Being in a state of highly consolidated wealth requires a prudential, super ego to regulate the risk. The risk is consolidated and structurally organized to control its distribution so that its effect can be philosophically rationalized as generally beneficial.
Typically, the philosophy of risk associated with consolidated wealth is an appeal to the super ego. The system of governance becomes so complex it appears necessary to consolidate power into the hands of a few supermen capable of forging order from the apparent chaos (the entropic value of the risk proportion discussed in previous articles on this site). The chaos (the value of a supposed uncertainty), keep in mind, is risk-value these saviors have caused, accumulated, and thus apply by deliberate necessity, which gives their power the appearance of a popular consent (naturally endowed to achieve a state of low entropy). These supermen not only have the natural ability (the power) to dominate (achieve success by risking capital), but also have what appears to be the wisdom to steer us all from moral hazards by consolidating the risk into the hands of elite power (networking the externalities to achieve low entropic value, which is measured with an expanding margin of profit).
If we experience a declining rate of profit (deflation), then we need more consolidation, conservatives contend, not deconsolidation. (Deconsolidation is considered to be a moral hazard despite the more of it we have the less probability of deflation. Since the probability of deflation provides the possibility for consolidating equity by expanding debt, or increasing debt-to-equity, capitalism tends to deflation but stops and reverses short of a declining rate of profit where the risk goes fully gamma. This is where a distribution MUST occur from the accumulation--not monetized--because a declining rate of profit accrues more power--consumer demand--to The People. Remember that monetizing the debt causes inflation, which reduces consumer demand, or buying "power.") Liberals who argue we need more consolidation, but with more regulation, are a subset of this conservative risk assessment and essentially delimit the current debate to prudentially regulating the risk proportion (Dodd-Frank instead of Glass-Steagall, for example). Reducing debt is being described and explained as a function of deliberate, organized consolidation, converging the left and the right into one, consolidated, reactionary element that both the Tea Party and Occupy Wall Street perceive to be the opposition.
What happens then, as we have seen following the Great Recession, is even more consolidation of the risk (even more errors), which provides even more need (validation) for reactionary, rather than pro-actionary, politics. The deliberative, prudential process results in validation (the Aristotelian logic that Ayn Rand uses) rather than verification (the empirical logic that Thomas Jefferson favored) of a popular consent.
While the reactionary element tends to tout its moral (Aristotelian, aristocratic) strength (its consolidated power, its "super" ego) as the legacy of a pluralistic tendency that goes back to the American Revolution, America's founders nevertheless considered concentration of power to be the very height of imprudence. To resist validating the errors (the incivility) that naturally accumulates with consolidated power, they sought to regulate it with civil (Constitutional) rights naturally endowed and empirically verified (tested) by demonstration of popular consent (unabridged freedom of speech and assembly being among the first and foremost). Occupy Wall Street, you see, does not indicate "collapse of our moral system" (which is what the king said about the American Revolution), but signals that the empirical value of the Enlightenment is alive and well...much to the demoralization of would-be kings.
At this point in our political-economic history, in a state of highly consolidated risk, we are, for example, relying on a "super committee" to arbitrate a dangerously, oversized, economy-of-scale risk proportion. It is important to understand that this kind of macro management will not reduce the risk, economically or politically, but will accumulate it even more. (Today it's pepper spray, tomorrow it's...? What form of prudent incivility will the "super" ego bring us tomorrow?)
The super committee has ignored, for example, the problem that plagues us--too much consolidation, like repeal of the Glass-Steagall Act of 1933. Instead, the committee's impasse is described as being over the left-wing delegation's intent to steer the committee toward a moral hazard--tax increases.
Having failed, then, to agree on budget cuts, the committee has determined the fate of our economy by procedural default. Cuts by "sequester" are highly deflationary--they will take effect while income is falling for ninety-nine percent of the population and rising for the top one percent.
