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.
Showing posts with label ontology of risk. Show all posts
Showing posts with label ontology of risk. Show all posts
Friday, July 29, 2011
Sunday, December 5, 2010
Understanding Deflation
If the denominational supply of money is $100, and your counterparty has consolidated 100% of that value, you have two choices, starve or go into debt.
The problem is not that there is a debt, but that the counterparty controls all of the equity (all of the risk). The debt obligation and the subsequent ability to pay it (the risk of default) are consequential to the problem. The consequences accumulate into a crisis proportion (the effect) and default becomes the problem (the risk) to be resolved.
As the wealth consolidates, your income is deflated. The result is a general crisis. Your lack of income is not the source of the crisis, consolidation of it is.
Understand that deflation is a general crisis. You can't get any poorer, and your counterparty can't get any richer without over-extending (over-leveraging) the risk.
The crisis becomes so extensive that even though it appears you are getting richer, you are really getting poorer. Your income is so over-leveraged that your equity is now negative. Both rich and poor have debt that cannot be paid with the risk of loss having been fully consumed by the working financial model.
The crisis will not resolve without changing the working model, which is imbued with normative value. In fact, changing it is considered an ontological, moral hazard. Nature intends risk to be consolidated to the fullest extent and discretely distributed to control the risk of loss that is fully assumed. Otherwise there is chaos. Humanity is then reduced to mere animals suffering the vicissitudes of uncontrollable natural forces that lack civilized purpose. It is necessary to de-ontologize the risk so that it can be managed with intelligent propriety (as the private property of elite authority).
The elite are naturally endowed to consolidate and manage the risk of loss, fully assumed, to a civil purpose. Despite all the negative equity, according to the elite hypothesis, the result is a net benefit--civil society organized to control nature in the form of private property in pursuit of the "good" life.
Private pursuit and management of property does afford the freedom, the propriety, of a moral existence. It does deontologize a more natural existence, but it is a mistake, as elite authority maintains, to consolidate the risk into economies of scale in order to control random chaos.
The free market mechanism, which is reduced by economies of scale, ontologically rewards and deprives on a deontological basis--by popular consent (the randomness elite authority intends to control to a civilized purpose). If you can't trust your bank not to use your money against you from its proprietary desk, pluralism (what an economy of scale is not) ensures you have a choice (the freedom to deontologically reward and deprive).
Ontology is a philosophical concept that is a measure of intention, or what economists ascribe to incentive. If a student studies to get a good grade, the student is teleologically determined. If a student studies to know the curriculum to the highest degree, a good grade is ontologically determined. While both can result in knowledge of the curriculum, the incentives are different and can affect the practical quality of the knowledge consumed.
The profit motive works in much the same way. An entrepreneur may make a product or service better and faster to make a profit, or may just be interested in doing things better and faster which ontologically results in a profit. A free market mechanism maximizes the productive incentive of each to occur by minimizing the probability the profit motive does not consolidate the risk to prevent the ontology (with the risk of loss fully assumed).
Whether the goal is to ensure a profit margin by determining the risk of loss, or a profit margin that is the result of doing things better and faster, a de-ontology occurs to determine the extent of the risk (how the risk of loss is to be fully consumed).
Ensuring a free-market mechanics in priority ensures the deontological existence elite theory promises but does not intend to achieve by "virtue" (the strength) of command and control.
Ensuring a natural pluralism in priority (instead of an economy of scale) ensures freedom, deontologically determined. As a species, being cognitively hardwired for causal determinism, pluralism ensures we have a choice to achieve a natural existence that is self-determined as opposed to a purely natural ontology which, unlike Rousseau's noble description, according to the elite, is to live like ignoble savages.
Naturally, the elite also extend the ignominy of Rousseau's ideal measure to pluralistic processes that govern their self-interest by means of popular consent. Pluralism, as John D. Rockefeller argued, for example, is unruly and inefficient, so it naturally selects those (such as himself) who are fittest to force their self-interest in the marketplace by consolidating it, thus organizing it, or civilizing it, into a proprietary authority (much as Marxist-Leninists describe it).
