (thus, for example, a highly improbable downgrade of our sovereign debt). Suddenly the risk is being accounted for by a third-party element, and to identify the risk and publicly recognize it is to admit to its liability, which is a hidden motive structured and processed to be otherwise argued ontological (which avoids the risk and accumulates errors).
Most salient among the false valuations is the "principle" that the self-interest of the rich beneficially aligns with the non-rich. It apparently does not, however, to the tune of a $14 trillion public debt that will effectively bankrupt our nation if paid by the non-rich. It will produce the classical result of consolidated capitalism (foreclosure by default) in which the rich get richer and the poor get poorer, supposedly in everyone's self-interest.
Blaming the President for busting the debt limit avoids admitting that tax cuts for the rich are not the self-interest of the vast majority. It is a false valuation--a false convergence of risk with reward--that can be believed in but does not verify, and that lack of fundamental verification accumulates errors, supporting the crisis proportion it purports to resist. At the same time, Democrats want us to believe that the debt ceiling is just a number that needs to be raised. That, too, is a fundamental error--a false valuation that just continues to accumulate risk into a crisis proportion.
Since the Pareto-Optimal hypothesis that ensuring the welfare of the rich is everyone's self-interest has been classically disconfirmed, and the risk it assumes neo-classically structured, processed, and offset to form the welfare state, "We the People" now face the angst of consuming the accumulated risk proportion. It is a risk proportion that is by no "ways and means" falsely valued. It is a truly empirical value that the "God" in which "We Trust" will not allow us to ontologically ignore.
The "principle" to be identified here is, indeed, Pareto Optimality of risk alignment--the "angst principle" of a perverse alignment that We can Trust will re-align and re-tribute the value offset and accumulated. (The more consolidated the risk-value becomes the more likely it will be deconsolidated.) False valuations will be reconciled, and activists like the Tea Party indicate the probability of the risk (the loss is, indeed, fully assumed in priority, which is the angst principle and the predictive value it has to indicate tendency to a natural condition).
Now we have "The Budget Control Act" being considered to "control" the fully assumed risk (the angst), and here we have the perfect example of how the risk is disconnected to cause detriment cleverly disguised as benefiting the victims.
The Budget Control Act and the Democratic Party's answer to it demonstrates what our political-economic system is intended to accomplish. It is structured to process the detriment (the risk) cleverly disguised as benefiting the victims, converging (compromising) the interests of the non-elite with the self-interest of the elite by means of sovereign authority and the accumulation of its debt (debt owned by "We the People"). We see very clearly how the risk is disconnected (offset) and reassigned (redistributed) for consumption, but not without assuming even more risk.
Marginal tax cuts and financial consolidation has put social security, for example, at risk. Even though it has been deliberately offset from this risk, it has been "put" at risk, nevertheless, because "We" are bankrupt. The empirical evidence for bankruptcy is possible default on our national debt. We are officially "on watch." We are being rated by the same people that caused the Great Recession, and default always forecloses (consumes) the assets of the defaulting party (to whom which the loss is fully assumed). Although default will not occur as long as we pay what comes due like we always have (and as Hamilton said we should), the angst principle is in full operation to exact the detriment, anchoring-in the possibility that things could be worse if we don't, and testing that hypothesis is, of course, too risky.
Cutting entitlements exacts detriment in a way similar to how corporates have raided pension funds. The Pension Guarantee Corporation is broke. By means of bankruptcy and reorganization of debt in the private sector, private firms legally converted pension value and consolidated it. In much the same way, the effect of our public-debt crisis will convert and consolidate entitlements by restructuring its obligations. The lost value will be effectively foreclosed--consumed in priority by the creditors that now have us "on watch" for our own protection after the Great Recession.
Over time the cause and effect disconnects and acquires a misattribution. Americans are not in debt because they refused to pay it, but because they do not have the income to pay it. That income has been consolidated in the upper class and they refuse to pay it because they say it is a moral hazard--it will kill jobs.
Misattribution of the risk falsely values the reward. While equities, for example, will continue to get support from the accumulation (the deflated demand--the purchasing power of the unemployed--consolidated by the upper class), they are falsely valued. Eventually the reward actively converges with the offset proportion of risk (like a sovereign-debt crisis) to retribute the value (the fundamental attribution error).
A crash diet for consumers will certainly be even more detrimental--it accumulates even more risk. An economy that is overweight at the top and underweight at the bottom will surely collapse--it will crash, and knowing when it will crash is a function of reading the signs.
The signs we choose to read must fully value the risk proportion free of confirmation biases. If we do not pursue intellectual freedom with verifiable hypotheses, controlling the risk will be falsely valued (corrupted) by dogmatic ideology and psychological tricks, like we have now with the budget-control debate.
Risk is detriment but it can be manipulated to be beneficial. It can be structured and processed to produce a profit. Since deliberately deriving benefit from detriment has civil and criminal liability associated with it, techniques designed to derive value from it are reasonably suspect and much effort is spent to minimize the liability through regulation and legal prudence.
Arguing that outcomes are unintended is a philosophical argument of ontological legitimacy. It is an affirmative defense because it is nearly impossible to prove a negative despite it being reasonable to infer that a benefit is being deliberately derived from detriment by either causing it or offsetting it.
Ontology is an effective argument applied to offsetting risk. When risk is disconnected from the reward we naturally infer that the risk is intentionally shifted to unassuming parties to make a profit. There is really no other reason to do it because, by taking the risk, success comes by consent of the consumer who governs with the full power to sanction the risk taker who, thus, retains the risk. The detriment is not consumed unless the risk taker is sanctioned by the consumer. Capturing this power is highly rewarding and easily defensible, which is why offsetting risk is so pervasive, and why valuations have a strong tendency to be false.
False valuations occur, and accumulate as econometric errors, because the probability that the risk will be retributed to its source is a political function. It is purely gamma risk that is largely unaccounted for because it has been offset (thus, for example, a highly improbable downgrade of our sovereign debt). Suddenly the risk is being accounted for by a third-party element, and to identify the risk and publicly recognize it is to admit to its liability, which is a hidden motive structured and processed to be otherwise argued ontological (which avoids the risk and accumulates errors).
Most salient among the false valuations is the "principle" that the self-interest of the rich beneficially aligns with the non-rich. It apparently does not, however, to the tune of a $14 trillion public debt that will effectively bankrupt our nation if paid by the non-rich. It will produce the classical result of consolidated capitalism (foreclosure by default) in which the rich get richer and the poor get poorer, supposedly in everyone's self-interest.
Blaming the President for busting the debt limit avoids admitting that tax cuts for the rich are not the self-interest of the vast majority. It is a false valuation--a false convergence of risk with reward--that can be believed in but does not verify, and that lack of fundamental verification accumulates errors, supporting the crisis proportion it purports to resist. At the same time, Democrats want us to believe that the debt ceiling is just a number that needs to be raised. That, too, is a fundamental error--a false valuation that just continues to accumulate risk into a crisis proportion.
Since the Pareto-Optimal hypothesis that ensuring the welfare of the rich is everyone's self-interest has been classically disconfirmed, and the risk it assumes neo-classically structured, processed, and offset to form the welfare state, "We the People" now face the angst of consuming the accumulated risk proportion. It is a risk proportion that is by no "ways and means" falsely valued. It is a truly empirical value that the "God" in which "We Trust" will not allow us to ontologically ignore.
The "principle" to be identified here is, indeed, Pareto Optimality of risk alignment--the "angst principle" of a perverse alignment that We can Trust will re-align and re-tribute the value offset and accumulated. (The more consolidated the risk-value becomes the more likely it will be deconsolidated.) False valuations will be reconciled, and activists like the Tea Party indicate the probability of the risk (the loss is, indeed, fully assumed in priority, which is the angst principle and the predictive value it has to indicate tendency to a natural condition).
Now we have "The Budget Control Act" being considered to "control" the fully assumed risk (the angst), and here we have the perfect example of how the risk is disconnected to cause detriment cleverly disguised as benefiting the victims.
The Budget Control Act and the Democratic Party's answer to it demonstrates what our political-economic system is intended to accomplish. It is structured to process the detriment (the risk) cleverly disguised as benefiting the victims, converging (compromising) the interests of the non-elite with the self-interest of the elite by means of sovereign authority and the accumulation of its debt (debt owned by "We the People"). We see very clearly how the risk is disconnected (offset) and reassigned (redistributed) for consumption, but not without assuming even more risk.
Marginal tax cuts and financial consolidation has put social security, for example, at risk. Even though it has been deliberately offset from this risk, it has been "put" at risk, nevertheless, because "We" are bankrupt. The empirical evidence for bankruptcy is possible default on our national debt. We are officially "on watch." We are being rated by the same people that caused the Great Recession, and default always forecloses (consumes) the assets of the defaulting party (to whom which the loss is fully assumed). Although default will not occur as long as we pay what comes due like we always have (and as Hamilton said we should), the angst principle is in full operation to exact the detriment, anchoring-in the possibility that things could be worse if we don't, and testing that hypothesis is, of course, too risky.
Cutting entitlements exacts detriment in a way similar to how corporates have raided pension funds. The Pension Guarantee Corporation is broke. By means of bankruptcy and reorganization of debt in the private sector, private firms legally converted pension value and consolidated it. In much the same way, the effect of our public-debt crisis will convert and consolidate entitlements by restructuring its obligations. The lost value will be effectively foreclosed--consumed in priority by the creditors that now have us "on watch" for our own protection after the Great Recession.
Over time the cause and effect disconnects and acquires a misattribution. Americans are not in debt because they refused to pay it, but because they do not have the income to pay it. That income has been consolidated in the upper class and they refuse to pay it because they say it is a moral hazard--it will kill jobs.
Misattribution of the risk falsely values the reward. While equities, for example, will continue to get support from the accumulation (the deflated demand--the purchasing power of the unemployed--consolidated by the upper class), they are falsely valued. Eventually the reward actively converges with the offset proportion of risk (like a sovereign-debt crisis) to retribute the value (the fundamental attribution error).
A crash diet for consumers will certainly be even more detrimental--it accumulates even more risk. An economy that is overweight at the top and underweight at the bottom will surely collapse--it will crash, and knowing when it will crash is a function of reading the signs.
The signs we choose to read must fully value the risk proportion free of confirmation biases. If we do not pursue intellectual freedom with verifiable hypotheses, controlling the risk will be falsely valued (corrupted) by dogmatic ideology and psychological tricks, like we have now with the budget-control debate.
Saturday, July 23, 2011
Constant Coefficiency
When consumers can fully sanction risk producers (having equal capacity to say "yes" or "no" to price, quantity, and quality), we can say that the risk proportion is co-efficient. Both parties have equal power to provide and deprive, but as soon as producers are too big to fail, the co-efficiency loses its equilibrium and detrimental value accumulates in the system.
Throughout the articles on this website, risk is described and explained as a coefficient constant. It cannot be increased or reduced (created or destroyed) but it can be accumulated and distributed.
The amount of risk remains constant but varies coefficiently with reward. This is what it means to say that the risk of loss is fully assumed--that it cannot be avoided. Avoiding it accumulates reward but also accumulates the risk associated with it coefficiently. If the value accumulated is disconnected (shifted to unassuming parties), it will be retributed (re-assumed) one way or another and this retributive value (the risk of loss fully assumed) is the coefficient that keeps the value constant (the unavoidable ontology of the risk proportion that is referred to in these articles as the retributive value of the risk).
Our founders, for example, operationalized the concept of risk ontology and retributive value with a revolutionary form of government to peacefully process pluralistic tendencies (the risk of loss fully assumed) into productive capacity. This capacity--a legacy of legitimacy we struggle with today--included a continuous debt proportion to keep the revolution productively revolving rather than slumber into static coefficiency (low demand due to liquidity crisis like we have now). Since the system always coefficiently tends to equilibrium (the efficient-markets theory), value does not accumulate retributively and cause crises as long as government does not interfere with its inherent efficiency. Thus, according to Hamiltonians, when crises do occur it is because government, not business, is too big and powerful, which is the hypothesis we struggle to confirm today as both business and government get coefficiently bigger to manage risk in a disfunctionally too-big-to-fail, crisis proportion.
The crisis we are experiencing now is technically philosophical. The Hamiltonian model of perpetual debt emerged into the 20th Century as a monetized risk proportion that, technically, conflates with traditional, conservative principles to form a cognitive dissonance (political-economic uncertainty) struggling to be resolved. If technical analysts want to achieve predictive utility, it is necessary to identify and assign probable value to the source of the uncertainty. Normative valuations that are considered to be apodictic principles (like welfare causes unemployment) can no longer be taken for granted, which is to recognize the ontological value--the constant coefficiency--of the risk to the reward.
That risk cannot be increased or reduced (created or destroyed) but it can be accumulated and distributed is the crisis of psychological dissonance struggling to be philosophically determined.
Are we ontologically or teleologically determined? If we cannot self-determine, then freedom is just an illusion and we are condemned to a coefficiency of probable risk that Schumpeter described as "creative destruction." At this point, such a hypothesis is evermore dismal as we are being told we can't get rich without cutting back on government programs that keep us from being poor. The dissonance is overwhelmingly dismal and appears to be philosophically unresolvable.
Take the philosophy of government, for example. As we debate the size of government, budget deficits and debt, we tend to compare it with household budgeting or running a business. Of course, neither a household or a business is managed by the consent of the governed. For the most part, they are legitimately managed, and fully sanctioned, from the top down. While many of our leaders would like to make our government operate like a household or a business, it Constitutionally does not. Thus, the recent call by Republicans for an amendment so that it does legitimately operate, and fully sanction, from the top down.
The reason Republicans object to new regulations that require over-sized financial institutions (SIFI's) retain risk is because that is how they do business. It is a patented model of success. Entrepreneurs indeed patent business models that derive value by causing detriment, and these models are "successful" because the value derived is disconnected from the risk in a too-big-to-fail proportion from the top down. Risk-retention requirements do not, of course, solve this problem.
Firms that are too big to fail are "too big" to fail (the risk is coefficiently constant, and in this case, constantly detrimental to a fault). It is ridiculous to say institutions that are too big to fail will be allowed to fail. It normatively values detriment and utilizes angst as a means of exercising power from the top down rather than the pursuit of happiness pluralistically self-determined from the bottom up.
Technically, conservatives claim truth cannot be compromised, and because the masses do not understand why it is better for our nation not to compromise conservative, philosophical principles, it will have to occur without its consent. Hence, the value this consumes is fully retributive--it demands strong, authoritative leadership to resist the natural, pluralistic coefficiency of power. It is a full-blown, Constitutional crisis of legitimacy that has been stewing for over 200 years (and if our technicals are fixed to the VIX and contrary, it only indicates we have assumed too much, or maybe not enough).
The incentives that govern the direction of the risk perversely align to surplus detriment into a cataclysmic, crisis proportion.
It is wrong to assume the system can be maintained in a perpetual state of disequilibrium. The inequity accumulates into an ever-larger proportion of debt-to-equity like we have now. It is inherently unstable and trying to fix it without deconsolidating the risk proportion only makes the value being accumulated more retributive (more unstable)--it exacerbates the problem making the system even more prone to crises.
Consumers being culpable for assuming risk they cannot control is clearly a false assumption--it is illegitimate.
Without reconnecting risk producers with consumers we will continue to slumber with slow demand. As long as the incentive to produce (taking risk) is not aligned with consumer demands (as long as it is not deconsolidated), the economy will continue to operate to derive value by causing detriment.
As long as producers are making risk instead of taking risk--offsetting and accumulating risk to be consumed rather than adding supply--the risk of default looms ever larger.