Falling income combined with the sequester will accelerate declining, economic demand, and combined with the repeal of Glass-Steagall will accelerate the process of turning equity into debt. In other words, this process is designed to profit the top one percent at the expense of everyone else, increasing political demand which, instead of deconsolidating the risk (repealing the repeal of Glass-Steagall, for example), will result in more deregulation to get a more progressive tax code.
A more progressive tax code, however, will not have the expansionary effect that it did in the 90's without deconsolidating the banking sector like we did in 1933. Glass-Steagall, remember, was repealed and signed into law in 1999 at the final hour of the final day of the Clinton administration. President Clinton was advised by his Randian economic advisers that consolidation will increase the efficiency of markets (that it will expand the pie). Of course, we know now, as we knew then, that it does not. It liquidates equity into debt, efficiently consolidating industry and markets by supporting deflationary risk instead of resisting it. The result is declining income against rising prices (monetized debt)...the ultimate dream of Bank of America and Goldman Sachs--putting everyone in their proper class, providing prudentially shared prosperity through its regulated deprivation, by committee, of course.
Understand that the capacity for prudential regulation is not its consolidation. All the arguments that are elite modeling of the risk proportion (whether a legislative "super"-ego committee or Wall-Street quants, both of which hauntingly hark back to fascist tendencies for managing systemic risk from the top down) tend to fallaciously beg the question. These arguments that derive from a liberal-conservative philosophy of the risk add errors to the system when we need reduction.
One thing we know for sure, fascism is not the model for the prudent regulator, something that our founders knew very well and very carefully wrote it out of our constitutional form of government. That is why it has lasted for over 200 years...not because it encourages the consolidation of power, but because, contrary to what elite theorists are currently telling us, it is intended to resist it.
Consolidation of power, economic or political, does not achieve an economy-of-scale efficiency, it achieves an economy-of-scale deficiency! The evidence is overwhelmingly obvious and it takes a veritable army of conservative philosophes--technical elites empowered and compensated to apply the risk--algorithmically calculating the zero-sum reward (the deficiency) to appear ontologically derived.
Understand that the "proof" of this ontology is a philosophical endeavor. Despite what physicists (the quants) claim, describing reality as a confirmable hypothesis combined with its mathematical proof is a philosophical construction easily manipulated to fit a preconceived notion of reality. The history of science is full of mathematicians armed with mathematical descriptions that were empirically disconfirmed despite a predictive utility.
According to the quants, a theory that is not verifiable is not science, it is philosophy, which leads us to believe that philosophy is not a reliable means of knowing things, much less a prudential means of determining liability for the administration of justice or, for example, the equitable effect of tax policy.
So, we need technical elites empowered and compensated to apply the risk, which invokes the Iron Law of Oligarchy and suggests the mechanics of natural law determines our fates based on one's ability to calculate (quantify and manipulate) the odds. In other words, to manipulate the math to fit the prescribed outcome fallaciously describes an ontology of the outcome--a philosophical error that loads the system with quantifiable (knowable, predictable) risk.
Algorithmically calculating the zero-sum reward (the economy-of-scale deficiency) to appear ontologically derived and, therefore, prudently regulated with the legitimacy of natural law, the elite are armed with the "proof" of its mathematical description rather than the liability of its intentional, philosophical prescription.
That there are no prosecutions after the Great Recession like there was, for example, after the savings and loan crisis is because the risk is being described as force majeure--a product of nature. Its prosecution is, then, tantamount to prosecuting gravity for causing an apple to fall off a tree and bonk you on the head--the risk of loss is fully assumed.
A philosophy of risk is in technical operation here to exculpate the liability inherent to its organized consolidation, and this philosophy effectively governs the practical concept of self-determination and the ability of the person (including the corporate body) to prudentially regulate it in self-interest.