The fittest to survive are those that are literally "too big to fail." These are the people most willing--morally incented--to de-ontologize the marketplace and consolidate the equity into debt; or as Marx and Lenin alternatively described it, to consolidate the equity into the Sovereignty of The People, keeping in mind that the more debt The People accumulate the more they own the bank with denominatively negative equity.
Yes, we are more than just animals, but achieving negative equity is not the civil way to confirm it. Rather, it is quite the uncivil act of authority (which is why forming "trusts" or what is "too big to fail" is supposed to be illegal).
If starvation or debt is the choice, debt becomes the more natural existence, and that is the choice we now face as we consider our economic problems toward a civil resolution.
Notice how the current commission to control the expansion of debt has virtually nothing to say about deconsolidating what is too big to fail. Apparently, just as the congress and the executive, the commission does not consider the consolidation of industry and markets to be of negative consequence (i.e., causing deflation and debt). This confirms that debt is considered to be, in true Hamiltonian fashion, the more natural state of our existence.
Keeping the risk (the equity) in a continuous state of consolidation is assumed to be the natural course of things, like Rockefeller argued, but keeping it solely proprietary naturally causes the need for government. The debt to equity is kept under close state control (monetary and fiscal policy) but denominatively proprietary to keep the equity stake ontologically incented with productive self-interest. Unfortunately, the stakes reduce to debt or starvation which, frankly, could hardly be more base. (Marxist-Leninists argue that as this consolidation becomes more civilized, productive incentive reduces less to the base and elevates to a self-determination that is technologically pulled by labor-saving devices. We currently refer to this "pull," this ontological determinism, as "unemployment," and Marxists "the leisure class." Without entitlements, or transfer payments in the current environment, the leisure will result in a deflationary crisis--the income will not be available to demand productivity. Of course, being able to afford leisure delimits socio-economic class, and the leisure class must work to maintain the delimitation by limiting the extent of entitlement--the extent of liability--to a debt obligation which, of course, accumulates into a gamma-risk proportion. Instead of buying time to commandeer available equity, productivity eventually occurs for its more equitable distribution and enjoyment. A person does not acquire a job or achieve an equity stake by depriving it of another person--by deflating another person's equity stake, or entitlement.)
To de-ontologize the gamma-risk proportion, the debt commission is to suggest ways to adjust the debt to equity. The proportion then gains civil authority (due process) to mitigate the risk of liability that results from deflationary trending in which those that have and have not are more clearly defined in zero-sum--what the rich refer to as "class envy."
Class envy in a deflationary environment is nothing but being basely reduced to accepting debt or starvation as a matter of self-determination (by natural right). When the economy is expanding (when the equity is being distributed and debt reduced), people naturally care less about the difference between rich and poor because there is, in fact, less difference. The discrepancy, the conflict, is essentially about entitlement. While the rich claim they are entitled to wealth and leisure, everyone else, by definition, is not. Without basic entitlements for everyone provided by the so-called liberal faction, the risk of liability (referred to as envy) is de-ontologized.
The deontology (the missing interpretation that defines the limit of a natural existence) allows for a more equitable distribution of the risk that "naturally" occurs (the risk of loss is fully assumed). America's founders, for example, demanded a more equitable self-determination of the risk extended from the king. They called this "equity" a "natural right." The king, of course, thought differently...the Revolutionaries were just envious of royal wealth, power and leisure (which includes the time to exercise power and limit the risk of loss that is fully assumed).
Currently, with the risk of loss fully assumed in zero-sum, American government is engaged in due process to determine (deontologize) the extent of entitlement which accounts for the debt (the risk) that accumulates without equitable distribution. With the public debt measuring the extent of the risk (the amount of potential inequity to ontologize in zero-sum), a $13 trillion denomination indicates an impending crisis (deflation) of colossal proportion. So, who is entitled to the debt? To whom shall it be commissioned?
Is it possible to pay the debt without starving?
It is important to understand that deflation is how distribution of the equity occurs and the Deficit Commission is dealing directly with an overvalued deflationary indicator that defines who is entitled to what, and when.
The problem is not that there is a debt, but that the counterparty controls all of the equity (all of the risk). The debt obligation and the subsequent ability to pay it (the risk of default) are consequential to the problem. The consequences accumulate into a crisis proportion (the effect) and default becomes the problem (the risk) to be resolved.
