The Prudent Regulator

In order to prudently regulate in a free market, the prudent regulator requires income, and the more income acquired the more ability to regulate--to govern--with a prudence that is self-determined.

As you may have guessed, this is a philosophy of equilibrium. As soon as someone has more income than others, odds are the outcome will favor the accumulation of income, not its distribution, which according to free-market capitalism is a virtue that provides for economic strength, not a weakness.

If we all pursue the strength of accumulation, its virtue becomes a source of deprivation. It is easy to then reason that deprivation (in pursuit of life, liberty and happiness) is a virtue. Capitalism, for example, calls this the paradox of thrift, and in a free-market environment is the strength--the austerity--of self-deprivation that forms capital. When invested (or if invested), the capital (the deprivation) expands the economic pie to provide for others.

It is easy to see, then, how the philosophy of risk inherent to capitalism becomes a philosophy of deprivation--austerity that surpluses value to prevent shortages. (It is important to note here that proponents of capitalism always site, for example, that its participants do not cue-up for goods in short supply like they did in the former Soviet Union. No, instead, participants do not have the money to demand it. There is no reason to stand in line for something you can't buy, and not being able to buy assures ample supply. While Russian citizens no longer visibly cue-up, the reduced demand, added to the top income class, is divisibly less visible than the accumulating supply, and because the demand is added at the top, prices marginally rise to meet the marginal consumer demand--the ability to pay--at the top. Characteristic of capitalism, then, prices rise against a falling demand until the alpha risk--the ability to self-determine and prudently regulate--is so accumulated that the only way to reduce the risk is to issue debt, which reduces buying "power"--the alpha risk--even more, and increases supply.) More and more, over time, the surplus occurs less by adding supply than by reducing demand (classic overproduction), which conservatives falsely refer to as "supply-side" economics. Who sacrifices to gain the surplus is "the risk" to be philosophically constructed and is essentially the debate we currently have over policies and programs that will keep us out of recession.

In order to determine the direction of the risk (the capacity to self-determine), it is necessary to occupy the policy space in the gamma dimension where risk is systematically managed (governed) in the representative form. Since we see a divergence of philosophy and practice over time, we see a kind of quantum entanglement of the risk that clearly identifies the position required to avoid taking the risk.

For example, when Occupy Wall Street occurs, there is a quantum-mechanical entanglement that conservative philosophy reacts to with rhetorical hyper-tropisms. Governance becomes a function of dogmatic rigor...we need to return to our roots, our foundation, our heritage, conservatives proclaim, and we hear things like, "the protesters don't know how wealth is created," which infers, in true Hamiltonian form, they are too ignorant--too uncivil--to know any better. It is "us" and "them" by construction of the argument, but admitting to it is a moral hazard. Not submitting to higher authority (governance of the best and the brightest), the one-percent contends, is to solicit class warfare and wantonly endanger civil society.

Quite the contrary. Occupy protesters know very well how wealth is created, and they know very well that capital is not productive if they are not at work producing it. They know very well that the capital to reduce debt-to-equity is not being used to create jobs (supply), it is being used to create debt. They know all too well that unemployment is the objective (the value of their austerity surplused as the private property of the upper class), not shared prosperity.

Debt (unemployment due to unproductive use of capital) is the supply being added, effectively raising the economic rent. Raising the rent turns equity (self-determination) into debt, and the vast majority into credit-score slaves.

Unproductive use of capital despoils the consumer...the prudent regulator with the power to determine (the quantum, pluralistic power of numbers to apply risk, which in the case of the upper class is value surplused disproportionate to their numbers). The consumer is demoralized, willing to do the bidding of the master for economic security and social mobility. The Occupiers are more than just animals, though, willing only to despoil the debt with productivity and make sure despoilers get their due.

Robbing labor of the value (the power) of self-determination is the objective, the reality, of capitalism, not the shared prosperity a free market provides (which assures despoilers get their due in short order). To tell victims they do not deserve an equal share because they are unproductive, because they lack the value (the civility) of those who manage the capital to victimize them, is to invoke the moral hazard (the incivility) capitalists say it is imperative to forswear--class warfare.

Instead of creating jobs and adding supply, capital is being distributed to create unemployment. Capital neo-classically demanded and consumed in speculative markets is where the risk is entangled, positioned, and arbitraged with the desired quantum effect. By focusing its value on the demand and consumption dimensions, rather than the value of labor (the power of the prudent regulator), capital is deliberately (systematically) horded to accumulate the wealth and power (the quantum effect) necessary to self-determine.