The self alone, according to this philosophy of risk, is the prudential regulator as long as we have a free market. (Remember, according to free-market theory, the freedom to choose--disposable income--affects the practical philosophy of selfishness. A selfish person is not likely to survive a free market, but a self-interested person is. Such a person is not solely self-determined, not without defeating the free market first, but is prudentially regulated by the determinations--the discretionary income--of others. To be completely self-determined and act selfishly, or imprudently, requires consolidating markets and accumulating discretionary income, or class warfare.) So, in order for the philosophy of the prudentially regulated self to be confirmed (to credibly "blame yourself" if you don't have a job, as one prominent conservative recently put it), it is necessary to ensure a free market, and conversely, if we do not have the power to self-determine, it must be because we don't have a free market.
The capacity to apply risk depends on income (like the ability to pay health-care premiums by government mandate, which leaves the consumer with virtually no means to control--demand--the cost and the marginal profit based on merit). The capacity to self-determine, then, is primarily a function of value imparted to labor, which according to modern economic theory is less important than consumer demand.
As long as we impart more value to consumer demand than the value actually imparted to labor, then we support (by super committee, for example) the capacity to "command" rather than "demand" the distribution of the risk--exactly what a free market is not.
Along with the failure of the super committee, the latest attempt to distribute the risk by means of constitutional mandate failed to pass the House as well. The right-wing delegation, despite holding out for making the Bush tax cuts permanent, apparently recognizes its philosophy of risk does not pass muster. Passing the super committee's cuts, or making the tax cuts permanent, either way, would not only make the costs and benefits of the Great Recession the "new normal," but would surely gain a gamma-burst proportion--the point at which the fully assumed risk of loss is fully consumed at present value.
As popular sentiment continues to swell against them, conservatives generally sense the need to reduce the gamma risk. The limit has been tested and the super ego wins, Constitutionally, by means of popular consent.
As our founders wisely recognized, popular consent is, by nature, the prudent regulator.
Monday, November 21, 2011
Thursday, November 17, 2011
Prudential Regulation
Adopting consumer demand to value the marginal risk forces the value of labor to rely more on politics outside the economic marketplace.
Remember that the capacity to buy something or not--marginal, discretionary income--applies risk. While primarily considered an economic function, it is a political function, nevertheless. Buyers and sellers, depending on income, sanction in the marketplace, affecting the margin of profit and market behavior, or what is referred to as "alpha" (market) risk.
When we rely on analysis that primarily focuses on consumer demand to value the marginal risk, the value of labor (what is paid out to apply the risk inherent to prices--prudentially buying, or not buying, to regulate the behavior of producers in the alpha dimension) is diminished.
Keep in mind, as well, that capitalists do not want to admit that the free market has a political component. Politics is, rather, an unwelcome intrusion that causes all manner of inefficiency, increasing costs that pass to the consumer. They want to focus, instead, on economic efficiencies gained by consolidating, which diminishes the power of consumers to politically sanction in the marketplace. The diminished, political capacity creates demand for more government and increases the cost of doing business.
It is important to understand that the demand for government is not a zero-sum, leading conservatives to claim that government causes itself, but, of course, it does not. Reducing alpha risk (the ability to apply risk on demand without a collective, economy-of-scale) causes more than one unit of government.
Along with the political demand displaced from the alpha-risk dimension, which is added to the gamma-risk dimension, the need to regulate the regulator is also added. This is where we see self-determination (the alpha legitimacy of risk-reward) being reduced to the Iron Law. So the alpha ends up occupying space, for example, in Zuccotti Park, in a gamma-risk dimension. Self-interest and determination becomes "a risk to public health and safety" instead of safely occupying space in the alpha dimension. This is the point of inflection at which alpha risk goes gamma to control the effects of its accumulation.
When the alpha goes gamma is the opportunity to determine just exactly what space the risk will legitimately occupy at any particular time. It is the opportunity to control--prudentially regulate--the effective distribution of the risk with the force and legitimacy of elite, authoritative governance, both public and private. Risk is deliberately organized so that the will of higher authority is too big to fail--it is literally insurmountable--in the interest of "We The People" (in the republican and not the democratic form both politically and economically).