As the wealth consolidates, your income is deflated. The result is a general crisis. Your lack of income is not the source of the crisis, consolidation of it is.
Understand that deflation is a general crisis. You can't get any poorer, and your counterparty can't get any richer without over-extending (over-leveraging) the risk.
The crisis becomes so extensive that even though it appears you are getting richer, you are really getting poorer. Your income is so over-leveraged that your equity is now negative. Both rich and poor have debt that cannot be paid with the risk of loss having been fully consumed by the working financial model.
The crisis will not resolve without changing the working model, which is imbued with normative value. In fact, changing it is considered an ontological, moral hazard. Nature intends risk to be consolidated to the fullest extent and discretely distributed to control the risk of loss that is fully assumed. Otherwise there is chaos. Humanity is then reduced to mere animals suffering the vicissitudes of uncontrollable natural forces that lack civilized purpose. It is necessary to de-ontologize the risk so that it can be managed with intelligent propriety (as the private property of elite authority).
The elite are naturally endowed to consolidate and manage the risk of loss, fully assumed, to a civil purpose. Despite all the negative equity, according to the elite hypothesis, the result is a net benefit--civil society organized to control nature in the form of private property in pursuit of the "good" life.
Private pursuit and management of property does afford the freedom, the propriety, of a moral existence. It does deontologize a more natural existence, but it is a mistake, as elite authority maintains, to consolidate the risk into economies of scale in order to control random chaos.
The free market mechanism, which is reduced by economies of scale, ontologically rewards and deprives on a deontological basis--by popular consent (the randomness elite authority intends to control to a civilized purpose). If you can't trust your bank not to use your money against you from its proprietary desk, pluralism (what an economy of scale is not) ensures you have a choice (the freedom to deontologically reward and deprive).
Ontology is a philosophical concept that is a measure of intention, or what economists ascribe to incentive. If a student studies to get a good grade, the student is teleologically determined. If a student studies to know the curriculum to the highest degree, a good grade is ontologically determined. While both can result in knowledge of the curriculum, the incentives are different and can affect the practical quality of the knowledge consumed.
The profit motive works in much the same way. An entrepreneur may make a product or service better and faster to make a profit, or may just be interested in doing things better and faster which ontologically results in a profit. A free market mechanism maximizes the productive incentive of each to occur by minimizing the probability the profit motive does not consolidate the risk to prevent the ontology (with the risk of loss fully assumed).
Whether the goal is to ensure a profit margin by determining the risk of loss, or a profit margin that is the result of doing things better and faster, a de-ontology occurs to determine the extent of the risk (how the risk of loss is to be fully consumed).
Ensuring a free-market mechanics in priority ensures the deontological existence elite theory promises but does not intend to achieve by "virtue" (the strength) of command and control.
Ensuring a natural pluralism in priority (instead of an economy of scale) ensures freedom, deontologically determined. As a species, being cognitively hardwired for causal determinism, pluralism ensures we have a choice to achieve a natural existence that is self-determined as opposed to a purely natural ontology which, unlike Rousseau's noble description, according to the elite, is to live like ignoble savages.
Naturally, the elite also extend the ignominy of Rousseau's ideal measure to pluralistic processes that govern their self-interest by means of popular consent. Pluralism, as John D. Rockefeller argued, for example, is unruly and inefficient, so it naturally selects those (such as himself) who are fittest to force their self-interest in the marketplace by consolidating it, thus organizing it, or civilizing it, into a proprietary authority (much as Marxist-Leninists describe it).
The fittest to survive are those that are literally "too big to fail." These are the people most willing--morally incented--to de-ontologize the marketplace and consolidate the equity into debt; or as Marx and Lenin alternatively described it, to consolidate the equity into the Sovereignty of The People, keeping in mind that the more debt The People accumulate the more they own the bank with denominatively negative equity.
Yes, we are more than just animals, but achieving negative equity is not the civil way to confirm it. Rather, it is quite the uncivil act of authority (which is why forming "trusts" or what is "too big to fail" is supposed to be illegal).
If starvation or debt is the choice, debt becomes the more natural existence, and that is the choice we now face as we consider our economic problems toward a civil resolution.