Avoiding default is not as simple as raising the debt ceiling. Nor will raising, flattening, or cutting taxes and entitlements actually reverse the trend to default. It's like hitting yourself in the head with a hammer. Just because you switch to a bag of beans doesn't mean you won't have a headache, and it's just a matter of time until you beat yourself into a coma.
In order to cure the problem we must reconnect (retribute) the risk to the profit makers who falsely claim to be risk takers and thus claim that the reward is legitimately earned (i.e, that the risk has been fully consumed by taking it, which is verified by producing a profit or not). This is not a function of risk retention. It is a function of risk taking. Risk can always be cleverly offset and yet be falsely attributed to making a profit. It is just another version of the same problem--offsetting risk rather than taking risk and adding supply to make a profit.
In order to cure the problem we must deconsolidate the risk proportion. The risk has become so consolidated and disconnected from the profit that the disease--more consolidation--looks like the cure.
So that we do not continue to try and cure a hemorrhage with bloodletting, we need to look at some examples of how the risk is disconnected to cause detriment cleverly disguised as benefiting the victims.
Throughout the articles on this website, risk is described and explained as a coefficient constant. It cannot be increased or reduced (created or destroyed) but it can be accumulated and distributed.
The amount of risk remains constant but varies coefficiently with reward. This is what it means to say that the risk of loss is fully assumed--that it cannot be avoided. Avoiding it accumulates reward but also accumulates the risk associated with it coefficiently. If the value accumulated is disconnected (shifted to unassuming parties), it will be retributed (re-assumed) one way or another and this retributive value (the risk of loss fully assumed) is the coefficient that keeps the value constant (the unavoidable ontology of the risk proportion that is referred to in these articles as the retributive value of the risk).
Our founders, for example, operationalized the concept of risk ontology and retributive value with a revolutionary form of government to peacefully process pluralistic tendencies (the risk of loss fully assumed) into productive capacity. This capacity--a legacy of legitimacy we struggle with today--included a continuous debt proportion to keep the revolution productively revolving rather than slumber into static coefficiency (low demand due to liquidity crisis like we have now). Since the system always coefficiently tends to equilibrium (the efficient-markets theory), value does not accumulate retributively and cause crises as long as government does not interfere with its inherent efficiency. Thus, according to Hamiltonians, when crises do occur it is because government, not business, is too big and powerful, which is the hypothesis we struggle to confirm today as both business and government get coefficiently bigger to manage risk in a disfunctionally too-big-to-fail, crisis proportion.
The crisis we are experiencing now is technically philosophical. The Hamiltonian model of perpetual debt emerged into the 20th Century as a monetized risk proportion that, technically, conflates with traditional, conservative principles to form a cognitive dissonance (political-economic uncertainty) struggling to be resolved. If technical analysts want to achieve predictive utility, it is necessary to identify and assign probable value to the source of the uncertainty. Normative valuations that are considered to be apodictic principles (like welfare causes unemployment) can no longer be taken for granted, which is to recognize the ontological value--the constant coefficiency--of the risk to the reward.
That risk cannot be increased or reduced (created or destroyed) but it can be accumulated and distributed is the crisis of psychological dissonance struggling to be philosophically determined.
Are we ontologically or teleologically determined? If we cannot self-determine, then freedom is just an illusion and we are condemned to a coefficiency of probable risk that Schumpeter described as "creative destruction." At this point, such a hypothesis is evermore dismal as we are being told we can't get rich without cutting back on government programs that keep us from being poor. The dissonance is overwhelmingly dismal and appears to be philosophically unresolvable.
Take the philosophy of government, for example. As we debate the size of government, budget deficits and debt, we tend to compare it with household budgeting or running a business. Of course, neither a household or a business is managed by the consent of the governed. For the most part, they are legitimately managed, and fully sanctioned, from the top down. While many of our leaders would like to make our government operate like a household or a business, it Constitutionally does not. Thus, the recent call by Republicans for an amendment so that it does legitimately operate, and fully sanction, from the top down.
The reason Republicans object to new regulations that require over-sized financial institutions (SIFI's) retain risk is because that is how they do business. It is a patented model of success. Entrepreneurs indeed patent business models that derive value by causing detriment, and these models are "successful" because the value derived is disconnected from the risk in a too-big-to-fail proportion from the top down. Risk-retention requirements do not, of course, solve this problem.
Firms that are too big to fail are "too big" to fail (the risk is coefficiently constant, and in this case, constantly detrimental to a fault). It is ridiculous to say institutions that are too big to fail will be allowed to fail. It normatively values detriment and utilizes angst as a means of exercising power from the top down rather than the pursuit of happiness pluralistically self-determined from the bottom up.
Technically, conservatives claim truth cannot be compromised, and because the masses do not understand why it is better for our nation not to compromise conservative, philosophical principles, it will have to occur without its consent. Hence, the value this consumes is fully retributive--it demands strong, authoritative leadership to resist the natural, pluralistic coefficiency of power. It is a full-blown, Constitutional crisis of legitimacy that has been stewing for over 200 years (and if our technicals are fixed to the VIX and contrary, it only indicates we have assumed too much, or maybe not enough).
The incentives that govern the direction of the risk perversely align to surplus detriment into a cataclysmic, crisis proportion.
It is wrong to assume the system can be maintained in a perpetual state of disequilibrium. The inequity accumulates into an ever-larger proportion of debt-to-equity like we have now. It is inherently unstable and trying to fix it without deconsolidating the risk proportion only makes the value being accumulated more retributive (more unstable)--it exacerbates the problem making the system even more prone to crises.
Consumers being culpable for assuming risk they cannot control is clearly a false assumption--it is illegitimate.
Without reconnecting risk producers with consumers we will continue to slumber with slow demand. As long as the incentive to produce (taking risk) is not aligned with consumer demands (as long as it is not deconsolidated), the economy will continue to operate to derive value by causing detriment.
As long as producers are making risk instead of taking risk--offsetting and accumulating risk to be consumed rather than adding supply--the risk of default looms ever larger.
Avoiding default is not as simple as raising the debt ceiling. Nor will raising, flattening, or cutting taxes and entitlements actually reverse the trend to default. It's like hitting yourself in the head with a hammer. Just because you switch to a bag of beans doesn't mean you won't have a headache, and it's just a matter of time until you beat yourself into a coma.
In order to cure the problem we must reconnect (retribute) the risk to the profit makers who falsely claim to be risk takers and thus claim that the reward is legitimately earned (i.e, that the risk has been fully consumed by taking it, which is verified by producing a profit or not). This is not a function of risk retention. It is a function of risk taking. Risk can always be cleverly offset and yet be falsely attributed to making a profit. It is just another version of the same problem--offsetting risk rather than taking risk and adding supply to make a profit.
In order to cure the problem we must deconsolidate the risk proportion. The risk has become so consolidated and disconnected from the profit that the disease--more consolidation--looks like the cure.
So that we do not continue to try and cure a hemorrhage with bloodletting, we need to look at some examples of how the risk is disconnected to cause detriment cleverly disguised as benefiting the victims.
Friday, July 22, 2011
Realignment of Incentives
How do we reconnect risk producers with consumers?
In a free market, risk producers consume the risk. It is not disconnected and consumers are empowered to sanction producers, not the other way around.
In a free market, producers are directly accountable to consumers. This is what it means to "take the risk." Risk does not accumulate systemically but distributes divisibly. Divisibility empowers consumers until industry and markets consolidate to avoid the risk (and consolidate power).
Consolidation does not avoid or reduce risk. It accumulates risk into a crisis (non-pluralistic, gamma-risk) proportion like we have now. Risk producers maximize reward by offsetting risk--sticking consumers with all the risk by minimizing the ability (the power) to control it.
"The risk" is always present. It is constant but can be proportionally manipulated to cause economic expansion (add supply) or contraction (reduce demand). Making sure the proportion is modeled pluralistically adds supply and is SPO (Strong Pareto Optimal). Consumers are fully empowered to sanction and producers make a profit and get rich without accumulating systemic-risk detriment.
Allowing the free market to consolidate reduces demand and causes the need for government authority and spending. The risk becomes disconnected and the power to self-determine becomes more and more authoritarian (consolidated) with the philosophical legitimacy that "We the People" are too unsophisticated to rule our own lives. This lack of sophistication is, however, nothing but the lack of pluralistic modeling that empowers "We the People" to self-determine.
Self-determination is exactly what our want-to-be rulers do not want us to have. It is what our fearless leaders fear the most. If everybody actually has the power to self-determine, then it is possible to determine "We" do not want, or need, them. Not only is it more possible, it is more probable because it forces them to take the risk rather than make it.
A more pluralistic model will realign the incentives, reconnecting risk producers with consumers.
In a free market, risk producers consume the risk. It is not disconnected and consumers are empowered to sanction producers, not the other way around.
In a free market, producers are directly accountable to consumers. This is what it means to "take the risk." Risk does not accumulate systemically but distributes divisibly. Divisibility empowers consumers until industry and markets consolidate to avoid the risk (and consolidate power).
Consolidation does not avoid or reduce risk. It accumulates risk into a crisis (non-pluralistic, gamma-risk) proportion like we have now. Risk producers maximize reward by offsetting risk--sticking consumers with all the risk by minimizing the ability (the power) to control it.
"The risk" is always present. It is constant but can be proportionally manipulated to cause economic expansion (add supply) or contraction (reduce demand). Making sure the proportion is modeled pluralistically adds supply and is SPO (Strong Pareto Optimal). Consumers are fully empowered to sanction and producers make a profit and get rich without accumulating systemic-risk detriment.
Allowing the free market to consolidate reduces demand and causes the need for government authority and spending. The risk becomes disconnected and the power to self-determine becomes more and more authoritarian (consolidated) with the philosophical legitimacy that "We the People" are too unsophisticated to rule our own lives. This lack of sophistication is, however, nothing but the lack of pluralistic modeling that empowers "We the People" to self-determine.
Self-determination is exactly what our want-to-be rulers do not want us to have. It is what our fearless leaders fear the most. If everybody actually has the power to self-determine, then it is possible to determine "We" do not want, or need, them. Not only is it more possible, it is more probable because it forces them to take the risk rather than make it.
A more pluralistic model will realign the incentives, reconnecting risk producers with consumers.
Thursday, July 21, 2011
Kick the Can
"Kicking the can down the road" is a way to describe the accumulation of risk. Both parties say we need to stop kicking the can, but we will play this game anyway to avoid an immediate consumption of the risk.
As discussed in the previous article, there is a disconnection between risk producers and consumers. The people that are supposed to be creating jobs, with incentive provided by the Bush tax cuts and consolidation of the financial sector, predictably produce more risk than jobs. The result, predictably, is a precipitous decline of tax revenue as the need to spend rises. Thus, the Bush tax cuts and financial consolidation have produced a huge deficit and a massive public debt that threatens to deflate our economy into another Great Depression. Save the upper-income class, deflationary risk tends to consume everyone's wealth by design.
Keep in mind that the promise of tax cuts for the rich and financial consolidation was supposed to be the path to prosperity, but it was, predictably, the road to ruin. If we do not at least let the tax cuts expire, which should have already expired, financial analysts have put our debt on watch.
With a full-blown depression looming large, Republican-party strategists have realized that the risk cannot be consumed in the proportion in which it is currently being gamed. Frankly, we need to just say it...this is the result of arrogant, elitist stupidity. The people that claim we are all better off with our fate in their hands are completely disconnected with the realpolitique "We the People" know as the general welfare.
Our currency says, "In God We Trust." This means that "We the People" will take the natural course of action to check the unempirical arrogance of the powerful who think they can exact detriment--cause harm (like debasing the value of our currency)--without liability, and arrogantly try to make us believe that if we do not let them harm us, we will suffer even more. "We" all know this philosophy of risk is completely disconnected from reality and "We" can most assuredly "Trust" it will be corrected. The right thing to do (moral value) is always there--it is categorical, but "We" choose what is imperative by being directly connected to the structure of power, not disconnected from it as the elite would have it.
(Remember that upon default your assets become collateral for much-needed debt. Equity is turned into debt--your net worth is liquidated and borrowed back from the rich at the highest possible rate of interest.)
Elite, conservative philosophy is not the path to prosperity. We can go with what we know we can trust, or kick the can down the road to ruin.
As discussed in the previous article, there is a disconnection between risk producers and consumers. The people that are supposed to be creating jobs, with incentive provided by the Bush tax cuts and consolidation of the financial sector, predictably produce more risk than jobs. The result, predictably, is a precipitous decline of tax revenue as the need to spend rises. Thus, the Bush tax cuts and financial consolidation have produced a huge deficit and a massive public debt that threatens to deflate our economy into another Great Depression. Save the upper-income class, deflationary risk tends to consume everyone's wealth by design.
Keep in mind that the promise of tax cuts for the rich and financial consolidation was supposed to be the path to prosperity, but it was, predictably, the road to ruin. If we do not at least let the tax cuts expire, which should have already expired, financial analysts have put our debt on watch.
With a full-blown depression looming large, Republican-party strategists have realized that the risk cannot be consumed in the proportion in which it is currently being gamed. Frankly, we need to just say it...this is the result of arrogant, elitist stupidity. The people that claim we are all better off with our fate in their hands are completely disconnected with the realpolitique "We the People" know as the general welfare.
Our currency says, "In God We Trust." This means that "We the People" will take the natural course of action to check the unempirical arrogance of the powerful who think they can exact detriment--cause harm (like debasing the value of our currency)--without liability, and arrogantly try to make us believe that if we do not let them harm us, we will suffer even more. "We" all know this philosophy of risk is completely disconnected from reality and "We" can most assuredly "Trust" it will be corrected. The right thing to do (moral value) is always there--it is categorical, but "We" choose what is imperative by being directly connected to the structure of power, not disconnected from it as the elite would have it.
(Remember that upon default your assets become collateral for much-needed debt. Equity is turned into debt--your net worth is liquidated and borrowed back from the rich at the highest possible rate of interest.)
Elite, conservative philosophy is not the path to prosperity. We can go with what we know we can trust, or kick the can down the road to ruin.
Wednesday, July 20, 2011
Alignment and Disconnection
Political economists spend a lot of time identifying alignment of incentives and the disconnection of risk from the reward. Analysts spend a lot of time in these dimensions because they are highly predictive.
If we can identify probable incentives to act and the probable techniques used to derive value, analysts are more likely to predict the direction of trends both long and short, political and economic.
As "the direction of trends" descriptively suggests, analysts identify how trends are being directed and why. The incentive to act "directs" a trend, purposefully manipulated toward a predetermined goal. Thus, the "direction" (the manipulation) of the trend.
The current deficit-and-debt-reduction debate provides a good example of trending analysis. In this debate we see policy options to control risk philosophically motivated. Keep in mind that the Tea Party membership adheres to a philosophy of risk that has been thoroughly tested and disconfirmed, yet it insists on it being applied in its pure, unadapted form, fundamentally misattributing its failure to its adaption. Combined with technical means, the risk is predictably directed to a probable outcome that is not necessarily in the self-interest of the actors, their constituents, in the desired direction, or for that matter, philosophically consistent.
The trend can change simply because the outcome does not reconcile philosophically, as in the case of Tea Party activists aligned against both Republicans and Democrats (which was an easily predictable trend modeled in the gamma-risk dimension). Binomially structured, a left-of-center realignment was reasonably expected to firmly follow a strong, recessionary trend. Instead, a strong, populist sentiment quickly realigned with conservative philosophy after so-called liberals demonstrated how illiberal they could be.
Identifying all the risk factors--like the empirical value of your working philosophy--is a function of predicting the future value of the risk (like an otherwise unlikely sovereign-debt crisis). It predicts where winning players should be positioned at any particular time. Ignorance is bliss until it is too late to change your position.