The Occupiers very clearly observe a quantity that is not "supply-side" driven, but a demand-side deprivation falsely postulated as benefiting them. They detect a con game to exact a detriment by promising prosperity--what criminals do, but because it is all entangled on Wall Street the detriment is exacted without the assumption of liability because it is presumed to function with the legitimacy (the philosophy of risk) a free-market provides.

(Remember that a free market requires full participation. If you did not participate and you, thus, have no income, it is your own fault. Hence, the marketplace is freely self-determined, ontologically entangled, and because of this unpredictable, probabilistic, quantum entanglement, the result is legitimately derived. Since the result is probabilistically ontological, the results are "objective" as Ayn Rand describes it, for example, and as Nietzsche explains, the results are "Beyond Good and Evil").

Understand, when Wall Street quants transfer risk, the quantum exchanged is entangled. Default swaps, for example, are a means of transferring risk (which, by the way, is a measure of risk that is exchanged in the dark). The quantum effect is not limited to the swaps market, which few people understand beyond its participants. It is a way to apply risk to the lower classes (the ninety-nine percent) in the dark.

The risk is applied in the dark so that it is not detectable (a quantum uncertainty) until it has an effect. Application of the risk can then be argued as ontologically derived (a quantum mechanism, unpredictable and probabilistic, like a free market), and thus legitimately free and open to anyone willing to take the risk. If the reward is taxed away or the market regulated, conservatives say, the incentive to produce what consumers demand (the will to take risk) is diminished. (Of course, this argument is nonsense. Most of the risk inherent to capitalism is consolidation of income--buying power. The incentive to produce inversely correlates with the accumulation of the income to demand it, and since it is the goal of capitalists to make money, not necessarily produce--which adds supply and disinflates prices, "the risk" consolidates with income. This income-deficit is falsely argued by reactionaries to be a deficiency of risk-taking. The incentive to take risk is not, however, value that is missing or lacking, but simply consolidated--misdirected--into a too-big-to-fail proportion that is fully assumed, in priority, to be lost without government intervention. What results is state capitalism, what Marx called "anti-socialist socialism," and what capitalists falsely refer to, post hoc, as imprudent regulatory authority that kills the incentive to create jobs. Understand that this fully assumed risk of loss is the feeling--the thrill...the quantum risk--capitalists have of gaining wealth and power, and keeping it, in defiance of the law of large numbers.) Declining demand (the lack of productive investment that adds supply and the income--the employment--to demand it), conservatives explain, is the entangled, quantum effect (the falling income of the ninety-nine percent) that expresses as populist sentiment, not a decline of income. (Income is rising just fine, all be it for the top one percent, but remember, according to conservative philosophy, this is not a zero-sum because it provides the incentive for labor to be more productive, which resists shortages, and thus hyper-inflation.)

Declining demand does not derive from the lack of income, according to conservative philosophy of the risk, because it implies that labor is its integral value. Declining demand, rather, is the result of low productivity--the more productive labor is, the more money it makes, which leads to hyper-tropic, reactionary rhetoric like, "get a job" when unemployment is at depressionary levels. (In other words, that's why conservatives never make much sense. Ideology prevents them from properly identifying the derived and integral parts that calculate the probable direction, position, and thus the space the risk proportion occupies at any particular time. This also accounts for most of the beta volatility--the entropic value--concomitant to organized consolidation of the risk proportion which, ironically, is supposed to lower the entropic value).

According to reactionaries, the problem is not the lack of income since keeping labor costs low is disinflationary. Modern economic theory, you see, focuses on consumer demand--creating debt and managing the money supply to resist the declining rate of profit. Of course, neo-classically, monetizing debt does not have a disinflationary, quantum effect. It has an entangled, stagflationary effect that renders the practical concept of labor value (unaccumulated income and the deflationary risk proportion that goes with it) as a value to be resisted by any and all means. Hence, disinflation, rather than being the benefit (the freedom) that a free market naturally provides to prudently regulate right down to each and every individual, is redefined, neo-classically, as a function of its consolidated value--adding supply at an economy-of-scale, volume discount against declining consumer income (demand) and rising unemployment.

The declining demand (zero-sum reduction of consumer income by reducing the amount of labor demanded) accounts for the amount of government regulation added. The demand (the power of the prudent regulator) is added to the size of government and is the entangled quantity that gains a gamma-risk proportion.

(It is important to understand here that competitive innovation is not considered by capitalists to be value that accrues to labor. Labor-saving devices are not employed to make labor easier at the same price, which increases the value of labor by making it more productive, but to increase the return on investment--the value of accumulated capital. The accumulation in zero-sum, you see, renders labor less productive, not more, and that is why there is so much confusion about the reward that derives from the risk. The legitimately derived reward is so entangled with varying, ideological quantifications of its, distributive, proportional attributes, its objective reality is reduced to whoever has accumulated the most wealth and power to determine it, which is the power to self-determine, or prudently regulate as one sees fit in the pursuit of liberty.)