Once the risk goes gamma, its direction is critical because it has gained a catastrophic proportion. Risk accumulated into the gamma dimension demands certainty, and so we organize it to be too big to fail. The risk gains a full measure of certainty and, at the same time, transforms into beta-risk volatility (uncertainty), which gives the risk the appearance of an exculpatory, random ontology.
Not only is government a pre-existing condition for doing business (the gamma risk that is fully assumed in priority), but when industry and markets consolidate, demand for government is added. It is at this point that advocates of consolidation argue, post hoc, for reducing government. Its success, however, adds more demand for government and more than one unit to prudentially regulate the market.
The added demand for prudential regulation is mistaken for added risk, but risk has not been added, it has been transformed. What is added is elite, regulatory authority modeled to manage this phantom, added risk, and because the risk is modeled as added rather than transformed, the error propagates within the system.
The added error propagates the regulatory authority to manage the accumulation of error as added risk. The risk assessment then becomes so complex that a highly technical cadre develops to technically model the probable outcome of, and the necessary reaction to, the certainty of an accumulating risk proportion.
Remember, again, the accumulating risk proportion is a zero-sum--it accumulates from the alpha dimension and transforms into regulatory (gamma) risk. When, however, the risk goes gamma, the need to govern it propagates. So we have, for example, expansion of the SEC to now include the Risk, Strategy and Financial Innovation Division promulgated to technically model and manage risk that is arbitraged to cause systemic (consolidated) risk rather than applied to prudentially regulate it in the alpha dimension where government is needed (demanded) least.
If we want to have government that governs least, as Jefferson described it, it is necessary to deconsolidate the risk.
Resorting to a "super committee" and a balanced budget by constitutional mandate to exact detriment (and accumulate more risk) in the name of the general welfare is far from the Jeffersonian ideal.
Remember that the capacity to buy something or not--marginal, discretionary income--applies risk. While primarily considered an economic function, it is a political function, nevertheless. Buyers and sellers, depending on income, sanction in the marketplace, affecting the margin of profit and market behavior, or what is referred to as "alpha" (market) risk.
When we rely on analysis that primarily focuses on consumer demand to value the marginal risk, the value of labor (what is paid out to apply the risk inherent to prices--prudentially buying, or not buying, to regulate the behavior of producers in the alpha dimension) is diminished.
Keep in mind, as well, that capitalists do not want to admit that the free market has a political component. Politics is, rather, an unwelcome intrusion that causes all manner of inefficiency, increasing costs that pass to the consumer. They want to focus, instead, on economic efficiencies gained by consolidating, which diminishes the power of consumers to politically sanction in the marketplace. The diminished, political capacity creates demand for more government and increases the cost of doing business.
It is important to understand that the demand for government is not a zero-sum, leading conservatives to claim that government causes itself, but, of course, it does not. Reducing alpha risk (the ability to apply risk on demand without a collective, economy-of-scale) causes more than one unit of government.
Along with the political demand displaced from the alpha-risk dimension, which is added to the gamma-risk dimension, the need to regulate the regulator is also added. This is where we see self-determination (the alpha legitimacy of risk-reward) being reduced to the Iron Law. So the alpha ends up occupying space, for example, in Zuccotti Park, in a gamma-risk dimension. Self-interest and determination becomes "a risk to public health and safety" instead of safely occupying space in the alpha dimension. This is the point of inflection at which alpha risk goes gamma to control the effects of its accumulation.
When the alpha goes gamma is the opportunity to determine just exactly what space the risk will legitimately occupy at any particular time. It is the opportunity to control--prudentially regulate--the effective distribution of the risk with the force and legitimacy of elite, authoritative governance, both public and private. Risk is deliberately organized so that the will of higher authority is too big to fail--it is literally insurmountable--in the interest of "We The People" (in the republican and not the democratic form both politically and economically).