Changing positions determine (indicate) likely trend reversals and, with added complexity, subsequent valuations that appear disconnected. While outcomes may in many respects be unexpected, they are not necessarily unintended, which makes a normative valuation of the risk cognitively tense and complex. Culpability becomes an ambivalent tension between ontology (probable outcome despite purpose) and teleology (probable purpose despite the outcome). It is important to remember here that once outcomes are deemed to have ontological legitimacy, the incentive (the telos, the determination) to act in such a way increases and the trend is highly probable until the legitimacy comes into question (until a de-ontology becomes apparent, like needing government to control accumulated risk that, philosophically, is supposed to be ontologically legitimate--laissez-faire--if it does not accumulate).
Where the deontology occurs is where all the risk has accumulated--where it has been disconnected from the risk takers and assigned as pure detriment to be publicly consumed in the form of public debt which is now, predictably, in crisis.
The risk to be now consumed is in the form of the need to tax. Since the risk takers (the risk makers being falsely described as job creators) largely control the apparatus of power, the risk (the tax, the detriment) will be assigned to those (the risk consumers) who do not have the means (the power) to control it despite having that power (self-determination) being the legitimate philosophy of the risk. Consumers being culpable for assuming risk they cannot control is clearly a false assumption--it is illegitimate. There is, then, a disconnection between risk producers and consumers and the incentives that govern the direction of the risk perversely align to surplus detriment into a cataclysmic, crisis proportion.
Philosophically, the risk is out of proportion. It is a critical, crisis indicator, and despite all the value poured into ignoring it--having accumulated $14 trillion, and counting--the discrepancy cannot be empirically ignored. The disconnection cannot be consensually maintained so it will be validated--reorganized and aligned--in the republican form with the Tea Party providing a semblance of verifiable, Constitutionally consensual, accountability.
Since the risk ontology cannot be avoided, there is an attempt by conservatives to constitutionally endow the detriment through a balanced budget amendment to the U.S. Constitution. The incentives will no longer be perversely aligned--they will be constitutional. The disconnect between political-economic philosophy and practice will no longer determine the probable direction of the risk. Binomially structured or otherwise, risk will be legitimately aligned with (determined by) the Constitution to which every executive of the administrative state swears an oath to protect and defend.
Theoretically, with probability out of the way, what remains is deontological certainty of the risk. Instead of being managed into an ever-larger proportion of debt-to-GDP, the risk is "balanced" (directed) into an ever-larger proportion of consumed detriment. Risk no longer accumulates disconnected from the reward but is balanced (fully accounted for) with the force and legitimacy of constitutional authority. Ontologically, however, with the risk/reward fully accounted for, the probability an amendment will occur that reverses the trend is nearly perfect, which means a balanced budget amendment will not occur and a rising debt limit will.
It is important, critical, to keep the risk disconnected from the reward to maintain continuous consolidation of wealth and power. Accounting for the risk becomes so complicated, so mired in political-economic conspiracy, that culpability always has the shadow of doubt, which is why, for example, no criminal referrals have occurred despite all the inquiry into what caused the Great Recession.
The current means of converting value and consolidating it is reliably routine and effective. Risk-value is effectively derived, hidden and narrated into a complex, technically exclusive knowledge of it, which determines the power to direct it. There is no reason to change it except, being moral beings concerned with the legitimacy of the outcome, there is the incentive to align the philosophy of risk disconnected with the distribution of reward.
If we can identify probable incentives to act and the probable techniques used to derive value, analysts are more likely to predict the direction of trends both long and short, political and economic.
As "the direction of trends" descriptively suggests, analysts identify how trends are being directed and why. The incentive to act "directs" a trend, purposefully manipulated toward a predetermined goal. Thus, the "direction" (the manipulation) of the trend.
The current deficit-and-debt-reduction debate provides a good example of trending analysis. In this debate we see policy options to control risk philosophically motivated. Keep in mind that the Tea Party membership adheres to a philosophy of risk that has been thoroughly tested and disconfirmed, yet it insists on it being applied in its pure, unadapted form, fundamentally misattributing its failure to its adaption. Combined with technical means, the risk is predictably directed to a probable outcome that is not necessarily in the self-interest of the actors, their constituents, in the desired direction, or for that matter, philosophically consistent.
The trend can change simply because the outcome does not reconcile philosophically, as in the case of Tea Party activists aligned against both Republicans and Democrats (which was an easily predictable trend modeled in the gamma-risk dimension). Binomially structured, a left-of-center realignment was reasonably expected to firmly follow a strong, recessionary trend. Instead, a strong, populist sentiment quickly realigned with conservative philosophy after so-called liberals demonstrated how illiberal they could be.
Identifying all the risk factors--like the empirical value of your working philosophy--is a function of predicting the future value of the risk (like an otherwise unlikely sovereign-debt crisis). It predicts where winning players should be positioned at any particular time. Ignorance is bliss until it is too late to change your position.
Changing positions determine (indicate) likely trend reversals and, with added complexity, subsequent valuations that appear disconnected. While outcomes may in many respects be unexpected, they are not necessarily unintended, which makes a normative valuation of the risk cognitively tense and complex. Culpability becomes an ambivalent tension between ontology (probable outcome despite purpose) and teleology (probable purpose despite the outcome). It is important to remember here that once outcomes are deemed to have ontological legitimacy, the incentive (the telos, the determination) to act in such a way increases and the trend is highly probable until the legitimacy comes into question (until a de-ontology becomes apparent, like needing government to control accumulated risk that, philosophically, is supposed to be ontologically legitimate--laissez-faire--if it does not accumulate).
Where the deontology occurs is where all the risk has accumulated--where it has been disconnected from the risk takers and assigned as pure detriment to be publicly consumed in the form of public debt which is now, predictably, in crisis.
The risk to be now consumed is in the form of the need to tax. Since the risk takers (the risk makers being falsely described as job creators) largely control the apparatus of power, the risk (the tax, the detriment) will be assigned to those (the risk consumers) who do not have the means (the power) to control it despite having that power (self-determination) being the legitimate philosophy of the risk. Consumers being culpable for assuming risk they cannot control is clearly a false assumption--it is illegitimate. There is, then, a disconnection between risk producers and consumers and the incentives that govern the direction of the risk perversely align to surplus detriment into a cataclysmic, crisis proportion.
Philosophically, the risk is out of proportion. It is a critical, crisis indicator, and despite all the value poured into ignoring it--having accumulated $14 trillion, and counting--the discrepancy cannot be empirically ignored. The disconnection cannot be consensually maintained so it will be validated--reorganized and aligned--in the republican form with the Tea Party providing a semblance of verifiable, Constitutionally consensual, accountability.
Since the risk ontology cannot be avoided, there is an attempt by conservatives to constitutionally endow the detriment through a balanced budget amendment to the U.S. Constitution. The incentives will no longer be perversely aligned--they will be constitutional. The disconnect between political-economic philosophy and practice will no longer determine the probable direction of the risk. Binomially structured or otherwise, risk will be legitimately aligned with (determined by) the Constitution to which every executive of the administrative state swears an oath to protect and defend.
Theoretically, with probability out of the way, what remains is deontological certainty of the risk. Instead of being managed into an ever-larger proportion of debt-to-GDP, the risk is "balanced" (directed) into an ever-larger proportion of consumed detriment. Risk no longer accumulates disconnected from the reward but is balanced (fully accounted for) with the force and legitimacy of constitutional authority. Ontologically, however, with the risk/reward fully accounted for, the probability an amendment will occur that reverses the trend is nearly perfect, which means a balanced budget amendment will not occur and a rising debt limit will.
It is important, critical, to keep the risk disconnected from the reward to maintain continuous consolidation of wealth and power. Accounting for the risk becomes so complicated, so mired in political-economic conspiracy, that culpability always has the shadow of doubt, which is why, for example, no criminal referrals have occurred despite all the inquiry into what caused the Great Recession.
The current means of converting value and consolidating it is reliably routine and effective. Risk-value is effectively derived, hidden and narrated into a complex, technically exclusive knowledge of it, which determines the power to direct it. There is no reason to change it except, being moral beings concerned with the legitimacy of the outcome, there is the incentive to align the philosophy of risk disconnected with the distribution of reward.
Sunday, July 17, 2011
Causing Detriment
The Republican Party is operating with a philosophy of detriment that, by default, the Democratic Party has to go along with to avoid the detriment Republicans are using to anchor-in the detriment.
It's quite clear we are deliberately operating with a normative philosophy of detriment. While it may appear to be shamelessly selfish and unenlightened, according to our fearless leaders, it's for our own good.
The detriment, however, (the distribution of over-accumulated risk) is NPO--it is Non-Pareto-Optimal. The distribution from the accumulation is beneficial in zero-sum--it produces an accumulative, highly divisible benefit for the top-income class at the expense of everyone else. This, according to conservatives, is the American way and it is un-American (abnormal) to do it any other way.
It is normal for the people to be anxious about their fate in the more capable hands of others who exact detriment for the good of the republic. A confident, unfearing leadership is the emblem of a strong, stable, form of government that we can all give good credit with full faith.
When the elite become anxious about "the mob," it is not because the risk has been over-extended, but because it is normal for the masses to resist the much-needed medicine to cure, in zero-sum, the detriment that ails them. It is unnatural, the elite argue, for mass anxiety to translate into the will of the people because it is detrimental to the full faith and credit of the republic.
Producing benefit by causing detriment is not only bad politics, it is terrible economics! All it does is accumulate risk, which is already over-accumulated to the point of sovereign-debt default. It is bankrupting our nation and more of the same just won't do!
If you don't think benefiting by causing detriment is a good philosophy for governing our political and economic fate, then you need to get active.
The risk has accumulated well beyond the level of political tolerance.
If the rich think they can only be rich by trampling on everybody else, then we will all find out, quite normatively, what it really means to be a republican in the Jeffersonian form.
It's quite clear we are deliberately operating with a normative philosophy of detriment. While it may appear to be shamelessly selfish and unenlightened, according to our fearless leaders, it's for our own good.
The detriment, however, (the distribution of over-accumulated risk) is NPO--it is Non-Pareto-Optimal. The distribution from the accumulation is beneficial in zero-sum--it produces an accumulative, highly divisible benefit for the top-income class at the expense of everyone else. This, according to conservatives, is the American way and it is un-American (abnormal) to do it any other way.
It is normal for the people to be anxious about their fate in the more capable hands of others who exact detriment for the good of the republic. A confident, unfearing leadership is the emblem of a strong, stable, form of government that we can all give good credit with full faith.
When the elite become anxious about "the mob," it is not because the risk has been over-extended, but because it is normal for the masses to resist the much-needed medicine to cure, in zero-sum, the detriment that ails them. It is unnatural, the elite argue, for mass anxiety to translate into the will of the people because it is detrimental to the full faith and credit of the republic.
Producing benefit by causing detriment is not only bad politics, it is terrible economics! All it does is accumulate risk, which is already over-accumulated to the point of sovereign-debt default. It is bankrupting our nation and more of the same just won't do!
If you don't think benefiting by causing detriment is a good philosophy for governing our political and economic fate, then you need to get active.
The risk has accumulated well beyond the level of political tolerance.
If the rich think they can only be rich by trampling on everybody else, then we will all find out, quite normatively, what it really means to be a republican in the Jeffersonian form.
Friday, July 15, 2011
Balanced Budget Amendment
The reason the Constitution does not require a balanced budget is because the founders did not intend for the Federal Government to finance like households.
The Federal Government, unlike households, is too big to fail, and if it does, the security, the domestic tranquility, of all households suffers.
While default of one household among a plurality does not threaten the entire system, default of the national debt affects everyone equally (like a flat tax) as long as household incomes do not accumulate unequally. As long as a plurality is maintained, one household cannot threaten other households with the risk of detriment and extort value unless enough value is accumulated to be a threat.
That the Federal Government is too big and powerful to fail is exactly what anti-federalists did not like about it, but the Federalist party contended that the Constitution provides for adequate checks and balances (pluralism).
Among our nation's most famous, founding Federalists was our first treasury secretary, Alexander Hamilton who argued it was impractical for the Federal Government to have a balanced budget. Not only did the government assume the debts of the states when they ratified the Constitution, but having an ongoing debt, Hamilton argued, with the full faith and credit of the Federal Government to pay it without fail scores a AAA credit rating to build the wealth of the nation.
The result is the wealthiest nation the world has ever seen, assured by means of public finance that did not require a balanced budget but a continuous debt proportion that always demonstrates the full faith and credit of "We the People" of the United States.
The Federal Government, unlike households, is too big to fail, and if it does, the security, the domestic tranquility, of all households suffers.
While default of one household among a plurality does not threaten the entire system, default of the national debt affects everyone equally (like a flat tax) as long as household incomes do not accumulate unequally. As long as a plurality is maintained, one household cannot threaten other households with the risk of detriment and extort value unless enough value is accumulated to be a threat.
That the Federal Government is too big and powerful to fail is exactly what anti-federalists did not like about it, but the Federalist party contended that the Constitution provides for adequate checks and balances (pluralism).
Among our nation's most famous, founding Federalists was our first treasury secretary, Alexander Hamilton who argued it was impractical for the Federal Government to have a balanced budget. Not only did the government assume the debts of the states when they ratified the Constitution, but having an ongoing debt, Hamilton argued, with the full faith and credit of the Federal Government to pay it without fail scores a AAA credit rating to build the wealth of the nation.
The result is the wealthiest nation the world has ever seen, assured by means of public finance that did not require a balanced budget but a continuous debt proportion that always demonstrates the full faith and credit of "We the People" of the United States.
Thursday, July 14, 2011
Modeling for Continuous Crisis
According to the chairman of the Federal Reserve, the probability of more quantitative easing is low. At this point, the Fed is looking to control "headline inflation" and "headline risk"."
With cheap money (low interest rates) driving commodity inflation, Bernanke identifies an economy being plagued with a persistent crisis proportion that constantly headlines the risk. Despite the sluggish demand, he sees inflation (a higher cost of doing business) crowding out employment which, in turn, increases the demand for debt, including government debt being politically managed into the threat of default. This kind of persistent, headline risk, Bernanke explained, just increases the budget deficit (increases investment in asset classes that do not produce growth and add supply).
We need to keep in mind here that the threat of sovereign-debt default is not a short-term, debt-ceiling problem turned into a long-term crisis proportion. It is an expression of the gamma-risk proportion--risk that has been unaccounted for (avoided and accumulated) heretofore. Just because it is not a mob of left-wing radicals demanding redemption of the accumulated risk, but right-wing radicals looking to fully consolidate value converted from the lower classes, does not make the debt-ceiling crisis any less gamma.
The debt ceiling is being used to extort full consolidation of converted value having been accumulated into a crisis proportion and accommodated by the administration of the state. Resistance to it being retributed by means of tax authority has been operationalized with the risk of default on an asset class that is otherwise, technically, at zero risk. It is not the debt ceiling being blown out of proportion here, it is the ambivalent philosophy of the risk being accommodatively blown out of proportion.
The new, unexpected, political valuation blows the technical value of the risk by accounting for its retributive value. This otherwise ignored valuation--a risk philosophically not assumed in practical, technical, econometric modeling--has an otherwise immediate, deflationary affect estimated to be at 10% of GDP (headline risk on steroids). This risk has an unexpected, technical value, keep in mind, only if you are not following the risk assessments on this website, for example, because it does not present the "right philosophy" of "bigger is better."
The central bank admits monetary easing has not supported the Fed's philosophy of controlling both inflation and unemployment. Instead, it is "accommodating" a business model that expects a consolidated, risk proportion in a mode of continuous crisis.