Notice how the current commission to control the expansion of debt has virtually nothing to say about deconsolidating what is too big to fail. Apparently, just as the congress and the executive, the commission does not consider the consolidation of industry and markets to be of negative consequence (i.e., causing deflation and debt). This confirms that debt is considered to be, in true Hamiltonian fashion, the more natural state of our existence.
Keeping the risk (the equity) in a continuous state of consolidation is assumed to be the natural course of things, like Rockefeller argued, but keeping it solely proprietary naturally causes the need for government. The debt to equity is kept under close state control (monetary and fiscal policy) but denominatively proprietary to keep the equity stake ontologically incented with productive self-interest. Unfortunately, the stakes reduce to debt or starvation which, frankly, could hardly be more base. (Marxist-Leninists argue that as this consolidation becomes more civilized, productive incentive reduces less to the base and elevates to a self-determination that is technologically pulled by labor-saving devices. We currently refer to this "pull," this ontological determinism, as "unemployment," and Marxists "the leisure class." Without entitlements, or transfer payments in the current environment, the leisure will result in a deflationary crisis--the income will not be available to demand productivity. Of course, being able to afford leisure delimits socio-economic class, and the leisure class must work to maintain the delimitation by limiting the extent of entitlement--the extent of liability--to a debt obligation which, of course, accumulates into a gamma-risk proportion. Instead of buying time to commandeer available equity, productivity eventually occurs for its more equitable distribution and enjoyment. A person does not acquire a job or achieve an equity stake by depriving it of another person--by deflating another person's equity stake, or entitlement.)
To de-ontologize the gamma-risk proportion, the debt commission is to suggest ways to adjust the debt to equity. The proportion then gains civil authority (due process) to mitigate the risk of liability that results from deflationary trending in which those that have and have not are more clearly defined in zero-sum--what the rich refer to as "class envy."
Class envy in a deflationary environment is nothing but being basely reduced to accepting debt or starvation as a matter of self-determination (by natural right). When the economy is expanding (when the equity is being distributed and debt reduced), people naturally care less about the difference between rich and poor because there is, in fact, less difference. The discrepancy, the conflict, is essentially about entitlement. While the rich claim they are entitled to wealth and leisure, everyone else, by definition, is not. Without basic entitlements for everyone provided by the so-called liberal faction, the risk of liability (referred to as envy) is de-ontologized.
The deontology (the missing interpretation that defines the limit of a natural existence) allows for a more equitable distribution of the risk that "naturally" occurs (the risk of loss is fully assumed). America's founders, for example, demanded a more equitable self-determination of the risk extended from the king. They called this "equity" a "natural right." The king, of course, thought differently...the Revolutionaries were just envious of royal wealth, power and leisure (which includes the time to exercise power and limit the risk of loss that is fully assumed).
Currently, with the risk of loss fully assumed in zero-sum, American government is engaged in due process to determine (deontologize) the extent of entitlement which accounts for the debt (the risk) that accumulates without equitable distribution. With the public debt measuring the extent of the risk (the amount of potential inequity to ontologize in zero-sum), a $13 trillion denomination indicates an impending crisis (deflation) of colossal proportion. So, who is entitled to the debt? To whom shall it be commissioned?
Is it possible to pay the debt without starving?
It is important to understand that deflation is how distribution of the equity occurs and the Deficit Commission is dealing directly with an overvalued deflationary indicator that defines who is entitled to what, and when.
Tuesday, September 14, 2010
Probability of Risk
Statistically, the probability of risk is 100%. The risk is fully extended. Discounting the probability of the risk, the extent is "determined."
The risk is always fully valued. Discounting the probability it will not occur (the null hypothesis) is the risk as far as we can determine. So, the only way to be completely certain (the probability of risk fully discounted to zero) is to have complete control (like consolidating markets to determine the extent of the risk, for example, or by controlled experiment and nulled hypotheses as a scientist).
In the world of scientific inquiry, hypotheses are nulled to verify the probability of having acquired truth, or knowledge, as best can be possibly determined. Even after this rigorous, empirical, cognitive regime, theories are tested for predictive utility. Since theories are apt to be thrown out or amended, knowing truth is an approximation of its absolute value (discounted from the fullest extent), much as Socrates and Plato postulated.
