Operationalizing the Risk Proportion

The iron law can be operationalized to deconsolidate the risk proportion. It can be used to deconsolidate the risk just as effectively as being used to cultivate and manage its accumulation and consolidation.

Despite every attempt to cultivate an aristocratic, philosophical predisposition of the risk proportion (technical application of Ayn Rand's philosophy, for example), technical aspects of the iron law do not necessarily tend to a natural, elitist objective. Quite the contrary, actually.

Conservatives have strongly objected to action of the Federal Reserve following economic crises not because it effectively controls the risk proportion (prevents a gamma burst), from which they critically benefit (keeping capitalism from being junked as a brutally inhumane form of social organization), but because there is a natural, pluralistic tendency that does not conserve the consolidated means of power. To counter the tendency to deconsolidate, deliberate measures must be taken to keep power consolidated.

Being sure, for example, the top one percent is co-opted (reward by income-class identity) is a critical measure taken to technically direct the risk. This technique is essentially behavioral psychology--operationalizing technical aspects (expected objective values) with conservative philosophy. Expected values are operantly conditioned with the expected reward, which nihilistically reduces human existence to animals in a Skinner box--or what Rand refers to as our only natural, "objectively" self-interested, moral identity.

It is critical that the risk be technically directed to fit, for example, the Randian "objective" (what objectively measures the ninety-nine percent probability--the real identity--of the risk), which is a fully assumed risk of loss that requires its technical, bureaucratic management. The result is a system that replicates and compounds, rather than prevents, errors, which in effect reinforces the need for its elite, bureaucratic management.

A fractal system promulgates to manage the risk, not reduce it, which promulgates errors (accumulates risk). We see then, for example, solutions looking for problems, then it is difficult to identify, or at least argue, what a real problem is. The system becomes so dysfunctional that the bureaucracy is fallaciously identified, post hoc, to be the problem.

Elite, bureaucratic management of the economy becomes the problem to be solved, and in the case of fully assumed, economic risk, the unabated, post-hoc accumulation of error naturally takes the form of class warfare, like we have now.

Since warfare is inherently bad, conservatives vilify any expression of the post-hoc accumulation as inherently bad (i.e., the cause of the expression is inherently good, but the effect is wrongly considered, as Ayn Rand explains it, to be bad, which causes demonstration of hard power). Not only is occupying Wall Street wrongheaded, but according to conservatives, activities of the central bank to manage the risk causes the risk to be prevented, empirically measured by arousing the rabble.

The central bank (a bureaucratic, technological elite charged with management of a consolidated risk proportion) prevents, they argue, the natural course of events (bankruptcy to the fullest extent of the risk) that clearly signals the end of the cycle and the decision to correct for an over-accumulated crisis proportion. Unfortunately that clear correction, before we started monetizing the risk to prevent the expression of its fullest proportion, too often resulted in the decision to go to war.

War, rather than welfare, achieved full employment and restored the demand needed to reduce "supply-side" overproduction. When the war was over, before we fully monetized the risk proportion, the objective of economic growth resumed to reduce debt (the measurable, accumulated risk, which was paid with a categorical, 90 percent marginal tax rate). Now we monetize the risk, post hoc, and the warfare supplements the welfare program to form a constant, post-hoc, monetary and fiscal management of a proportion no longer considered to be fully assumed, but bureaucratically consumed (operationalized with an objective).

More recently, conservatives say, to prevent huge deficits and the call for a marginal tax rate to the nines (class warfare), the Fed should have let too-big-to-fail banks fail at the outset of the Great Recession...but never mind that they are "too big" to fail.

If this latest example of pragmatic conservativism is supposed to be a rationally objective solution a la Ayn Rand, our confidence in conservative philosophy cannot be anything but completely diminished. This combination of philosophical theory and technical application cannot be recognized as having anything but a completely twisted identity--"A" is definitely, recognizably "A."

In other words, a bureaucratic, technological elite should not be charged with management of a consolidated risk proportion. It interrupts, conservatives say, the natural efficiency (the oligarchical tendency, or the natural order) of the marketplace to naturally select the efficiencies by bankrupting the system to the fullest extent of the risk proportion (the systemic risk we otherwise try, but fail, they argue, to control).

Conservatives contend the Fed prevents a clear signal that a crisis has been stopped and reversed (like we have now). Monetizing the risk causes uncertainty (reprices the risk by fiat) and so prevents the investment necessary to increase demand and cause a recovery. Risk, in other words, bureaucratically consumed (the reprice that redirects it) rather than diffused by objective (the free-market incentive for economic growth) is sitting in Zuccotti Park.

The effect of conflicting indicators, conservatives contend, is war and welfare (budget deficits) to achieve full employment and restore the demand needed to reduce the "supply-side" overproduction. Again, the argument here is post hoc. Conservatives identify monetarism as the cause, and so it is the problem to be solved, but it is really the effect (consolidation of industry and markets causes risk that is monetized through the Federal Reserve system). The system, then, is so loaded with errors that nothing makes sense without a very studied understanding of this complex entanglement of philosophical attributes and technical applications.

Conservatives are critically focused on the effects--managing the consequences--of a consolidated risk proportion. While it simplifies the problem, at the same time, the problem is rendered more complex by transposing cause and effect (up is down and down is up), which avoids the question of deconsolidation and effectively transfers the risk into a bureaucratic, white space. What little time is spent on deconsolidation is to validate how impractical it is with ideological biases that dogmatically determine the technical direction of the risk at odds with its philosophy--its identity--of self-determination.

Let's say we did it Ron Paul's way and let too-big-to-fail fail. The detriment--economic collapse--would have Tea partisans and anarchists occupying Wall Street. This, you see, is the risk of loss fully assumed--the gamma-risk proportion the Fed manages, occupying the policy space that keeps deconsolidation from becoming the objective of the iron law. Instead, the policy space is fully occupied with technically conserving the risk proportion it philosophically purports to resist--war and welfare.