Business professionals know very well that the modeling being used is not consistent with the non-zero-sum legitimacy of supply-side philosophy. Keeping this divergence from being corrected (insisting to the point of default that cutting spending and taxes for the rich creates jobs, for example) keeps the risk consolidated in a crisis proportion.
While monetary theory is philosophically pluralistic (employment rises and prices fall as the economy expands, or pluralizes by adding supply), the deliberate, practical effect is being modeled ("utilized" in self-interest) to be deflationary (contractionary with high prices rather than expansionary with low prices). Business professionals describe this marginal utility as risk-on and risk-off investing.
When the risk is being consolidated the risk is on, and when risk has been consolidated the risk is off. In the gamma-risk dimension, however, the risk actually models conversely: on is really off, and off is really on. This conflated, ambivalent convergence and divergence of risk and reward is cause for much uncertainty and causes the need for government (the bureaucratic state) to stabilize the continuous crisis of uncertainty that MBA's are philosophically trained to model without it.
The final effect is for the interest on the debt (the debt itself being the principal that generates the interest) to have precedence over employment to avoid default. Since, however, rising unemployment means there is less income to pay the debt (which means it accumulates with only the interest being paid), the missing value is "accommodated" (accounted for) by being monetized. The missing value (the otherwise unaccounted for risk) accumulates into public debt that, at this point, with Italy being the latest example, is in a continuous state of liquidity crisis (with the risk being perpetually "on" or, that is, fully assumed but without being fully accounted for in the actuarial model of doing business).
Since MBA's learn that business and finance is for making money, not creating jobs, the easy money is leveraged right into easy profits at the expense of jobs (and because we adhere to conservative tax-policy philosophy to create jobs, it is also at the expense of tax revenues, causing record budget deficits, debt, and default both public and private). This philosophy of finance is highly detrimental but, at the same time, highly profitable. It is then the job of the administrative state to reconcile the distribution of the risk with the verifiable reward without making anyone less well off. We see, for example, big banks using QE to buy back their stock, which increases the dividend per share without producing growth; and that means that the measure utilized to solve the problem is actually modeled to perpetuate it. The result, we should not be surprised, is a continuous crisis proportion. It is necessary to act surprised, however, to avoid the liability of deriving benefit from detriment. It is wrong, in zero-sum, to derive a dividend without adding supply.
It is wrong, according to supply-side philosophy, to produce profit by not adding supply but reducing it to cause unemployment and accumulating debt. Adam Smith, for example, said it is fundamentally immoral (illegitimate) to profit by leveraging risk (debt) into a crisis proportion (default). It is immoral to use capital to cause detriment and, thus, the need for government.
Capital, Smith said, is best managed by the most moral among us. Those who seek profit by providing (adding supply) rather than depriving are the naturally selected winners as long as the marketplace is free and unconsolidated (doing business because you want to, not because you have to). Legitimacy is best decided in zero-sum (with the risk of loss fully assumed in self-interest), by popular consent in a completely, empirically determined, free-and-open marketplace, without government picking winners and losers. Hence, the zero-sum incentive (self-interest) produces the non-zero-sum legitimacy (the public good) of added supply.
According to Adam Smith ("the" original "supply-sider"), it is the function of government, first and foremost, to ensure we have a free-and-unconsolidated marketplace, which is just the opposite of what we have and what so-called supply-siders want.
Leveraging risk is what MBA's are trained to do, and apparently to the point of continuous crisis. What motivates a professional class to drive a detriment into a persistent crisis proportion?
Un-Enlightened self-interest motivates us to consolidate and deprive rather than model for deconsolidation and provide. Once the capital is allowed to consolidate, we are slaves to it.
Our financial system is deliberately (politically and economically) modeled for a continuous crisis proportion, turning equity into debt by means of continuous consolidation. It is modeled to be too-big-to-fail and that, according to Adam Smith, is the ultimate ignominy--it is the ultimate moral hazard.
Pluralism provides an empirical moral authority that the bureaucratic model can only approximate without ensuring deconsolidation of the risk proportion in priority.
Modeled triangulation of business, congress, and administrative authority is being utilized to consolidate the risk into what Adam Smith would consider to be a continuous, "risk-on" moral hazard.
With cheap money (low interest rates) driving commodity inflation, Bernanke identifies an economy being plagued with a persistent crisis proportion that constantly headlines the risk. Despite the sluggish demand, he sees inflation (a higher cost of doing business) crowding out employment which, in turn, increases the demand for debt, including government debt being politically managed into the threat of default. This kind of persistent, headline risk, Bernanke explained, just increases the budget deficit (increases investment in asset classes that do not produce growth and add supply).
We need to keep in mind here that the threat of sovereign-debt default is not a short-term, debt-ceiling problem turned into a long-term crisis proportion. It is an expression of the gamma-risk proportion--risk that has been unaccounted for (avoided and accumulated) heretofore. Just because it is not a mob of left-wing radicals demanding redemption of the accumulated risk, but right-wing radicals looking to fully consolidate value converted from the lower classes, does not make the debt-ceiling crisis any less gamma.
The debt ceiling is being used to extort full consolidation of converted value having been accumulated into a crisis proportion and accommodated by the administration of the state. Resistance to it being retributed by means of tax authority has been operationalized with the risk of default on an asset class that is otherwise, technically, at zero risk. It is not the debt ceiling being blown out of proportion here, it is the ambivalent philosophy of the risk being accommodatively blown out of proportion.
The new, unexpected, political valuation blows the technical value of the risk by accounting for its retributive value. This otherwise ignored valuation--a risk philosophically not assumed in practical, technical, econometric modeling--has an otherwise immediate, deflationary affect estimated to be at 10% of GDP (headline risk on steroids). This risk has an unexpected, technical value, keep in mind, only if you are not following the risk assessments on this website, for example, because it does not present the "right philosophy" of "bigger is better."
The central bank admits monetary easing has not supported the Fed's philosophy of controlling both inflation and unemployment. Instead, it is "accommodating" a business model that expects a consolidated, risk proportion in a mode of continuous crisis.
Business professionals know very well that the modeling being used is not consistent with the non-zero-sum legitimacy of supply-side philosophy. Keeping this divergence from being corrected (insisting to the point of default that cutting spending and taxes for the rich creates jobs, for example) keeps the risk consolidated in a crisis proportion.
While monetary theory is philosophically pluralistic (employment rises and prices fall as the economy expands, or pluralizes by adding supply), the deliberate, practical effect is being modeled ("utilized" in self-interest) to be deflationary (contractionary with high prices rather than expansionary with low prices). Business professionals describe this marginal utility as risk-on and risk-off investing.
When the risk is being consolidated the risk is on, and when risk has been consolidated the risk is off. In the gamma-risk dimension, however, the risk actually models conversely: on is really off, and off is really on. This conflated, ambivalent convergence and divergence of risk and reward is cause for much uncertainty and causes the need for government (the bureaucratic state) to stabilize the continuous crisis of uncertainty that MBA's are philosophically trained to model without it.
The final effect is for the interest on the debt (the debt itself being the principal that generates the interest) to have precedence over employment to avoid default. Since, however, rising unemployment means there is less income to pay the debt (which means it accumulates with only the interest being paid), the missing value is "accommodated" (accounted for) by being monetized. The missing value (the otherwise unaccounted for risk) accumulates into public debt that, at this point, with Italy being the latest example, is in a continuous state of liquidity crisis (with the risk being perpetually "on" or, that is, fully assumed but without being fully accounted for in the actuarial model of doing business).
Since MBA's learn that business and finance is for making money, not creating jobs, the easy money is leveraged right into easy profits at the expense of jobs (and because we adhere to conservative tax-policy philosophy to create jobs, it is also at the expense of tax revenues, causing record budget deficits, debt, and default both public and private). This philosophy of finance is highly detrimental but, at the same time, highly profitable. It is then the job of the administrative state to reconcile the distribution of the risk with the verifiable reward without making anyone less well off. We see, for example, big banks using QE to buy back their stock, which increases the dividend per share without producing growth; and that means that the measure utilized to solve the problem is actually modeled to perpetuate it. The result, we should not be surprised, is a continuous crisis proportion. It is necessary to act surprised, however, to avoid the liability of deriving benefit from detriment. It is wrong, in zero-sum, to derive a dividend without adding supply.
It is wrong, according to supply-side philosophy, to produce profit by not adding supply but reducing it to cause unemployment and accumulating debt. Adam Smith, for example, said it is fundamentally immoral (illegitimate) to profit by leveraging risk (debt) into a crisis proportion (default). It is immoral to use capital to cause detriment and, thus, the need for government.
Capital, Smith said, is best managed by the most moral among us. Those who seek profit by providing (adding supply) rather than depriving are the naturally selected winners as long as the marketplace is free and unconsolidated (doing business because you want to, not because you have to). Legitimacy is best decided in zero-sum (with the risk of loss fully assumed in self-interest), by popular consent in a completely, empirically determined, free-and-open marketplace, without government picking winners and losers. Hence, the zero-sum incentive (self-interest) produces the non-zero-sum legitimacy (the public good) of added supply.
According to Adam Smith ("the" original "supply-sider"), it is the function of government, first and foremost, to ensure we have a free-and-unconsolidated marketplace, which is just the opposite of what we have and what so-called supply-siders want.
Leveraging risk is what MBA's are trained to do, and apparently to the point of continuous crisis. What motivates a professional class to drive a detriment into a persistent crisis proportion?
Un-Enlightened self-interest motivates us to consolidate and deprive rather than model for deconsolidation and provide. Once the capital is allowed to consolidate, we are slaves to it.
Our financial system is deliberately (politically and economically) modeled for a continuous crisis proportion, turning equity into debt by means of continuous consolidation. It is modeled to be too-big-to-fail and that, according to Adam Smith, is the ultimate ignominy--it is the ultimate moral hazard.
Pluralism provides an empirical moral authority that the bureaucratic model can only approximate without ensuring deconsolidation of the risk proportion in priority.
Modeled triangulation of business, congress, and administrative authority is being utilized to consolidate the risk into what Adam Smith would consider to be a continuous, "risk-on" moral hazard.
Philosophy of Added Supply
President Obama inherited the practical effects (the benefits derived from detriments) of supply-side, economic philosophy.
Although we knew the aggregate effect of supply-side philosophy is recession, we did it anyway because, philosophically, letting the American people keep all the income they earn is, like Adam Smith said, the right thing to do--it maximizes the practical utility of self-interest to build the wealth of the nation. Being sure, then, that the most able to pay taxes pay the least causes maximum employment at the lowest possible prices. It maximizes tax revenues while reducing the need for government spending by adding supply.
Supply-side philosophy, which is currently being offered to cure our economic woes after having caused it, formulates this hypothesis: If we do not adhere to supply-side, economic philosophy we will have low employment and a rising cost of living. Since the Obama administration does not adhere to conservative philosophy, we therefore have both unemployment and rising costs.
Apparently, Moody's doesn't believe in supply-side philosophy either.
Adding supply is a philosophy of risk that is not peculiar to the Reagan administration which, by the way, was plagued with high inflation, unemployment, and record budget deficits. The recessionary trend of the 80's did not abate until his successor, President Bush, raised taxes on the rich to reduce the deficit and record-high interest rates.
Adding supply is a philosophy that defines the legitimate distribution of reward going back to the founding of our nation. It is a philosophy that justifies the expected detriment (the austerity needed to create the wealth of the nation) being borne by "the little people" to produce the benefit--making rich people rich (causing a surplus, or adding supply). This is a very simple philosophy: you cannot be the beneficiary of the detriment if you have to share the detriment--that would be lower class.
You cannot be king (the tax collector) if you have to pay the tax; and you cannot profit from the interest on the debt if you have to pay it.
Remember, your income (your class) is wages, salaries, capital gains, dividends and interest divided by prices, and that includes taxes (the cost of government). If you are benefiting from rising prices (inflation) and interest on the debt (unemployment) at the lowest effective tax rate, you are decidedly, by every measure, upper class with every incentive to increase the cost of government (debt and the taxes to pay the interest on the debt) while reducing the benefit (entitlements).
The realpolitique of power (who bears the cost and who gains the benefit--the risk to reward) depends on a credible, philosophical foundation.
Power cannot be maintained if it is not believed to be legitimate.
Although we knew the aggregate effect of supply-side philosophy is recession, we did it anyway because, philosophically, letting the American people keep all the income they earn is, like Adam Smith said, the right thing to do--it maximizes the practical utility of self-interest to build the wealth of the nation. Being sure, then, that the most able to pay taxes pay the least causes maximum employment at the lowest possible prices. It maximizes tax revenues while reducing the need for government spending by adding supply.
Supply-side philosophy, which is currently being offered to cure our economic woes after having caused it, formulates this hypothesis: If we do not adhere to supply-side, economic philosophy we will have low employment and a rising cost of living. Since the Obama administration does not adhere to conservative philosophy, we therefore have both unemployment and rising costs.
Apparently, Moody's doesn't believe in supply-side philosophy either.
Adding supply is a philosophy of risk that is not peculiar to the Reagan administration which, by the way, was plagued with high inflation, unemployment, and record budget deficits. The recessionary trend of the 80's did not abate until his successor, President Bush, raised taxes on the rich to reduce the deficit and record-high interest rates.
Adding supply is a philosophy that defines the legitimate distribution of reward going back to the founding of our nation. It is a philosophy that justifies the expected detriment (the austerity needed to create the wealth of the nation) being borne by "the little people" to produce the benefit--making rich people rich (causing a surplus, or adding supply). This is a very simple philosophy: you cannot be the beneficiary of the detriment if you have to share the detriment--that would be lower class.
You cannot be king (the tax collector) if you have to pay the tax; and you cannot profit from the interest on the debt if you have to pay it.
Remember, your income (your class) is wages, salaries, capital gains, dividends and interest divided by prices, and that includes taxes (the cost of government). If you are benefiting from rising prices (inflation) and interest on the debt (unemployment) at the lowest effective tax rate, you are decidedly, by every measure, upper class with every incentive to increase the cost of government (debt and the taxes to pay the interest on the debt) while reducing the benefit (entitlements).
The realpolitique of power (who bears the cost and who gains the benefit--the risk to reward) depends on a credible, philosophical foundation.
Power cannot be maintained if it is not believed to be legitimate.
Wednesday, July 13, 2011
Good Sense, Full Faith, and Credit
Today we see attempts to confirm the philosophy that governs the risk.
The U.S. Senate is busy working on a non-binding, Sense of the Senate resolution. It resolves the intention--ensuring us that it has the good sense--to require the rich make a "meaningful contribution" to deficit and debt reduction.
The House, at the same time, is now scrambling to ensure entitlements are at zero risk after a lengthy political campaign to exact austerity by holding our nation hostage to the risk of default. They see the economy tanking and are feeling the gamma-risk proportion (the angst) inflecting toward a full accountability.
Congress is engaged in managing an over-accumulated risk proportion. Accountability is being managed not by reducing the proportion but by psychologically reducing the level of angst associated with it.
The Democratic Senate is acting to ensure a good sense for what is fair and equitable while the Republican House is ensuring, with full faith, that "We the People" (the government) will pay the interest on the debt at no risk. We have clear confirmation, then, of the philosophy that "governs" the risk.
We should all expect, with full faith, that We the People will pay the debt no matter what. Whether by hook or by crook, our credit is good.
Bad credit, we can all be sure, is what our representative form of government is modeled to reduce to zero (which assumes all the risk elsewhere). In order to keep the faith, that risk reduction has to also be fair and equitable--it must be Pareto Optimal (without loss of principal in zero-sum). Since this risk reduction actually accumulates political risk in proportion to the reduction, we are binomially determined (structured) to effectively counter-party the risk politically, which is what we see happening today, tomorrow, and the next.