Platonically, there is "nothing" really new. Everything reoccurs in different forms over time (and space), becoming a closer approximation of absolute value (what science discounts, or nulls in the form of hypotheses, to absolute zero, or certainty, otherwise known as the unchangeable condition of God, or what is Platonically described as "the world of ideas").
Classical cosmology (the theory of everything) does not postulate random events. It postulates truth can be absolutely known (things appear random if you don't know the truth--or have perfect knowledge like God). Everything can be known by its ideal measure (like the 100% measure of fully extended probability we use today). It is not necessary to null hypotheses because every thing teleologically tends to the ideal form of it (including the risk, which ideally is zero).
It is unnecessary to verifiably know something by knowing what it is not if you already know what it is to the fullest extent (its absolute 100% value).
Political, economic, and religious arguments, for example, tend to the classical, teleological form to avoid the risk of verifiable hypotheses. Arguments are reduced to axiomatic moral principles, or hazards, that run the risk of negative consequence if violated. Since predictive utility tends to self-fulfilling prophecy (like not cutting taxes for the rich causes unemployment), validation of axiomatic principles masquerade as empirical verification of hypotheses (with the proposition of the risk "determining" or prophesying its absolute value).
Classical philosophers tended to describe and explain the dynamic of nature with a teleological attribution. It was not until the scientific revolution that the classical, teleological interpretation was replaced with ontology.
Successful use of the scientific method launched the current probabilistic interpretation of the risk in which we null hypotheses, discounting the possibility that we can ever obtain absolute truth, ontologically anyway.
The Constitution of the United states was also a product of this cognitive, scientific revolution. We recognize the empirical benefit of a verifiable government by consent, discounting the probable extent of the risk to the inalienable right of self-determination.
Delimiting the risk to the direct control of The People allows for a scientific process--a continuing revolution--of continuous improvement (maximum participation) rather than a government of self-adulated kings, criminals, or any of various forms of elite incompetence. An intellectual, moral competence is especially important and inherent to a pluralistic model, recognizing and protecting the stability of keeping risk pluralistic and deconsolidated (exactly the opposite of what we have now).
Rather than economy-of-scale organizations that are too big to fail and create barriers to entry (minimum participation), maintaining a pluralistic model recognizes the moral value and practical effect of deconsolidated risk. A risk ontology that systematically operationalizes self-interest with the public good recognizes that providing for the wealth of nations is not by means of its deprivation.
Accumulating a benefit by causing a detriment (deprivation of others) is not in anyone's self-interest. It accumulates risk and causes general instability.
Ensuring the fullest probability of participation (pluralism) is not only a moral sentiment, it is a practical measure that, as our founders recognized, ensures the general welfare (avoids the accumulation of systemic risk that plagues us now).
Pluralism operates with the working hypothesis that we all know everything together, forming the perfect reduction of risk--self-determination or self-government. That reduction does not occur without the fullest participation, and income is required to participate. Self-determination is dependant on the provision of income, not its deprivation.
Providing for the commonwealth is a moral imperative (it has absolute value). If we want to reduce systemic risk, it means absolutely everything.
While we struggle to come up with a scientific theory of everything, classical philosophers breezed right through epistemic cosmology 101 with absolute, but unverified, knowledge of the truth.
By means of verification we recognize that many things once considered to be empirical truth and declarative knowledge (like the earth is flat) are now declared disconfirmed hypotheses. Indeed, we tend toward an absolute value of knowing what the truth really is, but fully dependant on our perception of it. Truth is a phenomenology. It is not independant of the mind as Aristotle argued (just as the real value of capital is not alienated from labor as Marx conceived it, but fully realized in the detrimental value of the risk).
The risk analyst is presented with a phenomenology of the risk that this series of articles has attempted to demonstrate. Analysts are keenly aware that the perception of risk is both a determining variable and the variable to be determined. It makes for an especially fractile reduction in which acting on the information affects the values being observed (the risk of unintended consequences--randomness that classical philosophers attribute to ignorance of absolute values).
Perception of the risk not only determines the probability, but the relative value risk yields in a current environment. Current, relative value is a coefficient of an absolute value that is knowingly increased or reduced. The risk coefficient (risk-to-reward) indicates the extent of the risk and delimits the risk to be encouraged or avoided. We then discover (perceive) the extent to which we are all knowingly and willingly "determined" to discount the probability of what we don't want will occur.
