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More Comfortable Lies and Painful Truths

By Mike Cronin

Comfortable Lie: Healthcare is a right. The US is the only developed country without universal healthcare. Obamacare reduced the gap. We must close that gap, but the Republican just tried (and failed) to open it back up.

Painful Truth: We have the right to life, but not the right to live at the expense of someone else. We have no more right to use the coercive power of government to take our neighbors’ money than we do to rob our neighbors in person, regardless of whether the loot is to be used to pay for healthcare.  Universal healthcare has been made to sound wonderful by the people who stand to gain the most power by implementing it; and it has been made to sound ghastly by the people who stand to gain the most by not having it. The fact that the US is the only developed country that does not have universal healthcare is irrelevant. We have been the first, or only, country to do, or not do, many things – one of which is to be the first nation established on the principles of individual liberty and freedom – which require individual responsibility and self-reliance. Reliance on the state leads to stagnation and mediocrity and the erosion of liberty and freedom.

Comfortable Lie: “fake news” and “alternative facts” are a recent phenomenon born of the 2016 election and social media.

Painful Truth: All news is fake; some news is useful.  This has been the case since the days of the town crier and before. Events that make the news involve, and/or are witnessed by, people – some of the least effective or reliable data recording and play-back devices known! (Remember the game called “telephone” from grade school?  Line everyone up and whisper a story into the first kid’s ear, then have him whisper it to the second kid, who whispers it to the third, and so on.  By the time the story gets to the last kid, it’s unrecognizable.) Sometime the “fakeness” of the news is due to misconceptions; sometimes it is deliberate, as mentioned in previous posts.  Sometimes the reason for the deliberate fakery seems not worth the effort, as when, in the days long before Photoshop, Life magazine retouched this shot of the infamous 1970 Kent State incident. Were they worried that somehow the public would assume the girl is screaming because a fence post seemed to be growing out of her head (right) in the original, and not because her friend lay dead in the street?

Or: What return on investment did the publishers of TV Guide gain by grafting Oprah Winfrey’s head onto Ann-Margaret’s body?  Did they think a genuine picture of Oprah would not sell as well at the check-out stand?

Comfortable Lie: The “experts” know when to raise interest rates, “inject liquidity,” or otherwise enact some control over the economy.

Painful Truth: An economy is an incredibly complex interaction between independent agents, the items they wish to buy and sell, and the relative scarcity of those items. “The economy” is impossible for even the most brilliant humans to understand at a level sufficient to make effective control decisions.  Invariably, those that try end up making small problems bigger and big problems into disasters. They also manage to steal from us by devaluing the currency we have left after paying taxes.  Consider: The humble candy bar cost a nickel a century ago, now it costs $1.25. The chocolate didn’t become 25 times more valuable in that time; our dollars have lost 75% or more of their buying power!

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Three Tips for Filtering the Feed

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By Mike Cronin

Last year I wrote about the war on Christmas. This year the election of Donald Trump has overshadowed the usual brouhaha over nativity scenes at City Hall. So this year I thought I’d go with something a little more practical. The guiding purpose of this blog is to make sense out of the vast array or “manufactured truth” that we are constantly bombarded with. Here are a few tips and tricks to deal with it every day:

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  1. Consume news skeptically: the first thing you need to remember about the news media is that their first concern is to sell advertising. Their second concern is often to reinforce a narrative or advance an ideological or even partisan agenda. Running in third place is actually informing you about the new events of the day. There has been much ado recently about fake news. Given the first and second criteria just outlined, almost all the news is fake to one degree or another. When there is some crisis happening, such as 9/11, and the news “breaks in” to tell us about the event as it’s happening, they haven’t had much time to adapt it to their preferred narrative. In those cases we are usually getting real news, even if some of the details are inaccurate while the debris is still falling or the smoke is still rising. As soon as one of these stories acquires its own theme music, it’s no longer breaking news. At that point you must start taking it with a grain of salt. In reality, the best way to glean something of the truth may be to examine headlines from multiple news sources, to include some foreign outlets such as the Economist, BBC, and perhaps even Al Jazeera or Xinhua.  Even so, while those sources may tell you what’s happening and why, they seldom articulate what it means and what will likely happen because of it. Personally, I like to scan the news headlines, but I also like to read intelligence. One of my favorite sources is StratFor; a private “intelligence” firm that uses the lens of geopolitics to explain the world.