By structurally modeling for counter-party assumption of the risk, we can faithfully, routinely, expect the detriment (the sacrifice) needed will be exacted to pay the interest on the debt (the principal at political risk of default) in priority.
What the principals need to avoid is the risk of liability associated with a benefit being derived from a deliberate detriment (and the more it is avoided the more unavoidable it becomes).
In order to keep the faith, we need to have a practical, governing philosophy to support it--the good sense that assures the credit "We the People" extend it. As we perpetually determine whether that philosophy should be democratic or republican, the debt (the risk) accumulates to determine our fate in a crisis proportion. It's not that it can't be avoided if "We" have the political will to self-determine, despite the elite philosophy that "The People" are not capable.
With the margin of profit scoring at record levels, the beneficiaries that do not want to share the record debt generated to support it will be forced to account for all the risk in a too-big-to-fail proportion.
The U.S. Senate is busy working on a non-binding, Sense of the Senate resolution. It resolves the intention--ensuring us that it has the good sense--to require the rich make a "meaningful contribution" to deficit and debt reduction.
The House, at the same time, is now scrambling to ensure entitlements are at zero risk after a lengthy political campaign to exact austerity by holding our nation hostage to the risk of default. They see the economy tanking and are feeling the gamma-risk proportion (the angst) inflecting toward a full accountability.
Congress is engaged in managing an over-accumulated risk proportion. Accountability is being managed not by reducing the proportion but by psychologically reducing the level of angst associated with it.
The Democratic Senate is acting to ensure a good sense for what is fair and equitable while the Republican House is ensuring, with full faith, that "We the People" (the government) will pay the interest on the debt at no risk. We have clear confirmation, then, of the philosophy that "governs" the risk.
We should all expect, with full faith, that We the People will pay the debt no matter what. Whether by hook or by crook, our credit is good.
Bad credit, we can all be sure, is what our representative form of government is modeled to reduce to zero (which assumes all the risk elsewhere). In order to keep the faith, that risk reduction has to also be fair and equitable--it must be Pareto Optimal (without loss of principal in zero-sum). Since this risk reduction actually accumulates political risk in proportion to the reduction, we are binomially determined (structured) to effectively counter-party the risk politically, which is what we see happening today, tomorrow, and the next.
By structurally modeling for counter-party assumption of the risk, we can faithfully, routinely, expect the detriment (the sacrifice) needed will be exacted to pay the interest on the debt (the principal at political risk of default) in priority.
What the principals need to avoid is the risk of liability associated with a benefit being derived from a deliberate detriment (and the more it is avoided the more unavoidable it becomes).
In order to keep the faith, we need to have a practical, governing philosophy to support it--the good sense that assures the credit "We the People" extend it. As we perpetually determine whether that philosophy should be democratic or republican, the debt (the risk) accumulates to determine our fate in a crisis proportion. It's not that it can't be avoided if "We" have the political will to self-determine, despite the elite philosophy that "The People" are not capable.
With the margin of profit scoring at record levels, the beneficiaries that do not want to share the record debt generated to support it will be forced to account for all the risk in a too-big-to-fail proportion.
Tuesday, July 12, 2011
At No Risk
At the founding of our nation, Alexander Hamilton--the Federalists, generally--thought it economically prudent to ensure the debt of the Federal Government is, categorically, at no risk.
Our nation is literally founded on the assumption of debt, much to the disapproval of anti-Federalists. Federal debt is, and will continue to be, an asset class that will, without exception, be paid. This policy, Constitutionally endowed, established the Federal debt as the primary, fundamental measure of value ("bonded" to the full faith and credit of ultimate, sovereign authority--the Federal Government, or "We the People"). It essentially established a fundamental philosophy of risk with "the risk" conceptually modeled at zero (We the People will always pay it).
Operating since our founding with this fundamental philosophy of risk, how is it that the concept of zero-fundamental-risk has unConstitutionally come into question?
The theoretical, philosophical foundation of zero-risk diverges with practice, much as Thomas Jefferson at our founding warned it would. Accusing the Federalists of being counter-revolutionaries, Jefferson saw the risk of loss being fundamentally conserved (fully assumed)--certainly not at zero.
Jefferson saw "the risk" inherent to monarchy being inherited by the new, aristocratic class of elite power and, counter to The Revolution, conserved. "The risk" conceptualized to be too big and powerful to fail through the system of federalism we have today at, supposedly, no risk, was by Jefferson's calculation naturally doomed to failure.
So, here we are, today, with Republicans saying, categorically, that "100 percent of the problem comes from the spending side--100 percent of the solution comes from the spending side." In other words, the risk of loss, as Thomas Jefferson warned, is fully assumed--it is conserved...falsely valued "100 percent" at no risk.
The massive amount of disconfirmed policy rhetoric incessantly applied by conservatives, especially at this point in our political history, is fully loaded with risk--it is 100 percent! Conservatives are going to find out what it means to ontologically achieve the gamma-risk proportion.
The debate reduces to an appropriate philosophy of the risk that ideally achieves an elusive, if not illusory, fundamental, zero-sum proportion.
The practical philosophy of conceptualized risk clearly diverges from the actualized risk, empirically resulting in an ever-larger proportion of debt to equity. To reduce the debt, it is then necessary to change the practical, philosophical concept of it.
Our nation is literally founded on the assumption of debt, much to the disapproval of anti-Federalists. Federal debt is, and will continue to be, an asset class that will, without exception, be paid. This policy, Constitutionally endowed, established the Federal debt as the primary, fundamental measure of value ("bonded" to the full faith and credit of ultimate, sovereign authority--the Federal Government, or "We the People"). It essentially established a fundamental philosophy of risk with "the risk" conceptually modeled at zero (We the People will always pay it).
Operating since our founding with this fundamental philosophy of risk, how is it that the concept of zero-fundamental-risk has unConstitutionally come into question?
The theoretical, philosophical foundation of zero-risk diverges with practice, much as Thomas Jefferson at our founding warned it would. Accusing the Federalists of being counter-revolutionaries, Jefferson saw the risk of loss being fundamentally conserved (fully assumed)--certainly not at zero.
Jefferson saw "the risk" inherent to monarchy being inherited by the new, aristocratic class of elite power and, counter to The Revolution, conserved. "The risk" conceptualized to be too big and powerful to fail through the system of federalism we have today at, supposedly, no risk, was by Jefferson's calculation naturally doomed to failure.
So, here we are, today, with Republicans saying, categorically, that "100 percent of the problem comes from the spending side--100 percent of the solution comes from the spending side." In other words, the risk of loss, as Thomas Jefferson warned, is fully assumed--it is conserved...falsely valued "100 percent" at no risk.
The massive amount of disconfirmed policy rhetoric incessantly applied by conservatives, especially at this point in our political history, is fully loaded with risk--it is 100 percent! Conservatives are going to find out what it means to ontologically achieve the gamma-risk proportion.
The debate reduces to an appropriate philosophy of the risk that ideally achieves an elusive, if not illusory, fundamental, zero-sum proportion.
The practical philosophy of conceptualized risk clearly diverges from the actualized risk, empirically resulting in an ever-larger proportion of debt to equity. To reduce the debt, it is then necessary to change the practical, philosophical concept of it.
Monday, July 11, 2011
Organizational Size and Pluralistic Tendencies
As the drama unfolds over preventing an improbable default of our sovereign debt, we can plainly see binomialism at work.
The drama is just that--political theater. Since the probable, binomially determined alternatives are obviously limited to the "dummy" variables, observing the determination of our fate is but a form of entertainment--an art form to make consolidation of power appear pluralistically legitimate in the republican form.
As we discussed in previous articles, binomialism is a large, consolidated, organized means of conserving the stakes over time by toggling between two variables. It is an organized tautology--a large, pre-determined, bureaucratic organization that delivers stable, routine results.
The result of consolidation--crises--is fully expected, and since the risk of loss is fully assumed, the risk is modeled in the republican form to safely vary within the limits of the routine (pre-determined) probability. The risk, you see, does not reduce, it is managed (consolidated) to yield a stable distribution of power (and wealth) over time at a highly predictable frequency, which is what we can clearly see happening now.
Although the risk is politically organized to be reduced by keeping it consolidated, it is actually being accumulated. Eventually, the value is so accumulated that a distribution occurs beyond the normally expected value. We have then, for example, the Tea-Party movement moving the realpolitique toward a more pluralistic distribution.
Our founders intended for power to never get so big and powerful that "We the People" have no authority to self-determine. We are assured a system of checks and balances (pluralism) by Constitutional authority. The natural tendency for power to collapse into crisis when it becomes so-called "too big to fail" is modeled as a fully assumed risk of loss in priority.
Since the pluralistic tendency is 100 percent, it is foolish to think you can be so powerful you cannot fail. It is practical, then, to systematically model the risk for cyclical consolidation and deconsolidation over time without loss of principal. Risk is proportioned to never be so diffused that the principal amount of power can be permanently lost. The proportion is effectively structured to conserve over time, conceived to ensure the general welfare (i.e., to legally, Constitutionally, ensure Pareto Optimality without instability). Federalists have been doing this for 235 years. It is the two-party system, and the Pareto-Optimal jurisprudence, we see in operation today.
Interjection of a third-party element destabilizes the binomial system of governance, and it is important not to characterize it as a duopoly. It is not a duopoly, it is a monopoly. The two variables operate together to monopolize power. The duality aspect is a psychological trick--it is a false pluralism that the Tea Party, for example, is Constitutionally empowered to check and balance.
To avoid more accountability, the third element must be co-opted--it must be organized, absorbed, into what is otherwise too-big to fail. As the organization gets bigger, more consolidated and more unaccountable, it is more likely to fail, collapse, under the weight of an accumulated, retributive value.
Yes, the bigger it is, the harder it falls. It is important to keep the system as deconsolidated as possible, but doing that is antithetical to the working model we have now. Conventional wisdom dictates: the bigger the better to control the risk.
Organizations that are are so big they can control the risk are largely unaccountable. They are intended to be unaccountable, by virtue of size, because accountability, or the lack of it, measures power--it measures who is in control and who is not.
The bigger, the more unaccountable, and the more unaccountable, the more risk accumulates unaccounted for. It gains a gamma-risk proportion with the benefit (and detriment) of being too big to fail. However, it really isn't too big to fail because the legitimate risk (pluralistic accountability) is falsely valued.
Legitimate value is missing and largely unaccounted for in the gamma, too-big-to-fail dimension. Legitimate risk is avoided (structured to accumulate, or transfer, to the future both politically and economically), which systemically, as we come to find out over and over again, is highly detrimental. It is detrimental even for a power elite who mistakenly assume they can completely self-determine without accountability (without risk) through ever-larger economies of scale.
An organization like the Tea Party is to prevent the risk from transferring to the future. It is demanding an immediate accounting of the risk, bringing us to the point of possible sovereign-debt default, improbable as that really is because the system is politically modeled (it is designed) for continuous debt accumulation, not default. The risk is always transferred to the future, by default, with the "full faith and credit" of the sovereign state (with the force and legitimacy of public authority).
Government is the ultimate entity of a truly too-big-to-fail proportion. It is the repository for all the accumulated risk, expressed as public debt. It is a place in which to dump our toxic assets and refinance the debt without fear of deconsolidation (default and political reorganization of the risk proportion). Risk can safely accumulate and reside there indefinitely...until, of course, its retributive value is demanded for redemption, which requires deconsolidation (a full, legitimate accounting) of the risk proportion, and is essentially what the Tea Party is doing.
Default on the national debt is exactly what we are politically organized to prevent on an ever-larger scale of too-big-to-fail. Deregulation, for example, demands a more deconsolidated marketplace by removing barriers, which means it will not happen; and sovereign default will demand a full accounting of the risk buried in that huge, infinitesimally larger number we call the national debt, which means it will not happen. It is political theater designed to make it look like government is the problem, and if you remove that appearance (that false valuation), a real, empirically verifiable accountability appears. If government is not the problem, then what is?
Neither party really wants to deregulate, and both parties want to raise the debt limit because that is where all the risk is stored to be managed without real, easily verifiable accountability (without deconsolidation). In the same way, we don't have a balanced budget amendment because it increases accountability. A clear accounting of the risk would gain current, present, empirical value. If government spending does not cause slow growth and recessionary trending, then what does?
Requiring a balanced budget is much more likely to require a more progressive tax code to balance it. The hypothesis that budget deficits cause inflation and unemployment rather than being the effect will be empirically tested (which is what "The Revolution," and The Enlightenment, was, and still is, all about...this is what the foundation of our political heritage really is).
To conserve the consolidation of power, an empirical test is a political risk to be avoided like the plague, and so we have a third-party element emerging to interpolate the missing value of risk unaccounted for because it is always being avoided and accumulated into an oversized, too-big-to-fail (gamma-risk) proportion. That proportion of unaccountability, hidden within the oversized dimensions of power to command and control the distribution of risk and the accumulation of reward without liability, is being tested by the natural emergence of a pluralistic, third-party element. It is a nascent occurrence of deconsolidated risk, currently being expressed as an otherwise improbable default on our sovereign debt.
The Tea Party is a precursor. It begins a larger movement--a natural tendency--toward a more empirically verifiable accountability. While risk is deliberately structured to accumulate, or transfer, to the future, both politically and economically, in a too-big-to-fail proportion, it is, at the same time, accouchering its antithetical form.
All is not lost. There is still a natural tendency to a more pluralistic proportion in which our problems will more easily resolve in the future.
The drama is just that--political theater. Since the probable, binomially determined alternatives are obviously limited to the "dummy" variables, observing the determination of our fate is but a form of entertainment--an art form to make consolidation of power appear pluralistically legitimate in the republican form.
As we discussed in previous articles, binomialism is a large, consolidated, organized means of conserving the stakes over time by toggling between two variables. It is an organized tautology--a large, pre-determined, bureaucratic organization that delivers stable, routine results.
The result of consolidation--crises--is fully expected, and since the risk of loss is fully assumed, the risk is modeled in the republican form to safely vary within the limits of the routine (pre-determined) probability. The risk, you see, does not reduce, it is managed (consolidated) to yield a stable distribution of power (and wealth) over time at a highly predictable frequency, which is what we can clearly see happening now.
Although the risk is politically organized to be reduced by keeping it consolidated, it is actually being accumulated. Eventually, the value is so accumulated that a distribution occurs beyond the normally expected value. We have then, for example, the Tea-Party movement moving the realpolitique toward a more pluralistic distribution.
Our founders intended for power to never get so big and powerful that "We the People" have no authority to self-determine. We are assured a system of checks and balances (pluralism) by Constitutional authority. The natural tendency for power to collapse into crisis when it becomes so-called "too big to fail" is modeled as a fully assumed risk of loss in priority.
Since the pluralistic tendency is 100 percent, it is foolish to think you can be so powerful you cannot fail. It is practical, then, to systematically model the risk for cyclical consolidation and deconsolidation over time without loss of principal. Risk is proportioned to never be so diffused that the principal amount of power can be permanently lost. The proportion is effectively structured to conserve over time, conceived to ensure the general welfare (i.e., to legally, Constitutionally, ensure Pareto Optimality without instability). Federalists have been doing this for 235 years. It is the two-party system, and the Pareto-Optimal jurisprudence, we see in operation today.
Interjection of a third-party element destabilizes the binomial system of governance, and it is important not to characterize it as a duopoly. It is not a duopoly, it is a monopoly. The two variables operate together to monopolize power. The duality aspect is a psychological trick--it is a false pluralism that the Tea Party, for example, is Constitutionally empowered to check and balance.