The reaction to regulation is that it does not allow for the liberty to organize as one sees fit, and that liberty (essentially derived from the incentive to control the cost of labor as a matter of prudential regulation) is value that is legitimately "self" determined. This value of the risk (its legitimately derived accountability) is, according to reactionaries, not only at the foundation of what it means to be American, but is at the root of the problems that plague us.

Industries and markets are merged (deliberately organized) so that labor costs are minimized while profits are maximized (stagflation and a continuously rising debt-to-equity). This, you see, is a deliberate act--an organizational technology--to gain profit by causing detriment, and since the capital derived by this technology is not converted back into labor value (disinflationary, competitive, innovatively productive capacity), but instead used to deflate wages and salaries of the ninety-nine percent, the effective quantum value of "the risk" (the fully assumed loss) is evermore probable.

Populist sentiment that reactionaries claim unnaturally resists the way things are and should be, resistance they say will result in a crisis, naturally occurs to deconsolidate the risk and prevent the crisis. (Correct! The implication here is that reactionaries want crises. It is the opportunity to react. It is the opportunity to foreclose on value accumulated in the lower classes.) So, when Bank of America reacts to deflationary crises with a massive, hubba-hubba foreclosure program, the quantum entanglement increases to a ninety-nine percent risk proportion and naturally tends to occupy the critical policy space that governs the risk--the space we refer to as self-determination...the space that must be occupied to demonstrate, or verify, how much power you have. Remember that Bank of America says its reaction is only natural...and acting contrary to its natural "objective" (its self-interest) is, like Ayn Rand says, the ultimate moral hazard--it will surely result in crises that, you see, the reaction is sure to cause.

Populist sentiment (declining consumer demand transformed into political demand), conservatives contend, is not class warfare. It is an economic technicality that "the mob" does not understand.

Turning consumer demand into political demand is a critical, technical error. The reason we use consumer demand to quantify value, instead of labor value, for example, is because labor tends to transform into political risk, which inflates costs and entangles economic risk. This entanglement is, you see, conservatives say, the uncertainty (the complexity that the non-elite are too slow or "intellectually lazy" to understand) that prevents economic growth and debt reduction.

In order to cause a distribution (increase demand for added supply so that, as conservatives will have it, there is no disinflationary effect, which according to neo-classical economics is bad because it empowers labor and reduces profits) it is necessary to free capital from taxation and government regulation. If capital is not freed from oppression (the political demands of empowered labor value), it will not distribute--it is horded (and kept in the dark), like we have now.

Capital is grossed and hidden in largely dark markets until the value of labor is reduced to economic desperation. At that point the philosophy of self-determination is invoked to identify the problem as self-oppression (Ayn Rand's "A is A" identity hypothesis and Herman Cain's "blame yourself" thesis). It is the point at which labor (including the small proprietor) seeks to cause a distribution through government process--essentially taxing and spending to turn accumulated wealth (and power) back into labor value (working capital), which is "the risk" neo-classically identified as consumer demand (buying power).

(Since buying power is the critical measure of the prudent regulator--for the ability to self-determine--it is necessary to consolidate this power to avoid its oppression and demand that others take the risk. This is accomplished by essentially "swapping" the role of oppressor and oppressed while, at the same time, retaining the original position--Rand's "A is A" identity--to avoid the liability of rigging the market and robbing consumers of their regulatory capacity. This capacity is, you see, the power of governance, or the ability to self-determine, and you can't be the governor if you are governed. Hence, we have the working hypothesis, "government is the problem and not the solution" and, at the same time, the practical theory that consumer demand is at the fundament of economic value where government, properly understood, is nothing but a moral hazard.

Being unwittingly stuck with all the risk is no accident. You are a likely counterparty--a likely victim--for consumption of "the risk" if you do not have the buying power to, for example, bid prices up and swap the risk in dark markets.)

According to the proponents of consolidated capitalism, the populus does not understand that government, not Wall Street, is the oppressor. Those who adamantly advocate for dark markets and counterparty "swaps" to effectively identify "the risk" and thus efficiently distribute capital to control it, like we are doing now, say this is the free market at work.

The more free-market "capitalism" we have (the more markets are allowed to freely consolidate into efficient, too-big-to-fail economies of scale), conservatives contend, the more private enterprise occupies the space otherwise used to oppress us by keeping demand (income) dependent on government action. It is as necessary to declare our independence now as it was in 1776. (Notice here that the argument is reduced to a functional binomialism. The potential, entropic value of consolidating the risk proportion--the increased entropy of "making" markets more efficient, or orderly, by commanding labor value, or income, with so-called consumer-demand measures--is operationalized with a predictable, binomial variation. The choice--the capacity to prudentially regulate--is binomially determined: either big government or a too-big-to-fail corporate state. It is here we all understand that consolidation of industry and markets causes the need for big government to prevent what is "too big to fail" from failing.)