As we discount the probability of having obtained knowledge, we consistently verify that there is no absolute zero (trying to eliminate economic risk, for example, produces political risk in equal proportion). Wherever we find nothing, something always appears. So, maybe the classics are right--we are just discounting the probability of our ignorance to discover what we knew all along.
While modern physics has stirred a popular critique of scientific inquiry, let's turn the heightened philosophical awareness to the political-economic domain where critical thinking gravitates against what remains of social inertial forces.
The risk is always fully valued. Discounting the probability it will not occur (the null hypothesis) is the risk as far as we can determine. So, the only way to be completely certain (the probability of risk fully discounted to zero) is to have complete control (like consolidating markets to determine the extent of the risk, for example, or by controlled experiment and nulled hypotheses as a scientist).
In the world of scientific inquiry, hypotheses are nulled to verify the probability of having acquired truth, or knowledge, as best can be possibly determined. Even after this rigorous, empirical, cognitive regime, theories are tested for predictive utility. Since theories are apt to be thrown out or amended, knowing truth is an approximation of its absolute value (discounted from the fullest extent), much as Socrates and Plato postulated.
Platonically, there is "nothing" really new. Everything reoccurs in different forms over time (and space), becoming a closer approximation of absolute value (what science discounts, or nulls in the form of hypotheses, to absolute zero, or certainty, otherwise known as the unchangeable condition of God, or what is Platonically described as "the world of ideas").
Classical cosmology (the theory of everything) does not postulate random events. It postulates truth can be absolutely known (things appear random if you don't know the truth--or have perfect knowledge like God). Everything can be known by its ideal measure (like the 100% measure of fully extended probability we use today). It is not necessary to null hypotheses because every thing teleologically tends to the ideal form of it (including the risk, which ideally is zero).
It is unnecessary to verifiably know something by knowing what it is not if you already know what it is to the fullest extent (its absolute 100% value).
Political, economic, and religious arguments, for example, tend to the classical, teleological form to avoid the risk of verifiable hypotheses. Arguments are reduced to axiomatic moral principles, or hazards, that run the risk of negative consequence if violated. Since predictive utility tends to self-fulfilling prophecy (like not cutting taxes for the rich causes unemployment), validation of axiomatic principles masquerade as empirical verification of hypotheses (with the proposition of the risk "determining" or prophesying its absolute value).
Classical philosophers tended to describe and explain the dynamic of nature with a teleological attribution. It was not until the scientific revolution that the classical, teleological interpretation was replaced with ontology.
Successful use of the scientific method launched the current probabilistic interpretation of the risk in which we null hypotheses, discounting the possibility that we can ever obtain absolute truth, ontologically anyway.
The Constitution of the United states was also a product of this cognitive, scientific revolution. We recognize the empirical benefit of a verifiable government by consent, discounting the probable extent of the risk to the inalienable right of self-determination.
Delimiting the risk to the direct control of The People allows for a scientific process--a continuing revolution--of continuous improvement (maximum participation) rather than a government of self-adulated kings, criminals, or any of various forms of elite incompetence. An intellectual, moral competence is especially important and inherent to a pluralistic model, recognizing and protecting the stability of keeping risk pluralistic and deconsolidated (exactly the opposite of what we have now).
Rather than economy-of-scale organizations that are too big to fail and create barriers to entry (minimum participation), maintaining a pluralistic model recognizes the moral value and practical effect of deconsolidated risk. A risk ontology that systematically operationalizes self-interest with the public good recognizes that providing for the wealth of nations is not by means of its deprivation.
Accumulating a benefit by causing a detriment (deprivation of others) is not in anyone's self-interest. It accumulates risk and causes general instability.
Ensuring the fullest probability of participation (pluralism) is not only a moral sentiment, it is a practical measure that, as our founders recognized, ensures the general welfare (avoids the accumulation of systemic risk that plagues us now).
Pluralism operates with the working hypothesis that we all know everything together, forming the perfect reduction of risk--self-determination or self-government. That reduction does not occur without the fullest participation, and income is required to participate. Self-determination is dependant on the provision of income, not its deprivation.