To avoid more accountability, the third element must be co-opted--it must be organized, absorbed, into what is otherwise too-big to fail. As the organization gets bigger, more consolidated and more unaccountable, it is more likely to fail, collapse, under the weight of an accumulated, retributive value.
Yes, the bigger it is, the harder it falls. It is important to keep the system as deconsolidated as possible, but doing that is antithetical to the working model we have now. Conventional wisdom dictates: the bigger the better to control the risk.
Organizations that are are so big they can control the risk are largely unaccountable. They are intended to be unaccountable, by virtue of size, because accountability, or the lack of it, measures power--it measures who is in control and who is not.
The bigger, the more unaccountable, and the more unaccountable, the more risk accumulates unaccounted for. It gains a gamma-risk proportion with the benefit (and detriment) of being too big to fail. However, it really isn't too big to fail because the legitimate risk (pluralistic accountability) is falsely valued.
Legitimate value is missing and largely unaccounted for in the gamma, too-big-to-fail dimension. Legitimate risk is avoided (structured to accumulate, or transfer, to the future both politically and economically), which systemically, as we come to find out over and over again, is highly detrimental. It is detrimental even for a power elite who mistakenly assume they can completely self-determine without accountability (without risk) through ever-larger economies of scale.
An organization like the Tea Party is to prevent the risk from transferring to the future. It is demanding an immediate accounting of the risk, bringing us to the point of possible sovereign-debt default, improbable as that really is because the system is politically modeled (it is designed) for continuous debt accumulation, not default. The risk is always transferred to the future, by default, with the "full faith and credit" of the sovereign state (with the force and legitimacy of public authority).
Government is the ultimate entity of a truly too-big-to-fail proportion. It is the repository for all the accumulated risk, expressed as public debt. It is a place in which to dump our toxic assets and refinance the debt without fear of deconsolidation (default and political reorganization of the risk proportion). Risk can safely accumulate and reside there indefinitely...until, of course, its retributive value is demanded for redemption, which requires deconsolidation (a full, legitimate accounting) of the risk proportion, and is essentially what the Tea Party is doing.
Default on the national debt is exactly what we are politically organized to prevent on an ever-larger scale of too-big-to-fail. Deregulation, for example, demands a more deconsolidated marketplace by removing barriers, which means it will not happen; and sovereign default will demand a full accounting of the risk buried in that huge, infinitesimally larger number we call the national debt, which means it will not happen. It is political theater designed to make it look like government is the problem, and if you remove that appearance (that false valuation), a real, empirically verifiable accountability appears. If government is not the problem, then what is?
Neither party really wants to deregulate, and both parties want to raise the debt limit because that is where all the risk is stored to be managed without real, easily verifiable accountability (without deconsolidation). In the same way, we don't have a balanced budget amendment because it increases accountability. A clear accounting of the risk would gain current, present, empirical value. If government spending does not cause slow growth and recessionary trending, then what does?
Requiring a balanced budget is much more likely to require a more progressive tax code to balance it. The hypothesis that budget deficits cause inflation and unemployment rather than being the effect will be empirically tested (which is what "The Revolution," and The Enlightenment, was, and still is, all about...this is what the foundation of our political heritage really is).
To conserve the consolidation of power, an empirical test is a political risk to be avoided like the plague, and so we have a third-party element emerging to interpolate the missing value of risk unaccounted for because it is always being avoided and accumulated into an oversized, too-big-to-fail (gamma-risk) proportion. That proportion of unaccountability, hidden within the oversized dimensions of power to command and control the distribution of risk and the accumulation of reward without liability, is being tested by the natural emergence of a pluralistic, third-party element. It is a nascent occurrence of deconsolidated risk, currently being expressed as an otherwise improbable default on our sovereign debt.
The Tea Party is a precursor. It begins a larger movement--a natural tendency--toward a more empirically verifiable accountability. While risk is deliberately structured to accumulate, or transfer, to the future, both politically and economically, in a too-big-to-fail proportion, it is, at the same time, accouchering its antithetical form.
All is not lost. There is still a natural tendency to a more pluralistic proportion in which our problems will more easily resolve in the future.
Saturday, July 9, 2011
Avoiding the Risk of Default
If you are following risk modeling and assessment on this web site, you are not surprised by a dismal employment report.
For the financial analyst representing upper-class incomes, a dismal report is good news. Everything is going as planned. The detriment--high unemployment--extends the benefit derived (an accumulation of income into the upper class that is literally bankrupting our economy). The risk to be avoided is to keep it from being taxed and distributed to create jobs, which according to Republicans is the ways and means to tax and spend ourselves into default.
If we follow the Republican plan for "shared prosperity," everyone will be bankrupt but the upper class. Our nation, however, will be more solvent and the dollar will be much stronger, but that is scant consolation if you have to go bankrupt to keep the nation solvent (to make the rich richer at your expense, which is "shared prosperity").
Curious, isn't it, how middle-class Republicans support policies that will effectively bankrupt them to keep the nation solvent; and as the dissonance accumulates, so does the angst and the risk of political default.
With trillions of dollars available in the private sector and trillions of dollars to monetize a too-big-to-fail financial system, we should not be in any way anxious about sovereign-debt default. There is plenty of money available, but it is not being used to pay debt. It is being used to create debt instead of jobs, and this causes risk to accumulate into default (deflation) which, at this point, presents as global, sovereign-debt crises.
While risk cannot be created, it can be proportioned to cause angst. The political opportunity is then created to manage the accumulated effect of the risk to derive, consolidate, and manage economic value into an ongoing surplus.
In order to keep the risk consolidated in an economy-of-scale proportion, it is necessary to make people believe it is in their self-interest to not tax the surplus, turn it into capital and create jobs. Economies of scale, for example, we are told by mainstream, Ivy-League economists, create jobs and lower prices when just the opposite happens. (Keep in mind, for example, we may get a lower price at WalMart, but the price rises as income declines when the only place to work is at WalMart. While Ivy-League economists are quick to tout the benefit of lower prices, they neglect the full cost against the benefit to please their masters and falsely induce the belief that economies of scale are a non-zero-sum model of efficiency.) So, working with this "belief" (this failed, practical, philosophy of the risk), what we have now are massive economies of scale, unemployment, rising prices, and a whole lot of angst.
On the one hand, we have both Democrats and Republicans telling us we need to create jobs but both are relying on economies of scale to get us there. Both parties agree that we need to create jobs to pay the debt because relying on rich people to pay it pulls capital away from investment that creates jobs. On the other hand, we have an increasingly consolidated marketplace full of economy-of-scale firms that cause both inflation and unemployment, which leaves no one to pay the debt but rich people. Despite what we are told to believe, this is not an unresolvable paradox. It is a function of false, impractical modeling.
Allowing the economy to consolidate does not achieve pluralistic results. It accumulates risk to the point of sovereign-debt crises...and we are there, anxiously awaiting the trappings of our abuse to disabuse us.
The high level of angst indicates a problem that is beyond the capacity of the current political-economic system to solve. On the economic side there is no incentive with an economy-of-scale proportion, and politically there is no will in the current republican form. Overall, there is a critical deficiency of consensuality (pluralism) both politically and economically, and with third-party elements like Eric Cantor, for example, firmly fisting the purse strings, there seems to be no recourse to an incessant barrage of irrational, unempirical, policy options.
Despite the apparent hopelessness, all is not lost, however.
For the financial analyst representing upper-class incomes, a dismal report is good news. Everything is going as planned. The detriment--high unemployment--extends the benefit derived (an accumulation of income into the upper class that is literally bankrupting our economy). The risk to be avoided is to keep it from being taxed and distributed to create jobs, which according to Republicans is the ways and means to tax and spend ourselves into default.
If we follow the Republican plan for "shared prosperity," everyone will be bankrupt but the upper class. Our nation, however, will be more solvent and the dollar will be much stronger, but that is scant consolation if you have to go bankrupt to keep the nation solvent (to make the rich richer at your expense, which is "shared prosperity").
Curious, isn't it, how middle-class Republicans support policies that will effectively bankrupt them to keep the nation solvent; and as the dissonance accumulates, so does the angst and the risk of political default.
With trillions of dollars available in the private sector and trillions of dollars to monetize a too-big-to-fail financial system, we should not be in any way anxious about sovereign-debt default. There is plenty of money available, but it is not being used to pay debt. It is being used to create debt instead of jobs, and this causes risk to accumulate into default (deflation) which, at this point, presents as global, sovereign-debt crises.
While risk cannot be created, it can be proportioned to cause angst. The political opportunity is then created to manage the accumulated effect of the risk to derive, consolidate, and manage economic value into an ongoing surplus.
In order to keep the risk consolidated in an economy-of-scale proportion, it is necessary to make people believe it is in their self-interest to not tax the surplus, turn it into capital and create jobs. Economies of scale, for example, we are told by mainstream, Ivy-League economists, create jobs and lower prices when just the opposite happens. (Keep in mind, for example, we may get a lower price at WalMart, but the price rises as income declines when the only place to work is at WalMart. While Ivy-League economists are quick to tout the benefit of lower prices, they neglect the full cost against the benefit to please their masters and falsely induce the belief that economies of scale are a non-zero-sum model of efficiency.) So, working with this "belief" (this failed, practical, philosophy of the risk), what we have now are massive economies of scale, unemployment, rising prices, and a whole lot of angst.
On the one hand, we have both Democrats and Republicans telling us we need to create jobs but both are relying on economies of scale to get us there. Both parties agree that we need to create jobs to pay the debt because relying on rich people to pay it pulls capital away from investment that creates jobs. On the other hand, we have an increasingly consolidated marketplace full of economy-of-scale firms that cause both inflation and unemployment, which leaves no one to pay the debt but rich people. Despite what we are told to believe, this is not an unresolvable paradox. It is a function of false, impractical modeling.
Allowing the economy to consolidate does not achieve pluralistic results. It accumulates risk to the point of sovereign-debt crises...and we are there, anxiously awaiting the trappings of our abuse to disabuse us.
The high level of angst indicates a problem that is beyond the capacity of the current political-economic system to solve. On the economic side there is no incentive with an economy-of-scale proportion, and politically there is no will in the current republican form. Overall, there is a critical deficiency of consensuality (pluralism) both politically and economically, and with third-party elements like Eric Cantor, for example, firmly fisting the purse strings, there seems to be no recourse to an incessant barrage of irrational, unempirical, policy options.
Despite the apparent hopelessness, all is not lost, however.
Friday, July 8, 2011
Avoiding the Risk
If you are powerful, and you believe power can only be legitimately earned, and demonstrated, at the expense of others, movement toward a more consensual working model is the risk to be avoided.
A more consensual model shares power. Governance that is consensually legitimate has a more democratic than a republican aspect. The powerful are legitimate only by the verifiable consent of the governed. Power, then, is shared non-zero-sum. People that want to be powerful gain power without it being at the expense, but to the benefit, of everyone else.
When Republicans claim tax-cuts for the rich provide a non-zero-sum benefit, they mean that the inequitable distribution of risk and reward ensures the best and the brightest rule and everyone else, by nature, legitimately follows. The detriment exacted--their gain being our loss--is the general welfare verified by the inequity. So, when regressive tax policy has current value, like we have now, and our income declines against rising prices, it is really for our own good even though we are too unsophisticated to realize it. Those few among us who, being the best and the brightest, do realize the otherwise invisible, indivisible benefit of inequity, and thus having gained the secret knowledge consent to it, are more likely (naturally selected) to experience upward, class mobility and enjoy (earn) high executive compensation derived from the inequity.
Since, however, the masses (the non-elite) will always demand equity without earning it, it is necessary to come up with clever means to structure the distribution of risk and reward. Power is then structured for executive administration (with all the rights and privileges legitimately earned and enjoyed therein) that looks legitimately consensual.
This conceptual framework for structuring power essentially describes the Hamiltonian model of political-economy conceived by Federalists at the founding of our nation. It is a working, conceptual model--the practical philosophy of federalism--that survives to this day, successfully avoiding the risk proportion the upper class inherited from the king.
In order to conserve the risk proportion in the upper class, which became the "ruling class" with a revolutionary philosophy of legitimacy, it was necessary to interrupt the natural tendency to achieve pluralistic consensuality.
Working with the new concept of "natural right" to private property ("life, liberty, and the pursuit of happiness"), Federalists successfully avoided the fully assumed risk of loss that kings arrogantly, and unempirically, take for granted as divine right. They were able to ensure a more republican model and avoid the momentum toward a more consensually empirical philosophy of democratic legitimacy by arguing that democracy is inherently unstable--always on the brink of mob rule, with the French Revolution being the best example at the time.
To this day, conservatives regard democracy to be an inferior form of government, which leads their critics to accuse them of harboring fascist sentiments. Conservatives then rejoin that their critics are un-American which, as we know historically, means that anyone that does not embrace conservative philosophy must be a communist, implying that the only alternative to the overwhelming systemic risk capitalism presents is communism, and that is not true.
Again, the exchange of ideological recriminations has an anchoring effect--it is a psychological tool for limiting the probable alternatives. Our two-party system, for example, is set up to avoid the stigma of ideological recriminations--when party A reaches the threshold of voter tolerance, party B does not look so bad, and so on, ad infinitum. This binomial system is familiarly "American" and avoids being ideologically branded as "communist" or "fascist" which are objects of much fear and loathing (angst).
The effect of the angst (retributive value) is reduced (avoided and accumulated) with a system of government that produces reliable, dummy-variable results, conserving the material, economic stakes through a systematically, ideologically structured process. Power is deliberately structured to conserve the angst (the stakes), keeping the distribution of the risk proportion in a beneficially detrimental condition of boom and bust (the angst systematically determined, which we call "systemic risk").
Keep in mind that while the risk cannot be reduced, only accumulated and distributed, the angst (the feeling of being anxious) can be psychologically reduced.
Psychological tools are employed to reduce angst, which makes it appear that risk is being reduced when it is really being accumulated (repressed). Indeed, power is structured to manage the angst, which is a philosophical pursuit (managing probable ideas and beliefs), not a material pursuit (managing wealth and the probable distribution of the risk) in priority. Making people believe that tax cuts for the rich benefit those that are not rich may be a function of structuring a system of material rewards and deprivations, but it is largely a philosophical endeavor to agnosiate the verifiable evidence and vitiate the consensual will of We the People.
When we incur the detriment, we are being told it is in the interest of being prudentially risk averse. If we do not allow the elite to gain the benefit, the detriment will be even worse, which is philosophically consistent with the belief that ensuring the welfare of the rich in priority ensures the general welfare despite the verifiable evidence--the Great Recession, for example--to the contrary. Going with the verifiable evidence is a philosophical pursuit--it is the philosophy of science in which truth is verified by replication of the results under the same conditions.
To vitiate the verifiable evidence, conservatives generally argue, for example, that the cycle of boom and bust, although not readily apparent, is really an indivisible net benefit derived from an apparent, divisible assignment of risk. Contending that the business cycle ensures we are always being led by the most competent--successful--managers is a philosophical argument systematically validated by repeatedly invoking the angst (the probability) of it being worse if abandoned (which is to psychologically manipulate the level of angst associated with an unavoidable, constant, risk proportion). The veracity of the argument is derived from the probability of abandoning the reliable assumption (the philosophical interpretation, or conceptual modeling) of the risk proportion that is never abandoned. It is a tautology that systematically goes untested and is used to falsely induce the evidence to technically support it.