Once the risk goes gamma, its direction is critical because it has gained a catastrophic proportion. Risk accumulated into the gamma dimension demands certainty, and so we organize it to be too big to fail. The risk gains a full measure of certainty and, at the same time, transforms into beta-risk volatility (uncertainty), which gives the risk the appearance of an exculpatory, random ontology.
Not only is government a pre-existing condition for doing business (the gamma risk that is fully assumed in priority), but when industry and markets consolidate, demand for government is added. It is at this point that advocates of consolidation argue, post hoc, for reducing government. Its success, however, adds more demand for government and more than one unit to prudentially regulate the market.
The added demand for prudential regulation is mistaken for added risk, but risk has not been added, it has been transformed. What is added is elite, regulatory authority modeled to manage this phantom, added risk, and because the risk is modeled as added rather than transformed, the error propagates within the system.
The added error propagates the regulatory authority to manage the accumulation of error as added risk. The risk assessment then becomes so complex that a highly technical cadre develops to technically model the probable outcome of, and the necessary reaction to, the certainty of an accumulating risk proportion.
Remember, again, the accumulating risk proportion is a zero-sum--it accumulates from the alpha dimension and transforms into regulatory (gamma) risk. When, however, the risk goes gamma, the need to govern it propagates. So we have, for example, expansion of the SEC to now include the Risk, Strategy and Financial Innovation Division promulgated to technically model and manage risk that is arbitraged to cause systemic (consolidated) risk rather than applied to prudentially regulate it in the alpha dimension where government is needed (demanded) least.
If we want to have government that governs least, as Jefferson described it, it is necessary to deconsolidate the risk.
Resorting to a "super committee" and a balanced budget by constitutional mandate to exact detriment (and accumulate more risk) in the name of the general welfare is far from the Jeffersonian ideal.
Friday, November 4, 2011
Demand Economics (Geeks and Greeks)
While classical economic theory posits that labor is the source of economic value, neo-classical theory assigns consumer demand to that value.
The new assignment of fundamental value to the consumer ideologically accommodates conservative philosophy of the risk in a post-industrial environment. Marx's theory of labor value, which all classical economists subscribed, is suppressed to accommodate a theory of value that supports arbitrage of the risk proportion. Market value is not how much work is imparted, but with the extension of credit (inflation, unemployment, and massive debt-to-equity), value is whatever the market is willing to pay for it. That way valuations are legitimately arbitraged (put at risk, remembering that the reward is legitimately commensurate with the size of the risk) without adding supply, exculpating the liability of gaining profit by causing detriment, the Great Recession being the latest example.
Assessing what caused the Great Recession includes, for example, the Community Reinvestment Act in which mortgages were written without the means to pay it. That is, market prices were based on what the market would bear, not the value imparted to labor (what wages and salaries could afford to pay). The entire system was put at risk. The risk proportion was huge, and the reward is proportionally huge (its political value currently estimated at ninety-nine percent of the probable risk assessment and rising). If there is blame to be imparted, Wall Street can claim the geek gods (the technocratic elite) of public and private finance modeled the risk with an inscrutable complexity that can only be described as fateful, but this claim of ignorance is not enough to exculpate the value consumed from risk that is fully assumed.
There has to be a philosophy to explain the legitimate value of the risk proportion. Although equities continue to rise in value, it is not being "expropriated" from labor as classically described, but legitimately "demanded" in the marketplace.
Profits are generated on demand and the supply of money available to demand it legitimately directs the risk according to market forces (the analog to Greek gods on Mount Olympus). Any Socratic challenge to this ontological mythology, you may have noticed, is tantamount to political-economic heresy...it is unpatriotic...it is counter-revolutionary!