Providing for the commonwealth is a moral imperative (it has absolute value). If we want to reduce systemic risk, it means absolutely everything.
While we struggle to come up with a scientific theory of everything, classical philosophers breezed right through epistemic cosmology 101 with absolute, but unverified, knowledge of the truth.
By means of verification we recognize that many things once considered to be empirical truth and declarative knowledge (like the earth is flat) are now declared disconfirmed hypotheses. Indeed, we tend toward an absolute value of knowing what the truth really is, but fully dependant on our perception of it. Truth is a phenomenology. It is not independant of the mind as Aristotle argued (just as the real value of capital is not alienated from labor as Marx conceived it, but fully realized in the detrimental value of the risk).
The risk analyst is presented with a phenomenology of the risk that this series of articles has attempted to demonstrate. Analysts are keenly aware that the perception of risk is both a determining variable and the variable to be determined. It makes for an especially fractile reduction in which acting on the information affects the values being observed (the risk of unintended consequences--randomness that classical philosophers attribute to ignorance of absolute values).
Perception of the risk not only determines the probability, but the relative value risk yields in a current environment. Current, relative value is a coefficient of an absolute value that is knowingly increased or reduced. The risk coefficient (risk-to-reward) indicates the extent of the risk and delimits the risk to be encouraged or avoided. We then discover (perceive) the extent to which we are all knowingly and willingly "determined" to discount the probability of what we don't want will occur.
As we discount the probability of having obtained knowledge, we consistently verify that there is no absolute zero (trying to eliminate economic risk, for example, produces political risk in equal proportion). Wherever we find nothing, something always appears. So, maybe the classics are right--we are just discounting the probability of our ignorance to discover what we knew all along.
While modern physics has stirred a popular critique of scientific inquiry, let's turn the heightened philosophical awareness to the political-economic domain where critical thinking gravitates against what remains of social inertial forces.
Saturday, September 11, 2010
Political Extension of the Risk
Politically extending the risk by means of public policy confirms income class and the current value of the risk in a zero-sum proportion.
The current debate is consumed with income-class valuations. Which income class, for example, is more worthy of risk protection--the class more, or less able to "take" the risk? It is a question that is economically motivated (the zero-sum) but politically (ideologically) determined.
Income is not only the measure of success, it is the variable that determines it. The more income (the ability to pay), the more protection from the risk which, by virtue of the accumulation, extends from it. No better way to protect yourself from risk than to determine who takes it when and how, and even more important, politically, why?
Why is a philosophical question, and while it is a speculative endeavor it does not preclude empirical measurement. Quite the contrary, it is empirically verifiable by very clearly defined class distinctions.
Like Skinner said about psychological motivation--you can't see it but you can measure its effects.
The effect of tax cuts for the rich, for example, has yielded an obvious zero-sum benefit. Those representing the rich, of course, argue the effect was neither caused by the benefit (accumulation of income) nor intended to cause harm (consolidation of lower-class assets into upper-class income). While the motive is speculative, the effect is clearly verifiable.
Now that the wealth is so consolidated that the only risk to be taken is the risk nobody wants, the capital accumulated is ready to merge and acquire assets distressed by the accumulation. At this point, the risk is so over-extended, the additional unemployment produced by M&A will push the economy over the edge.
The political risk (the gamma) is so extensive, even the typically complacent, ideologically compliant middle class is radicalized. The recession has made moving into the upper class so verifiably improbable, and being busted down (the risk being extended to anyone of lesser means) probable, the probability of risk is reaching its fullest, ontological extent.
The probability of risk (change) is never zero. It is always 100 percent.
The current debate is consumed with income-class valuations. Which income class, for example, is more worthy of risk protection--the class more, or less able to "take" the risk? It is a question that is economically motivated (the zero-sum) but politically (ideologically) determined.
Income is not only the measure of success, it is the variable that determines it. The more income (the ability to pay), the more protection from the risk which, by virtue of the accumulation, extends from it. No better way to protect yourself from risk than to determine who takes it when and how, and even more important, politically, why?
Why is a philosophical question, and while it is a speculative endeavor it does not preclude empirical measurement. Quite the contrary, it is empirically verifiable by very clearly defined class distinctions.
Like Skinner said about psychological motivation--you can't see it but you can measure its effects.