When, for example, technical analysts say a weak dollar causes commodity prices to rise, the assumption (the philosophical interpretation that determines the working, conceptual model) is that too much money is pluralistically chasing too few goods. We are not, however, all-together, collectively, pluralistically, bidding up prices. Instead, the "too much money" is really money that is too consolidated, which causes a highly divisible benefit (assumed, or modeled, to be the upper class) derived from a highly structured assignment of risk (assumed by the lower class).
Technically, the indivisible net benefit is a false, philosophical argument modeled to effectively avoid the risk and accumulate it into a crisis proportion. What is characterized as the unapparent, "secret knowledge" that only the "successful" elite of society understand is but a patent, pious fraud committed to structure risk so it can be assigned on command through means that appear to be cyclically ontological.
The false, philosophical ontology is the cycle of boom and bust modeled to look pluralistically legitimate. Thus, conservatives contend, any counter-cyclical action to redistribute the accumulated value is thievery--it is illegitimate. Since illegitimate accumulation of value is naturally retributive, this tendency to thievery has the retributive value of making the down-trend of the cycle longer and deeper, which is, of course, the current conservative argument to explain why capital is not being used to create jobs--because it is being hidden, protected, from thieves.
Conservatives currently contend, philosophically, that the wealth of the nation having been successfully consolidated into the hands of the upper-class is ethically legitimate because they earned it. They are the legitimate winners of a pluralistic competition (a popularity contest) in which everyone is free to participate. Success is not inherited by divine right, but legitimately earned by popular consent.
With dollar votes "We the People" have the freedom to buy and sell, or not, in the free market. Government intervention is not necessary because a free market is a pure, direct democracy (as long as it is not allowed to consolidate) with a completely legitimate outcome from the bottom up. Risk never gains a retributive value because it is efficiently diffused (unconsolidated) and thus systemically avoided (unaccumulated in a NOT-too-big-to-fail proportion).
Government intervention into the natural, distributive-order of things is the source of systemic risk. Errors accumulate into a naturally occurring, cyclical process that is otherwise a "normal" business-cycle distribution of risk and reward legitimately earned (and consolidated, supposedly) by popular consent of the governed. Interrupting the natural distribution is a moral hazard because it corrupts the popular consent of the governed, and popular consent is the legitimacy necessary to avoid retributive valuation and accumulation of the risk (only if "the value" is not allowed to consolidate into a crisis proportion, however).
People are not governed by men, but by law--natural law. "We" are all equally governed by the law--the legitimate ontology--of supply and demand, for example (and those most apt to manage it and consolidate it, but not without the consent of the governed). Those most capable of managing the law (and avoid the risk) naturally govern, producing an indivisible, non-zero-sum benefit guided by the divisible, invisible hand of providence (the utilitarian incentive--the natural, moral imperative--to earn reward in self-interest).
Confiscation of earned wealth (and power) is a moral hazard. It usurps the consent of the governed and corrupts its legitimate power of empirical confirmation. It robs society of its best management. It is like the king wanting to manage the affairs of middle-class merchants who know best how to network the externalities and manage the risk to produce value for the sovereign which, after The Revolution, became "We the People" (the bourgeois class of property owners who have wealth and, thus, power that the king thought "We," the plurality, were stealing).
Redistribution of wealth, then, conservatives argue, unnaturally models a retributive value. Redistribution (the consolidated value retributed, but not necessarily deconsolidated because that would effectively diffuse the risk of retribution into a divisible, micro-risk proportion and reduce the need for government) negates the indivisible net benefit that otherwise obtains. This natural-law argument used by conservatives is but the self-concept method of practically modeling the risk proportion. It is essentially the same philosophy maintained by monarchs with the divine-right argument.
Understanding the "nature" of retributive value, conservatives maintain, is the secret knowledge that is invisible to the non-elite. "The People," the otherwise unruly masses, will always mistakenly demand government spending to counter the natural detriment exacted by the business cycle without the wisdom of their "natural" rulers. Elite wisdom (self-conceptualized) is needed to collectively self-actualize. It allows our real self-interest to actualize in a necessarily representative form (acting as our super-ego).
An unsophisticated, unruly mob, retributively motivated by immediate satisfaction of the appetite against the reality of naturally limited resources, naturally depends on the "upper" class to consolidate and conserve the wealth of the nation and, thus, its long-term, economic security. It is not in the self-interest of the masses (modeled on the self-concept of the elite) to counter the long-term, ontological trend of the business cycle and the self-conceptualized wisdom of its elite managers.
The business cycle not only naturally confirms, privately, who the winners and losers are, but also determines who is more apt to represent the long-term interests of the republic, naturally acting, publicly, to counter the retributive demands of mob rule despite how unpopular that may be. So, you see, for example, it is really in everyone's self-interest to allow unlimited amounts of money be spent to ensure the best and the brightest are elected to public office. It is the job of elite republicans to exact the austerity that naturally occurs--like the Republicans are doing now with Democrats conspiring under the guise of being anchored-in to an unpopular compromise. We will find out, empirically, however, that this binomial, conspiratorial management of the accumulated, retributive value (the macro, gamma-risk proportion) derives and confirms the legitimacy of a massive benefit from a massive, zero-sum detriment with the force and legitimacy of public (republican, elitist) authority. Since the legitimacy is derived and confirmed without the consent of the governed, the value derived is even more retributive than before, not less. Technically this means that the risk is still gaining in a catastrophic, gamma-risk proportion (that is: the length and depth of the recession is being supported, not resisted, by the policies and programs of both parties).
With the recession getting more political support than resistance, we can expect equity values to continue rising along with the need for government spending, budget deficits and, ironically, low interest rates to encourage inflation (employment) rather than deflation (declining demand). Since, however, low rates are being used to bid-up commodity futures, we can expect to have both inflation and unemployment supporting equity values until demand is so depleted that there is no possible way to pay the debt accumulated both public and private. The result then will be a massive, catastrophic correction unless we change the tax code to pay down the debt from the top down and increase income from the bottom up right now...today! Since this is not an elite, republican option, however, the natural, catastrophic risk proportion will not be avoided.
The realpolitique--the real structure of power--is an elitist model, not a pluralistic one. It deliberately operates to avoid (accumulate) the risk in the guise of popular, pluralistic consent. Since the legitimacy is empirically false, the value becomes fully retributive (the value commands a massive corrective wave in a catastrophic, consolidated, gamma-risk proportion). The mob rule that conservative philosophy operationalizes with the realpolitique of the administrative state to avoid is rendered evermore sure.
A more consensual model shares power. Governance that is consensually legitimate has a more democratic than a republican aspect. The powerful are legitimate only by the verifiable consent of the governed. Power, then, is shared non-zero-sum. People that want to be powerful gain power without it being at the expense, but to the benefit, of everyone else.
When Republicans claim tax-cuts for the rich provide a non-zero-sum benefit, they mean that the inequitable distribution of risk and reward ensures the best and the brightest rule and everyone else, by nature, legitimately follows. The detriment exacted--their gain being our loss--is the general welfare verified by the inequity. So, when regressive tax policy has current value, like we have now, and our income declines against rising prices, it is really for our own good even though we are too unsophisticated to realize it. Those few among us who, being the best and the brightest, do realize the otherwise invisible, indivisible benefit of inequity, and thus having gained the secret knowledge consent to it, are more likely (naturally selected) to experience upward, class mobility and enjoy (earn) high executive compensation derived from the inequity.
Since, however, the masses (the non-elite) will always demand equity without earning it, it is necessary to come up with clever means to structure the distribution of risk and reward. Power is then structured for executive administration (with all the rights and privileges legitimately earned and enjoyed therein) that looks legitimately consensual.
This conceptual framework for structuring power essentially describes the Hamiltonian model of political-economy conceived by Federalists at the founding of our nation. It is a working, conceptual model--the practical philosophy of federalism--that survives to this day, successfully avoiding the risk proportion the upper class inherited from the king.
In order to conserve the risk proportion in the upper class, which became the "ruling class" with a revolutionary philosophy of legitimacy, it was necessary to interrupt the natural tendency to achieve pluralistic consensuality.
Working with the new concept of "natural right" to private property ("life, liberty, and the pursuit of happiness"), Federalists successfully avoided the fully assumed risk of loss that kings arrogantly, and unempirically, take for granted as divine right. They were able to ensure a more republican model and avoid the momentum toward a more consensually empirical philosophy of democratic legitimacy by arguing that democracy is inherently unstable--always on the brink of mob rule, with the French Revolution being the best example at the time.
To this day, conservatives regard democracy to be an inferior form of government, which leads their critics to accuse them of harboring fascist sentiments. Conservatives then rejoin that their critics are un-American which, as we know historically, means that anyone that does not embrace conservative philosophy must be a communist, implying that the only alternative to the overwhelming systemic risk capitalism presents is communism, and that is not true.
Again, the exchange of ideological recriminations has an anchoring effect--it is a psychological tool for limiting the probable alternatives. Our two-party system, for example, is set up to avoid the stigma of ideological recriminations--when party A reaches the threshold of voter tolerance, party B does not look so bad, and so on, ad infinitum. This binomial system is familiarly "American" and avoids being ideologically branded as "communist" or "fascist" which are objects of much fear and loathing (angst).
The effect of the angst (retributive value) is reduced (avoided and accumulated) with a system of government that produces reliable, dummy-variable results, conserving the material, economic stakes through a systematically, ideologically structured process. Power is deliberately structured to conserve the angst (the stakes), keeping the distribution of the risk proportion in a beneficially detrimental condition of boom and bust (the angst systematically determined, which we call "systemic risk").
Keep in mind that while the risk cannot be reduced, only accumulated and distributed, the angst (the feeling of being anxious) can be psychologically reduced.
Psychological tools are employed to reduce angst, which makes it appear that risk is being reduced when it is really being accumulated (repressed). Indeed, power is structured to manage the angst, which is a philosophical pursuit (managing probable ideas and beliefs), not a material pursuit (managing wealth and the probable distribution of the risk) in priority. Making people believe that tax cuts for the rich benefit those that are not rich may be a function of structuring a system of material rewards and deprivations, but it is largely a philosophical endeavor to agnosiate the verifiable evidence and vitiate the consensual will of We the People.
When we incur the detriment, we are being told it is in the interest of being prudentially risk averse. If we do not allow the elite to gain the benefit, the detriment will be even worse, which is philosophically consistent with the belief that ensuring the welfare of the rich in priority ensures the general welfare despite the verifiable evidence--the Great Recession, for example--to the contrary. Going with the verifiable evidence is a philosophical pursuit--it is the philosophy of science in which truth is verified by replication of the results under the same conditions.
To vitiate the verifiable evidence, conservatives generally argue, for example, that the cycle of boom and bust, although not readily apparent, is really an indivisible net benefit derived from an apparent, divisible assignment of risk. Contending that the business cycle ensures we are always being led by the most competent--successful--managers is a philosophical argument systematically validated by repeatedly invoking the angst (the probability) of it being worse if abandoned (which is to psychologically manipulate the level of angst associated with an unavoidable, constant, risk proportion). The veracity of the argument is derived from the probability of abandoning the reliable assumption (the philosophical interpretation, or conceptual modeling) of the risk proportion that is never abandoned. It is a tautology that systematically goes untested and is used to falsely induce the evidence to technically support it.
When, for example, technical analysts say a weak dollar causes commodity prices to rise, the assumption (the philosophical interpretation that determines the working, conceptual model) is that too much money is pluralistically chasing too few goods. We are not, however, all-together, collectively, pluralistically, bidding up prices. Instead, the "too much money" is really money that is too consolidated, which causes a highly divisible benefit (assumed, or modeled, to be the upper class) derived from a highly structured assignment of risk (assumed by the lower class).
Technically, the indivisible net benefit is a false, philosophical argument modeled to effectively avoid the risk and accumulate it into a crisis proportion. What is characterized as the unapparent, "secret knowledge" that only the "successful" elite of society understand is but a patent, pious fraud committed to structure risk so it can be assigned on command through means that appear to be cyclically ontological.
The false, philosophical ontology is the cycle of boom and bust modeled to look pluralistically legitimate. Thus, conservatives contend, any counter-cyclical action to redistribute the accumulated value is thievery--it is illegitimate. Since illegitimate accumulation of value is naturally retributive, this tendency to thievery has the retributive value of making the down-trend of the cycle longer and deeper, which is, of course, the current conservative argument to explain why capital is not being used to create jobs--because it is being hidden, protected, from thieves.
Conservatives currently contend, philosophically, that the wealth of the nation having been successfully consolidated into the hands of the upper-class is ethically legitimate because they earned it. They are the legitimate winners of a pluralistic competition (a popularity contest) in which everyone is free to participate. Success is not inherited by divine right, but legitimately earned by popular consent.
With dollar votes "We the People" have the freedom to buy and sell, or not, in the free market. Government intervention is not necessary because a free market is a pure, direct democracy (as long as it is not allowed to consolidate) with a completely legitimate outcome from the bottom up. Risk never gains a retributive value because it is efficiently diffused (unconsolidated) and thus systemically avoided (unaccumulated in a NOT-too-big-to-fail proportion).
Government intervention into the natural, distributive-order of things is the source of systemic risk. Errors accumulate into a naturally occurring, cyclical process that is otherwise a "normal" business-cycle distribution of risk and reward legitimately earned (and consolidated, supposedly) by popular consent of the governed. Interrupting the natural distribution is a moral hazard because it corrupts the popular consent of the governed, and popular consent is the legitimacy necessary to avoid retributive valuation and accumulation of the risk (only if "the value" is not allowed to consolidate into a crisis proportion, however).
People are not governed by men, but by law--natural law. "We" are all equally governed by the law--the legitimate ontology--of supply and demand, for example (and those most apt to manage it and consolidate it, but not without the consent of the governed). Those most capable of managing the law (and avoid the risk) naturally govern, producing an indivisible, non-zero-sum benefit guided by the divisible, invisible hand of providence (the utilitarian incentive--the natural, moral imperative--to earn reward in self-interest).
Confiscation of earned wealth (and power) is a moral hazard. It usurps the consent of the governed and corrupts its legitimate power of empirical confirmation. It robs society of its best management. It is like the king wanting to manage the affairs of middle-class merchants who know best how to network the externalities and manage the risk to produce value for the sovereign which, after The Revolution, became "We the People" (the bourgeois class of property owners who have wealth and, thus, power that the king thought "We," the plurality, were stealing).
Redistribution of wealth, then, conservatives argue, unnaturally models a retributive value. Redistribution (the consolidated value retributed, but not necessarily deconsolidated because that would effectively diffuse the risk of retribution into a divisible, micro-risk proportion and reduce the need for government) negates the indivisible net benefit that otherwise obtains. This natural-law argument used by conservatives is but the self-concept method of practically modeling the risk proportion. It is essentially the same philosophy maintained by monarchs with the divine-right argument.
Understanding the "nature" of retributive value, conservatives maintain, is the secret knowledge that is invisible to the non-elite. "The People," the otherwise unruly masses, will always mistakenly demand government spending to counter the natural detriment exacted by the business cycle without the wisdom of their "natural" rulers. Elite wisdom (self-conceptualized) is needed to collectively self-actualize. It allows our real self-interest to actualize in a necessarily representative form (acting as our super-ego).
An unsophisticated, unruly mob, retributively motivated by immediate satisfaction of the appetite against the reality of naturally limited resources, naturally depends on the "upper" class to consolidate and conserve the wealth of the nation and, thus, its long-term, economic security. It is not in the self-interest of the masses (modeled on the self-concept of the elite) to counter the long-term, ontological trend of the business cycle and the self-conceptualized wisdom of its elite managers.