We see then how demand economics provides technical support for a classical outcome that is philosophically outmoded. While we no longer consider the rigors of the free market a legitimate means of mass deprivation for the common good, the accumulated supply of money is nevertheless being directed by the top one percent to exact deprivation because consumer markets (the geek gods) demand it.
The power to exact detriment is in the lap of the gods, you see. Wall Street geeks crunch and tweak so fate befalls the weaker links. If success eludes the toil you bear, it is the self you must at first forswear. It's not geeks that put you in the streets, but looters, vandals, and freeloading Greeks.
The new assignment of fundamental value to the consumer ideologically accommodates conservative philosophy of the risk in a post-industrial environment. Marx's theory of labor value, which all classical economists subscribed, is suppressed to accommodate a theory of value that supports arbitrage of the risk proportion. Market value is not how much work is imparted, but with the extension of credit (inflation, unemployment, and massive debt-to-equity), value is whatever the market is willing to pay for it. That way valuations are legitimately arbitraged (put at risk, remembering that the reward is legitimately commensurate with the size of the risk) without adding supply, exculpating the liability of gaining profit by causing detriment, the Great Recession being the latest example.
Assessing what caused the Great Recession includes, for example, the Community Reinvestment Act in which mortgages were written without the means to pay it. That is, market prices were based on what the market would bear, not the value imparted to labor (what wages and salaries could afford to pay). The entire system was put at risk. The risk proportion was huge, and the reward is proportionally huge (its political value currently estimated at ninety-nine percent of the probable risk assessment and rising). If there is blame to be imparted, Wall Street can claim the geek gods (the technocratic elite) of public and private finance modeled the risk with an inscrutable complexity that can only be described as fateful, but this claim of ignorance is not enough to exculpate the value consumed from risk that is fully assumed.
There has to be a philosophy to explain the legitimate value of the risk proportion. Although equities continue to rise in value, it is not being "expropriated" from labor as classically described, but legitimately "demanded" in the marketplace.
Profits are generated on demand and the supply of money available to demand it legitimately directs the risk according to market forces (the analog to Greek gods on Mount Olympus). Any Socratic challenge to this ontological mythology, you may have noticed, is tantamount to political-economic heresy...it is unpatriotic...it is counter-revolutionary!
We see then how demand economics provides technical support for a classical outcome that is philosophically outmoded. While we no longer consider the rigors of the free market a legitimate means of mass deprivation for the common good, the accumulated supply of money is nevertheless being directed by the top one percent to exact deprivation because consumer markets (the geek gods) demand it.
The power to exact detriment is in the lap of the gods, you see. Wall Street geeks crunch and tweak so fate befalls the weaker links. If success eludes the toil you bear, it is the self you must at first forswear. It's not geeks that put you in the streets, but looters, vandals, and freeloading Greeks.
Ninety-Nine Percent
Now that there is ample evidence the risk proportion is fully gamma (Occupy Wall Street, for example), a distribution will occur on the accumulation.
Political pressure to occupy the critical policy space of financial investment will be relieved enough to set up for the next crisis of liquidity. The risk, rather than deconsolidated, will be temporized--extended over time to secure occupation of the critical space that deliberately consolidates capital and converts it into accumulated wealth (massive debt) and political power (the massive, too-big-to-fail risk associated with the debt). Rather than reduction of accumulated risk, the probability of class warfare is kept at ninety-nine percent.
At ninety-nine percent, the risk of loss is fully assumed. Wall Street perp-walks (mostly insider trading) will give the appearance of risk reduction, but it occurs to support, not resist, maintaining the accumulated risk proportion (40 percent of all profits to the financial sector on a 4-1 debt-to-equity). The debt will continue to liquidate equity, but at a slower rate, giving the appearance of an improving economy.
Equity shares will rise to reflect the accumulation of value which, ironically, diminishes the capacity to sustain it. We continue to see, for example, productivity rising with increasing momentum against declining income (which accumulates value in the top one percent), setting the macros up for another big short--a double dip that will be attributed to market mechanics and not a deliberate detriment.