The effect of tax cuts for the rich, for example, has yielded an obvious zero-sum benefit. Those representing the rich, of course, argue the effect was neither caused by the benefit (accumulation of income) nor intended to cause harm (consolidation of lower-class assets into upper-class income). While the motive is speculative, the effect is clearly verifiable.
Now that the wealth is so consolidated that the only risk to be taken is the risk nobody wants, the capital accumulated is ready to merge and acquire assets distressed by the accumulation. At this point, the risk is so over-extended, the additional unemployment produced by M&A will push the economy over the edge.
The political risk (the gamma) is so extensive, even the typically complacent, ideologically compliant middle class is radicalized. The recession has made moving into the upper class so verifiably improbable, and being busted down (the risk being extended to anyone of lesser means) probable, the probability of risk is reaching its fullest, ontological extent.
The probability of risk (change) is never zero. It is always 100 percent.
Monday, August 30, 2010
Big Government
Managing the extent of the risk, especially on a global scale, requires a political-economic organization on a scale so massive it cannot fail, and we all know the risk ontology associated with "too big to fail."
A world in which there is no risk left to take would be revolutionary, but not ideal. It would be catastrophic with a tendency to completely consolidate the risk into the gamma dimension (like with the king, relying on the extension of risk into a crisis--revolutionary--proportion). It is the risk to be avoided, not nurtured by continuous consolidation into an economy of scale to expand the margin of profit with minimal innovation and growth, extending the risk into a crisis proportion.
Global, economy-of-scale extension of the risk will reduce individuals to an organized epitaxy of the consolidated risk. It will etiolate the productive and innovative capacity of individuals on a massive scale, subjecting The People to a massive extension of power that is supra-sovereign.
While a so-called "ideal" consolidation and extension of the risk may provide a measure of predictability, acting to shelter and pamper its subjects into a sense of secure health and wealth, it will, at the same time, deprive natural vigor and potential growth (the income to provide it for yourself). The profit (the distribution of reward and deprivation) has to come from somewhere.
The People will be deprived not by innovative productive capacity (technological obsolescence), but by over-extension of the risk, producing a persistent deflationary tendency on a global scale that requires "big" government to control and mainatin the extension of risk in the gamma proportion.
The extension is not to be conserved, it is to be liberated from the economy-of-scale constructions of would-be tyrants who delimit the natural rights of the Sovereign--The People--to the extent of elitist power (just like the crown did to an unnatural extent).
The "natural" thing to do is for government to exist for the primary purpose of ensuring the liberty of The People rather than providing a useful tool for tyrants. Government is then the natural extension of The People, extending the risk only to those who would deprive anyone from taking it.
A world in which there is no risk left to take would be revolutionary, but not ideal. It would be catastrophic with a tendency to completely consolidate the risk into the gamma dimension (like with the king, relying on the extension of risk into a crisis--revolutionary--proportion). It is the risk to be avoided, not nurtured by continuous consolidation into an economy of scale to expand the margin of profit with minimal innovation and growth, extending the risk into a crisis proportion.
Global, economy-of-scale extension of the risk will reduce individuals to an organized epitaxy of the consolidated risk. It will etiolate the productive and innovative capacity of individuals on a massive scale, subjecting The People to a massive extension of power that is supra-sovereign.
While a so-called "ideal" consolidation and extension of the risk may provide a measure of predictability, acting to shelter and pamper its subjects into a sense of secure health and wealth, it will, at the same time, deprive natural vigor and potential growth (the income to provide it for yourself). The profit (the distribution of reward and deprivation) has to come from somewhere.
The People will be deprived not by innovative productive capacity (technological obsolescence), but by over-extension of the risk, producing a persistent deflationary tendency on a global scale that requires "big" government to control and mainatin the extension of risk in the gamma proportion.
The extension is not to be conserved, it is to be liberated from the economy-of-scale constructions of would-be tyrants who delimit the natural rights of the Sovereign--The People--to the extent of elitist power (just like the crown did to an unnatural extent).
The "natural" thing to do is for government to exist for the primary purpose of ensuring the liberty of The People rather than providing a useful tool for tyrants. Government is then the natural extension of The People, extending the risk only to those who would deprive anyone from taking it.
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