Government, then, according to conservatives, causes demand reduction by taxing, spending, and regulating what is otherwise a free-and-open market. Government, they say, "crowds out" the prudent regulator, which they say "adds" risk, but as we know, risk is not added, it is consolidated. It is deliberately organized into an economy-of-scale efficiency that hides in the dark to avoid "the risk" of liability, which eventually transforms into, and presents as, the demand for government and sovereign debt. "Sovereign," remember, means debt that is largely paid (consumed) by "We the People" (the ninety-nine percent), collected by the top, one percent with the legal authority to tax and spend, or not, by means of due (public) process. Those who accumulate value by the invisible hand of providence (public processes), you see, are next to God...they are supra-sovereign. They are so enlightened with the secret knowledge of our true, "objective" reality (class identity verified by the capacity to make money and use buying power), they can see what the rest of us cannot see--the invisible hand doing its handy work (making money), without liability, in the dark. We can't presume to sue what "We the People" can't see, can't do, or properly understand, right?

The invisible hand (dark markets) ontologically commands the risk--it as an act of God, in whom we trust, and it is imprudent to try and regulate the providential (the objective) hand of God. So, for example, according to the Objectivist, reactionary version of this natural philosophy, when we experience a recession, it is best to just let God's hand play out, providentially consolidating wealth and power into the hands of those naturally selected to prudently regulate risk with, for example, dark markets.

The fatal flaw of Objectivist, natural philosophy is that it is reactionary--it is fallaciously post hoc. Without ensuring deconsolidation of the risk in priority (the fully assumed risk of loss consumed in priority by the prudent regulator), the consumer is not empowered to demand the objective reality (the self-determination) it professes.

Reactionaries are always sure to identify populist sentiment with high entropic value. Populist movements indicate impending chaos, confirming what they always knew to be true, that disestablishment of conservative values and institutions always re-establish. The ensuing chaos of a populist sentiment (not the gamma-risk proportion that accumulates with the established consolidation of wealth and power) objectively identifies the risk of loss that is fully assumed (i.e., the risk of loss correlates with the determinant without deviation and is thus fully assumed in priority). While David Hume, for example, reflected on the French Revolution as the evidence that supports the conservative hypothesis of natural, elite authority, Karl Marx's assessment of the risk was quite different.

According to Marx, the entropic value indicates impending change that quantifies (synthesizes) the risk proportion. The objective reality that occurred, as history unfolded, was Hume's hypothesis synthesized with Marx's concept of socialism. We had, for a time, state socialism versus state capitalism with a well-defined, binomial structure of global power.

Conservatives, now claiming the end of history with the dominance of global capitalism, are quite sure of their conservative hypothesis. They react to any challenge to established authority with absolute confidence, and a sense of absolute power. They are sure, absolutely, "We" naturally tend to a low entropic value by continuously organizing toward a singularity of the quantum risk (merging and acquiring into an ever-smaller policy space with an ever-larger span of control), despite increasing entropic value world wide.

To control entropic value (to command it and direct it to resist the declining rate of profit) central banks (a singular, coordinated quantum that is too big, and too entangled, to fail) react to the probable risk proportion by managing the money supply (the quantum), and much of this activity occurs in the dark (the entanglement). (Remember that a free market requires the quantum value of the risk not be in the dark. If it is, it is impossible for the consumer to be the prudent regulator.) The Fed, for example, recently disclosed its secret trillion-dollar transaction with the financial sector to forestall financial collapse, but without forestalling foreclosure. (Keep in mind that the total amount spent to bailout big financial establishments is currently estimated at over $120 trillion. At the same time, virtually nothing is made available to prevent the property of the lower classes from being confiscated, and in many cases these victims of private enterprise--their property unprotected by the state--are still obligated to pay the mortgage and the costs of foreclosure on property they do not own sold short. Not only did the ninety-nine percent get royally scammed, but paid the scammers--the consumers demanding it--a big bonus to do it! So, if conservatives cannot see what the gamma-risk proportion looks like because they are always too busy lurking in the dark, this is what objective reality really looks like.)

The reason this kind of macro-risk management occurs in the dark is not because its disclosure would cause financial panic, but because it rewards rampant psychosis on Wall Street...the same people that tell the Occupiers to "get a job" and "take a bath"...the same people who believe it is normal to allow for massive foreclosures and widespread economic desperation while its perpetrators are rewarded, and sustained, in zero-sum through the Federal Reserve System.