It is a deliberate detriment, however, and the proportion of the risk assumed is determined by income class. Ninety-nine percent is fully expected to sacrifice for the benefit of the top one percent who, according to conservative philosophy of the risk, are demonstrably best able to determine the general welfare by application of their self-interest. This application of "interest" (economic rent) is the measure of self-determination, and how much interest you pay is confirmed (but actually determined) by accumulation of wealth and power (the accumulation of risk). The accumulated benefit is used to produce income exacted from the productivity of the lower classes through application of the accumulated risk (either you pay the rent--sacrifice for the benefit of those who master society's resources--or suffer deprivation of social resources to which, by natural right, no one is entitled to except by having earned it in the free market).
Keep in mind that the detriment is exacted by means of market mechanics directed by a consolidated, risk proportion (the accumulated benefit in a class proportion). Achieving an economy-of-scale (organizationally defeating free-market mechanics) is touted as a functionally beneficial means of controlling the risks (the direct, democratic accountability) of the free market.
Consolidating capital, industry and markets is supposed to make us more productive, and it does that, but with high inflation and unemployment. (Understand here that the productivity is generated from the demand-side while conservatives argue it is "supply-side." It is a deliberate deceit constructed to exculpate the risk of liability because, remember, the legitimacy of the profit is that it adds supply, which creates jobs and controls inflation.) These risk attributes (inflation and unemployment symptomatic of demand-side management of the risk) accumulate because the means to control them (the free market) is diminished to maximize the profit margin (the empirical measure of success that conservatives say is legitimately earned without any additional liability because the risk of loss is fully assumed by free-market mechanics in priority).
Keep in mind that, according to conservatives, the zero-sum distribution of risk and reward (the class proportion) is not warfare because it adjusts the macros for capital investment which, they say, is generally beneficial. At the same time, they argue, large (supra-sovereign) corporates are hording cash and running up huge sovereign debt (which they are beyond the liability to pay) because the business environment is too uncertain. This uncertainty, however, is an extortion scheme using the accumulated value.
If the accumulation is not free of tax liability (being supra-sovereign) then the certain choice is larger sovereign debt or massive austerity (a liability to be collectively paid by "The People" who are sovereign and, thus, self-determined). In either case, the result is diminished demand--higher demand against a lower dollar, or a higher dollar against lower demand. This extortion scheme is possible only because the value (the risk) is too consolidated. That is, in order to properly adjust for this problem, providing the stability (the liability) of a popular consent, it is neccessary to deconsolidate the risk value.
A philosophy of supra-sovereignty (corporate bodies so big that they are beyond the accountability of sovereign power to achieve the general benefit of economy-of-scale efficiency) has, however, developed to explain the discrepancy between conservative values and the apparent lack of popular consent.
Now we have "neo-conservative" values that know no sovereign boundary (because as Ayn Rand explains, for example, they represent universally "objective" truth, which is difficult for the sovereign, non-elite to ascertain). These newly evolved values are supposed to provide a general, global benefit, but a highly divisible (class-warfare) distribution of the risk actually occurs. So we see, for example, the emergence of the "super committee" to reconcile, and organizationally validate by bureaucratic default, the divergence of conservative, economic philosophy and the political "demand" that has accumulated into an empirically verifiable, ninety-nine percent risk proportion.
Political pressure to occupy the critical policy space of financial investment will be relieved enough to set up for the next crisis of liquidity. The risk, rather than deconsolidated, will be temporized--extended over time to secure occupation of the critical space that deliberately consolidates capital and converts it into accumulated wealth (massive debt) and political power (the massive, too-big-to-fail risk associated with the debt). Rather than reduction of accumulated risk, the probability of class warfare is kept at ninety-nine percent.