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  1. Geopolitics, as you might have guessed, is not just about geography or politics, but about how geography enables or constrains political and/or economic action between nations and other actors. For example: The United States is largely regarded to have the largest economy and the most powerful military, and we are generally thought of as being the world’s only superpower. But it is not only our military might or our form of government that has led us to this condition. The United States is this way in part because of where it’s at and what it has. The most striking example of this is our river and coastal waterway system. “The Greater Mississippi Basin together with the Intracoastal Waterway has more kilometers of navigable internal waterways than the rest of the world combined. The American Midwest is both overlaid by this waterway and is the world’s largest contiguous piece of farmland. The U.S. Atlantic Coast possesses more major ports than the rest of the Western Hemisphere combined. Two vast oceans insulated the United States from Asian and European powers, deserts separate the United States from Mexico to the south, while lakes and forests separate the population centers in Canada from those in the United States. The United States has capital, food surpluses and physical insulation in excess of every other country in the world by an exceedingly large margin.” (From StratFor’s “The Geopolitics of the United States.”) Give these advantages, it would have been a shock if the US had not become an economic powerhouse! By way of contrast, consider the difficulties faced by a landlocked country. Afghanistan, for example, is estimated to have over $1 trillion worth of natural resources in the form of valuable ores and minerals. Yet owing to the difficulty of getting to and from Afghanistan and navigating within its borders, and the fractured nature of its tribal society, Afghanistan has never realized its economic potential, and is unlikely to do so in the foreseeable future. Where the United States has abundance of access, Afghanistan has a dearth. Geography has dealt a difficult hand to landlocked countries, but there is at least one way to overcome that difficulty: adopt a Western form of governance that recognizes individual rights and promotes liberty. Switzerland is the epitome of a country that can overcome geographic isolation by staying neutral in the conflicts of its neighbors and giving its people freedom.
  1. Like most, I’ve had geography classes, and classes on US. Government, but I never had a “geopolitics” class per se in my formal education. Our schools are set up to teach material as discreet subjects, but our brains are not set up that way. We learn and make memories by association. Another example might be economics. The word economics conjures up thoughts of central banks, such as the Federal Reserve, changing interest rates and conducting “quantitative easing.” Those elements of economics were among the set popularized by John Maynard Keynes, and “Keynesian Economics holds sway among the vast majority of economists today.  9i7jfxdepbiuxmllhv6wxoykazrjmeynuapn20ngnu0But in a broader sense, economics is the study of human activity. This goes hand in glove with geopolitics, as does history. Come to think of it, so does psychology. What if there was a way of learning economics (and other subjects) in a way that more closely mimics the way the human brain learns? Under such a rubric, there would be far fewer barriers between what we think of as the traditional subjects. Such a field exists.  It’s called “praxeology.” In short, praxeology is the study of volitional human action, and it is a basis for the Austrian school of economic thought.  We can borrow the concept to help us understand the world without trying to become economists ourselves.

Using these three tools (skeptical news consumption, understanding how geography can enable or constrain political and economic action, and removing the artificial barriers between “subjects,” and examining human action holistically), we can better learn to Filter the Feed.

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The Philosophy of Invincible Ignorance

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By Mike Cronin

I once heard an anecdote about a female engineering student who spoke up in the classroom and opined that 50% of engineers should be women.  The professor requested that the student take a look at the class make up. (It was overwhelmingly male.) The professor then observed that before 50% of engineers could be women, 50% of engineering students would have to be women.

A quick web search indicates science, engineering, technology, and math (STEM) are still largely male-dominated fields of work…and college study, with engineering being extremely so – to the tune of roughly 80% male to 20% female. (There was no accounting for any “alternately gendered” engineers/students.)

I don’t know how to get more females into STEM programs, or even if gender parity in STEM is a must-do, but I do know that destroying scientific rigor is not the answer.

Apparently, that is a misogynist attitude on my part.  According to a study by Laura Parson of the University of North Dakota, STEM course syllabi (and by extension all of STEM) alienate women because of the way they are worded. Her study was undertaken through the lens of “poststructuralist feminist thought.” For those of us uninitiated in the arcana of ivory-tower academician-speak,   “Poststructuralism ‘rejects objectivity and the notions of an absolute truth and single reality.’” Ahh, now that explains a few things.

Under such a system of thought, you can do or say anything you want, because in your subjective reality you’ve decided it’s OK.  That kind of junk philosophy may be the foundation (or the excuse) for the pervasiveness of what the late William F. Buckley, Jr. called “invincible ignorance.”  Imagine a world underpinned by such mental guidance: People could do whatever they felt like and get away with it…as long as they were of the anointed class approved by the elite, who could do or say whatever they felt like in their own little realities.

I mean, under such a regime you could have a central bank pump funny money into the big investment banks and the stock market even as the rest of the government taxes the bejesus out of the people’s real earnings and accumulated wealth, and call it “economic stimulus” or “quantitative easing.” Or you could have members of the elite who think the laws don’t apply to them, or that when they are caught breaking the laws, claim they made a “mistake” and not even get charged with a crime, let alone tried or convicted. Or you could wage endless wars against conditions and actions like obesity, poverty, drugs, and terrorism instead of naming your enemies and destroying them.  Or wealth could be distributed and redistributed, instead of earned and taken. Or the Supreme Court could call the Constitution a “living document” and interpret it to mean anything they liked, vice what it actually says.