The business cycle not only naturally confirms, privately, who the winners and losers are, but also determines who is more apt to represent the long-term interests of the republic, naturally acting, publicly, to counter the retributive demands of mob rule despite how unpopular that may be. So, you see, for example, it is really in everyone's self-interest to allow unlimited amounts of money be spent to ensure the best and the brightest are elected to public office. It is the job of elite republicans to exact the austerity that naturally occurs--like the Republicans are doing now with Democrats conspiring under the guise of being anchored-in to an unpopular compromise. We will find out, empirically, however, that this binomial, conspiratorial management of the accumulated, retributive value (the macro, gamma-risk proportion) derives and confirms the legitimacy of a massive benefit from a massive, zero-sum detriment with the force and legitimacy of public (republican, elitist) authority. Since the legitimacy is derived and confirmed without the consent of the governed, the value derived is even more retributive than before, not less. Technically this means that the risk is still gaining in a catastrophic, gamma-risk proportion (that is: the length and depth of the recession is being supported, not resisted, by the policies and programs of both parties).
With the recession getting more political support than resistance, we can expect equity values to continue rising along with the need for government spending, budget deficits and, ironically, low interest rates to encourage inflation (employment) rather than deflation (declining demand). Since, however, low rates are being used to bid-up commodity futures, we can expect to have both inflation and unemployment supporting equity values until demand is so depleted that there is no possible way to pay the debt accumulated both public and private. The result then will be a massive, catastrophic correction unless we change the tax code to pay down the debt from the top down and increase income from the bottom up right now...today! Since this is not an elite, republican option, however, the natural, catastrophic risk proportion will not be avoided.
The realpolitique--the real structure of power--is an elitist model, not a pluralistic one. It deliberately operates to avoid (accumulate) the risk in the guise of popular, pluralistic consent. Since the legitimacy is empirically false, the value becomes fully retributive (the value commands a massive corrective wave in a catastrophic, consolidated, gamma-risk proportion). The mob rule that conservative philosophy operationalizes with the realpolitique of the administrative state to avoid is rendered evermore sure.
Friday, July 1, 2011
Toward a Consensual Working Model
If the average American income is being reduced by lower pay, declining asset values, and higher prices for food and fuel, it is absolutely imperative to reduce the tax burden for the average-income class.
It is essential we increase the income of average Americans if we want to emerge from this persistent, recessionary trend. Increasing the income of upper-class Americans, despite Republican rhetoric, does not, will not, increase income for everyone else. If recession (declining demand and rising debt) is what you want, tax cuts for the rich will surely get you there.
Empirically, we see the rich getting richer at the expense of everyone else. The effect is a high demand for government spending while revenues are declining because, philosophically, in spite of the evidence, we must have tax cuts for the rich to increase income and reduce the demand for government debt (which is one of the more dogmatically mind-numbing tautologies of Republican logic and rhetoric to validate otherwise disconfirmed hypotheses).
Empirically tested, the tax policy we have now will keep us in a recessionary trend. The policy is so detrimental--the wealth is so accumulated--that even a massive, government stimulus plan did not pull us out. If we want to reverse this trend, it is necessary to reverse the "effective" tax policy: progressively higher rates toward the upper margin and lower rates toward the lower margin with the nominal rate being the "real" rate collected with no exemptions, deductions, or subsidies.
Increasing income toward the lower margin reduces the need for government spending. If we want to reduce spending, this is the way to do it without causing an even more massive rate of unemployment. Remember, unemployment produces a massive, systemic benefit for the rich. Your job and your assets are liquidated and sold back to you with money you borrow from them at a high rate because you are--by deliberate, systemic determination--a bad credit risk. Equity is effectively turned into debt, and if you are not the beneficiary of the lower, marginal tax rate, which includes tax-incentives to even have a job that you pay through the public bonding authority, you suffer even more to make the rich even richer. By all accounts, empirically, despite what Republicans preach, tax-incentive programs for the rich are not Pareto Optimal because your loss is their gain.
The Republican agenda calls for both spending cuts and tax cuts at the high margin, which is deflationary. It will increase the need for government spending while revenue is declining (like we have now), so it cannot be considered a serious plan for debt reduction despite being declared "The Path to Prosperity."
Since the average-income class is the vast majority, Constitutionally endowed with the power of popular consent, how come there is not a clear and decisive consensus to confirm its self-interest with the force and legitimacy of public authority?
The reason we do not have a clear, political consensus is because, as described and explained in previous articles, there is a complex conflation of political philosophy combined with technical theory and practice. These elements combine to form a complex working model, and while it may appear impossible, modifying it toward a clear and decisive, middle-class consensus is not really that difficult. It appears to be impossible because, for example, when Democrats gained a majority and captured the executive as the Great Recession transpired, the first thing they did was raise taxes to finance healthcare and dickered with an unfathomable healthcare plan while Americans lost their jobs, their incomes, their homes.... Democrats literally fiddled while Rome burned!
Following all the economic fiddle-faddle, political folderol, and garishly self-aggrandized gamesmanship, voters had enough. The vote effectively de-selected the conceit that a select few should mandate what consumers are going to buy at a government-negotiated, economy-of-scale price which, empirically, by past experience, means we do business with firms because we have to, not because we want to, at a no-bid price we have to pay because we can't say no!
Democrats came up with a healthcare plan that is ripe for expensive corruption and abuse because it is effectively non-consensual (by mandate) and, thus, inherently unempirical (unaccountable). It is a plan that needs to be de-selected because it represents a largely non-consensual working (Hamiltonian) model despite all the legitimate, democratic process associated with it. Hence, voters elected a counter-party presence conflated with the element of a third-party accountability because Hamiltonian modeling has driven us to the point of uncontrollable debt in an unrelenting crisis proportion!
People can't buy healthcare because of insufficient funds...and mandating they buy it, despite all the technical mumbo-jumbo, is not the solution to this problem! So, when Republicans assumed the majority position, they summarily lost their counter-party mandate to de-select the healthcare bill and went right to validating what keeps us from affording to buy healthcare at any price--insufficient income! According to the new, Republican majority, its mandate is to ensure tax cuts for the rich and cut welfare which, on the heels of the Great Recession, will turn the recession into a full-blown depression!
I do believe "The People" have had enough, and so it will be up to the technocrats to keep us from gravitating toward a more consensual, working model.
Much of what prevents consensus is its being mired in abstract, technical analyses promulgated by a bureaucratic, administrative elite that average Americans cannot verify or disconfirm with a popular vote. This working, administrative, bureaucratic model has a more elitist than a pluralist aspect, and so it tends to produce elitist benefits validated, rather than pluralistically verified, with the force and legitimacy of state authority (See the article, "The Bureaucratic Model of Power and Political-Economy" on this web site).
Sociologists tell us that a bureaucracy is an organization structured for stable, routine tasks. When we have high inflation, for example, the Fed routinely raises interest rates to reduce it. The bureaucratic effect is equally stable and routine--it produces a predictable, structurally reliable result that we all bank on. Why, then, is there so much uncertainty and all that systemic risk (angst) associated with our inherent, economic existence? It would seem, then, that the risk is not an unavoidable ontology, but is structurally (purposefully or, that is, teleologically rather than ontologically) engineered to operate with predictable, bureaucratic, reliability. Technically, it is both.
While risk is structurally teleological, it has an ontological dimension, nevertheless, which I refer to as the "gamma" risk proportion. No matter how hard we try to avoid it, the risk will always present with real, empirical value representing the ontology (the categorical imperative) of a teleological, and needlessly angst-driven existence (being that we are more than economic animals). Since we are endowed with moral intelligence, we have the freedom to choose whether we model risk into a diffused, pluralistic, non-catastrophic proportion, or not.
The risk, remember, cannot be avoided. It is always there, ontologically (it does not care how we perceive it or how we structure it, it just "categorically" is what it is, and it is up to us to choose what is "imperative"). While it cannot be avoided, it can be allowed to accumulate in order to be structurally managed into a predictable, reliable distribution, like when we experience massive unemployment and massive transformation of equity into debt (a huge public debt to be managed by our "prudential regulators" or the bureaucracy). This, of course, results in an alienated complexity (and anxiety) that appeals to authority with less and less accountability--it becomes a working model that is progressively more authoritarian and less verifiably consensual.
The trend to establish an evermore authoritarian state is a trend that can, nevertheless, be reversed; and contrary to what Republicans want, it does not require deconstructing regulatory authority but operationalizing it to fit a more pluralistic, working model.
Clever economic and political manipulations to gain value by causing detriment is not the measure of sophistication. Causing the Great Recession and then telling baby boomers they are an unaffordable liability is the height of arrogant stupidity. Growing old is not a liability we cannot afford, but an asset in which to distribute accumulated wealth into sustainable, post-industrial, economic growth; and if you are too greedy to see that, you are philosophically determined to the unavoidable risk...an economic animal unwittingly snared in the detriment of his own devices.
The purpose of life, we come to find out, is to always do the right thing and be creative about it...not to do the wrong thing and innovate clever structures to get away with it as a confirmative demonstration of power.
It is essential we increase the income of average Americans if we want to emerge from this persistent, recessionary trend. Increasing the income of upper-class Americans, despite Republican rhetoric, does not, will not, increase income for everyone else. If recession (declining demand and rising debt) is what you want, tax cuts for the rich will surely get you there.
Empirically, we see the rich getting richer at the expense of everyone else. The effect is a high demand for government spending while revenues are declining because, philosophically, in spite of the evidence, we must have tax cuts for the rich to increase income and reduce the demand for government debt (which is one of the more dogmatically mind-numbing tautologies of Republican logic and rhetoric to validate otherwise disconfirmed hypotheses).
Empirically tested, the tax policy we have now will keep us in a recessionary trend. The policy is so detrimental--the wealth is so accumulated--that even a massive, government stimulus plan did not pull us out. If we want to reverse this trend, it is necessary to reverse the "effective" tax policy: progressively higher rates toward the upper margin and lower rates toward the lower margin with the nominal rate being the "real" rate collected with no exemptions, deductions, or subsidies.
Increasing income toward the lower margin reduces the need for government spending. If we want to reduce spending, this is the way to do it without causing an even more massive rate of unemployment. Remember, unemployment produces a massive, systemic benefit for the rich. Your job and your assets are liquidated and sold back to you with money you borrow from them at a high rate because you are--by deliberate, systemic determination--a bad credit risk. Equity is effectively turned into debt, and if you are not the beneficiary of the lower, marginal tax rate, which includes tax-incentives to even have a job that you pay through the public bonding authority, you suffer even more to make the rich even richer. By all accounts, empirically, despite what Republicans preach, tax-incentive programs for the rich are not Pareto Optimal because your loss is their gain.
The Republican agenda calls for both spending cuts and tax cuts at the high margin, which is deflationary. It will increase the need for government spending while revenue is declining (like we have now), so it cannot be considered a serious plan for debt reduction despite being declared "The Path to Prosperity."
Since the average-income class is the vast majority, Constitutionally endowed with the power of popular consent, how come there is not a clear and decisive consensus to confirm its self-interest with the force and legitimacy of public authority?
The reason we do not have a clear, political consensus is because, as described and explained in previous articles, there is a complex conflation of political philosophy combined with technical theory and practice. These elements combine to form a complex working model, and while it may appear impossible, modifying it toward a clear and decisive, middle-class consensus is not really that difficult. It appears to be impossible because, for example, when Democrats gained a majority and captured the executive as the Great Recession transpired, the first thing they did was raise taxes to finance healthcare and dickered with an unfathomable healthcare plan while Americans lost their jobs, their incomes, their homes.... Democrats literally fiddled while Rome burned!
Following all the economic fiddle-faddle, political folderol, and garishly self-aggrandized gamesmanship, voters had enough. The vote effectively de-selected the conceit that a select few should mandate what consumers are going to buy at a government-negotiated, economy-of-scale price which, empirically, by past experience, means we do business with firms because we have to, not because we want to, at a no-bid price we have to pay because we can't say no!
Democrats came up with a healthcare plan that is ripe for expensive corruption and abuse because it is effectively non-consensual (by mandate) and, thus, inherently unempirical (unaccountable). It is a plan that needs to be de-selected because it represents a largely non-consensual working (Hamiltonian) model despite all the legitimate, democratic process associated with it. Hence, voters elected a counter-party presence conflated with the element of a third-party accountability because Hamiltonian modeling has driven us to the point of uncontrollable debt in an unrelenting crisis proportion!
People can't buy healthcare because of insufficient funds...and mandating they buy it, despite all the technical mumbo-jumbo, is not the solution to this problem! So, when Republicans assumed the majority position, they summarily lost their counter-party mandate to de-select the healthcare bill and went right to validating what keeps us from affording to buy healthcare at any price--insufficient income! According to the new, Republican majority, its mandate is to ensure tax cuts for the rich and cut welfare which, on the heels of the Great Recession, will turn the recession into a full-blown depression!
I do believe "The People" have had enough, and so it will be up to the technocrats to keep us from gravitating toward a more consensual, working model.
Much of what prevents consensus is its being mired in abstract, technical analyses promulgated by a bureaucratic, administrative elite that average Americans cannot verify or disconfirm with a popular vote. This working, administrative, bureaucratic model has a more elitist than a pluralist aspect, and so it tends to produce elitist benefits validated, rather than pluralistically verified, with the force and legitimacy of state authority (See the article, "The Bureaucratic Model of Power and Political-Economy" on this web site).
Sociologists tell us that a bureaucracy is an organization structured for stable, routine tasks. When we have high inflation, for example, the Fed routinely raises interest rates to reduce it. The bureaucratic effect is equally stable and routine--it produces a predictable, structurally reliable result that we all bank on. Why, then, is there so much uncertainty and all that systemic risk (angst) associated with our inherent, economic existence? It would seem, then, that the risk is not an unavoidable ontology, but is structurally (purposefully or, that is, teleologically rather than ontologically) engineered to operate with predictable, bureaucratic, reliability. Technically, it is both.
While risk is structurally teleological, it has an ontological dimension, nevertheless, which I refer to as the "gamma" risk proportion. No matter how hard we try to avoid it, the risk will always present with real, empirical value representing the ontology (the categorical imperative) of a teleological, and needlessly angst-driven existence (being that we are more than economic animals). Since we are endowed with moral intelligence, we have the freedom to choose whether we model risk into a diffused, pluralistic, non-catastrophic proportion, or not.
The risk, remember, cannot be avoided. It is always there, ontologically (it does not care how we perceive it or how we structure it, it just "categorically" is what it is, and it is up to us to choose what is "imperative"). While it cannot be avoided, it can be allowed to accumulate in order to be structurally managed into a predictable, reliable distribution, like when we experience massive unemployment and massive transformation of equity into debt (a huge public debt to be managed by our "prudential regulators" or the bureaucracy). This, of course, results in an alienated complexity (and anxiety) that appeals to authority with less and less accountability--it becomes a working model that is progressively more authoritarian and less verifiably consensual.
The trend to establish an evermore authoritarian state is a trend that can, nevertheless, be reversed; and contrary to what Republicans want, it does not require deconstructing regulatory authority but operationalizing it to fit a more pluralistic, working model.
Clever economic and political manipulations to gain value by causing detriment is not the measure of sophistication. Causing the Great Recession and then telling baby boomers they are an unaffordable liability is the height of arrogant stupidity. Growing old is not a liability we cannot afford, but an asset in which to distribute accumulated wealth into sustainable, post-industrial, economic growth; and if you are too greedy to see that, you are philosophically determined to the unavoidable risk...an economic animal unwittingly snared in the detriment of his own devices.
The purpose of life, we come to find out, is to always do the right thing and be creative about it...not to do the wrong thing and innovate clever structures to get away with it as a confirmative demonstration of power.
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