At ninety-nine percent, the risk of loss is fully assumed. Wall Street perp-walks (mostly insider trading) will give the appearance of risk reduction, but it occurs to support, not resist, maintaining the accumulated risk proportion (40 percent of all profits to the financial sector on a 4-1 debt-to-equity). The debt will continue to liquidate equity, but at a slower rate, giving the appearance of an improving economy.
Equity shares will rise to reflect the accumulation of value which, ironically, diminishes the capacity to sustain it. We continue to see, for example, productivity rising with increasing momentum against declining income (which accumulates value in the top one percent), setting the macros up for another big short--a double dip that will be attributed to market mechanics and not a deliberate detriment.
It is a deliberate detriment, however, and the proportion of the risk assumed is determined by income class. Ninety-nine percent is fully expected to sacrifice for the benefit of the top one percent who, according to conservative philosophy of the risk, are demonstrably best able to determine the general welfare by application of their self-interest. This application of "interest" (economic rent) is the measure of self-determination, and how much interest you pay is confirmed (but actually determined) by accumulation of wealth and power (the accumulation of risk). The accumulated benefit is used to produce income exacted from the productivity of the lower classes through application of the accumulated risk (either you pay the rent--sacrifice for the benefit of those who master society's resources--or suffer deprivation of social resources to which, by natural right, no one is entitled to except by having earned it in the free market).
Keep in mind that the detriment is exacted by means of market mechanics directed by a consolidated, risk proportion (the accumulated benefit in a class proportion). Achieving an economy-of-scale (organizationally defeating free-market mechanics) is touted as a functionally beneficial means of controlling the risks (the direct, democratic accountability) of the free market.
Consolidating capital, industry and markets is supposed to make us more productive, and it does that, but with high inflation and unemployment. (Understand here that the productivity is generated from the demand-side while conservatives argue it is "supply-side." It is a deliberate deceit constructed to exculpate the risk of liability because, remember, the legitimacy of the profit is that it adds supply, which creates jobs and controls inflation.) These risk attributes (inflation and unemployment symptomatic of demand-side management of the risk) accumulate because the means to control them (the free market) is diminished to maximize the profit margin (the empirical measure of success that conservatives say is legitimately earned without any additional liability because the risk of loss is fully assumed by free-market mechanics in priority).
Keep in mind that, according to conservatives, the zero-sum distribution of risk and reward (the class proportion) is not warfare because it adjusts the macros for capital investment which, they say, is generally beneficial. At the same time, they argue, large (supra-sovereign) corporates are hording cash and running up huge sovereign debt (which they are beyond the liability to pay) because the business environment is too uncertain. This uncertainty, however, is an extortion scheme using the accumulated value.
If the accumulation is not free of tax liability (being supra-sovereign) then the certain choice is larger sovereign debt or massive austerity (a liability to be collectively paid by "The People" who are sovereign and, thus, self-determined). In either case, the result is diminished demand--higher demand against a lower dollar, or a higher dollar against lower demand. This extortion scheme is possible only because the value (the risk) is too consolidated. That is, in order to properly adjust for this problem, providing the stability (the liability) of a popular consent, it is neccessary to deconsolidate the risk value.
A philosophy of supra-sovereignty (corporate bodies so big that they are beyond the accountability of sovereign power to achieve the general benefit of economy-of-scale efficiency) has, however, developed to explain the discrepancy between conservative values and the apparent lack of popular consent.
Now we have "neo-conservative" values that know no sovereign boundary (because as Ayn Rand explains, for example, they represent universally "objective" truth, which is difficult for the sovereign, non-elite to ascertain). These newly evolved values are supposed to provide a general, global benefit, but a highly divisible (class-warfare) distribution of the risk actually occurs. So we see, for example, the emergence of the "super committee" to reconcile, and organizationally validate by bureaucratic default, the divergence of conservative, economic philosophy and the political "demand" that has accumulated into an empirically verifiable, ninety-nine percent risk proportion.
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