I wonder how soon it will be before travelers will have to fly in an airplane designed by an engineer who went to the “Laura Parson School of Subjective Sciences and Mathematics,” who “felt” her math was correct under her own alternative understanding of the laws of physics?

 

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Quantitative Easing or Quantitative Fleecing?

By Mike Cronin

Q: You’ve heard the talking heads talk about quantitative easing, so what the heck is it?

A: Put in the most basic terms, quantitative easing, or QE, is weasel-ese for the Federal Reserve (aka “the Fed”) attempting to stimulate consumption by making up money out of nothing and injecting it into the economy.

Q: What’s wrong with that?

A: Multiple things:

  1. The Constitution gives the government the power to print and coin money. That is one of the functions of the Dept of the Treasury.  The Constitutionality of the government making monetary policy (i.e. manipulating interest rates or “stimulating” the economy) has been debated since the time of Jefferson and Hamilton.  The powers enumerated to the government in the Constitution manifestly do not include allowing it to charter a central bank (which is what the Federal Reserve is), but Congress created one anyway with the passage of the Tenth Amendment in 1913.
  2. The “money” that the Federal Reserve puts into the economy is created out of thin air. The process is convoluted, but the net effect is that the Fed accomplishes QE by changing the balance in the accounts it is “depositing” the money into, i.e. creating electronic “money” out of thin air. The theory is that by giving banks more money (quantitative) to lend at low rates (easing), more businesses will borrow that money and put it to work, which will in turn generate more commerce.  In other words, the economy will have been “stimulated.”  The problem is, after the financial crises in 2007-2009, banks are only lending money to those with top-tier credit ratings.  A great deal of the money that is meant to stimulate commerce has instead stimulated stock trading.  That’s why we can have record stock prices even as the rest of the economy (especially on the employment side) is unspectacular.
  3. Since the value of a thing, including money, is directly related to its relative scarcity, adding hundreds of billions, or even trillions of dollars into electronic circulation reduces, or debases, the value of our already existing money. If the money isn’t worth as much as it used to be, but the value of the things we buy hasn’t changed, the price will have to go up. That’s price inflation.  If your income rises with prices, inflation may not be alarming, but how often do you get a raise just because your money loses value?

Q: If I’m not going to make more money at work, making money in the stock market isn’t so bad, is it?

A: In and of itself, making money on stocks is not bad.  The problem is that there shouldn’t be any QE and there shouldn’t be a central bank!

In reality, instead of stimulating the economy, QE amounts to a second, insidious way to tax you.  The first way is income and capital gains taxes. They are painful, but at least they are overt and articulated in law.  The second is in currency debasement (the deliberate erosion of the buying power of the dollar to increase the amount of dollars moving in the system) by the unelected, unaccountable, and opaque Federal Reserve.  It is not nearly as overt, but it takes value from you just the same.

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Your Income: Earned or Distributed?

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By Mike Cronin

When you received your pay check, was it because you earned it by trading your time and skill for money, or because it was just “distributed” to you?  I suspect you answered that you earned it. Most of us do. That’s why talk about the vast “income inequality” in our country can be very misleading.

When a statistician talks about income distribution, he or she is referring to how income brackets fit in a bell curve, like in the chart above.  When a politician or a pundit talks about income or wealth distribution, we are supposed to just act as if our money has been unfairly distributed and not earned, and  certain adjustments are necessary to make things “fair.”  These adjustments take the form of taxes, if you “received” too much, or hand outs and benefits, if you “received” too little.

The statisticians’ usage of the term distribution is neither bad nor good, it’s just math. The politicians’ and pundits’ usage of the term distribution is insidious, because it sounds so fair, but it drops contexts in at least two ways.  Every dollar that is “given” by the politicians to those who didn’t have “enough” income “distributed” to them, either:

  1. Had to be taken away from those who had produced it, then “redistributed” to the “have nots;”
  2. or, it had to be minted, printed, or digitally conjured up out of thin air and “pumped” or “quantitatively eased” into the economy.

The first is literal and direct theft (though we call it income taxes) and the latter is indirect theft, because it steals value from our existing money. (Full disclosure: I work for the government, so almost my entire income during my working life has come from your taxes – and my own. The part of the government I work for is clearly derived from the enumerated powers in the Constitution, and I favor The Fair Tax vice the confiscatory taxation system we have today. Decide for yourself whether I am a hypocrite. The thought has given me pause from time-to-time.)

So, statistically speaking, we have a vast disparity between the highest income earners and the lowest. That does not mean income distribution is unfair, because it does not mean that the “haves” with huge incomes somehow just got lucky and received an unfairly large distribution of money. Maybe they earned it, maybe they inherited it, maybe they embezzled it. The fact that they have It is not proof that they got it unfairly. Likewise, the fact that “have nots” at the low end of the income bell curve don’t have more doesn’t mean that they have somehow been cheated. Perhaps it means that they can work hard, gain skills, and climb into higher income brackets.