I received this email from a regular reader in response to one of my responses to my Creationism in Florida Schools post:

“The real question that comes to my mind after reading this St. Petersburg Times poll is, should we allow popular demand to decide what is taught in science classes?”

How about for deciding what is taught in science, deciding tax policy, setting social programs, setting foreign policy, etc., etc., etc.? Should we allow popular demand to decide for these as well? I think we currently do, and I think it is with the same disastrous results. The next logical question is how should we pick the deciders? The problem is, we will never move to the next logical question.

What was considered ancient political wisdom at the time of the Caesars was: If the people can vote themselves bread and circuses, they will. Concentration of capital is the primary benefit of a taxation system. It allows big things to be done by a people of whom no individual member can afford. Government social programs (a form of insurance that used to be the province of churches, thus the tradition of tithing) are an example of dilution of capital. As is the Economic Stimulus Package that raced through our government checks and balances without much of either.

The examples of Ancient Greece, the Medici families (practically an empire unto themselves), the California legislature, and the Summerhill project (as described in the book by A.S. Neill) show that, once people get used to controlling their own disbursments as a group, they eventually regularly (but not always) behave in a responsible manner toward the group, and therefore unselfishly benefit themselves. Good things can, and usually do, come of it.

But a key word is “eventually”. They must vote themselves “pork” for long enough to see the damage done by not providing for the greater good. Our system would prevent sufficient damage to let people see how bad these decisions can be. So we are perpetually in the broad borderlands between doing something good, and fiscal collapse.

The Federal Government was set up as a coordinator between the States of the union, and to limit the power of States where it may interfere with rights of the people. Phrases like “Provide for the Common Defense” and “Insure domestic tranquility” come to mind. Early in the 20th century, legislators went hog wild amending the constitution.

Then we had a rash of arguably unconstitutional federal programs established, such as Income Tax and Social Security (technically, these are voluntary). But the federal income tax was set up to pay for the common defense (war debts). And with over 20 workers per retiree, who would mind 5% for retirement insurance, half paid by the employer? Rather than deal with charging the states that then pass the charges on to the residents as state taxes, it was more expedient to charge people directly, originally based on the ability to pay. The personal deduction was originally above the median family income. Now the deductible is well below the poverty level. Also there are now only 7 workers per retiree, and falling (14% to FICA).

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Bill Moyers recently interviewed Benjamin Barber, a renowned political theorist and a distinguished senior fellow at Demos — a public policy think tank here in New York City. Barber’s most recent book is Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole (2007). What’s the focus of this book?

[T]he global economy produces too many goods we don’t need, too few of those we do need, and, to keep the racket going, targets children as consumers in a market where shopping is a twenty-four hour business. Capitalism, he says, “seems quite literally to be consuming itself, leaving democracy in peril and the fate of citizens uncertain.”

Barber argues that we now have “push capitalism”:

They’ve got to sell all this stuff, and they have to figure out how to get us to want it. So they take adults and they infantilize them. They dumb them down. They get us to want things. And then they start targeting children. Because it’s not enough just to sell to the adults.

One prominent example is bottled water, which is often actually bottled tap water. Was there ever really a demand for expensive bottled tap water?  Yet so many of us demand it and claim to need it. Barber argues that American adults are, indeed, infantilized.

What I mean is that grownups, part of being grown up is getting a hold of yourself and saying, “I don’t need this. I’ve got to be a gatekeeper for my kid. I want to live in a pluralistic world where, yes, I shop, but I also pray and play and do art and make love and make artwork and do lots of different things. And shopping’s one part of that.” As an adult, we know that. But if you live in a capitalist– society that needs to sell us all the time, they’ve got to turn that prudent, thoughtful adult back into a child who says, “Gimme, gimme, gimme. I want, I want, I want.” Just like the kid in the candy store. And is grasping and reaching.

Barber argues that push capitalism is threatening democracy.  It seduces us into thinking that being a consumer is being a citizen.

That a citizen is nothing more than a consumer. That voting means spending your dollars spreading around your private prejudices, your private preferences. Not reaching public judgments. Not finding common ground. Not making decisions about the social consequences of private judgments, but just making the private judgments. And letting it fall where it will.

How do we combat this threat of the hyper-consumption of un-needed goods and services that is driving us deeply into debt?  Barber makes three suggestions.

First of all we, as consumers, have to be tougher. We are the gatekeepers for our kids and our families. We have to be tougher. I mean, I ask anyone out there who needs to go out at 2:00 AM to go shopping? For God sakes, wait ’til Monday afternoon.

Second thing is capitalism has to begin to earn the profits to which it has a right, when it takes real risks. Inventing something that is needed. Folks working in alternative energy, some of them are going to make real money.

Barber’s third approach is a slap at those who disparage government and naively tell us that we should look to the “free market” to solve our problems.

We’ve got to retrieve our citizenship. We can’t buy the line that government is our enemy and the market is our friend. We used to say government can do everything, the market can do nothing. That was a mistake. But now we seem to say the market can do everything and government can do any– nothing. [But] Government is us. Government is our institutions. Government is how we make social and public choices working together. We’ve got to retrieve our citizenship.

Advertisement (almost a full page ad) for a huge new casino opening soon in St. Louis, published in the November 30, 2007 St. Louis Post-Dispatch. 

I didn’t know that happiness was so easily achieved.  And from this ad, it appears that everyone comes out ahead at the casino.

Adam Smith argued that everyone will ultimately benefit when each person acts out of self interest.  For a long time now, economists have now shown that Smith’s view was naïve, and that even rational people will act in ways that leave everyone worse off.  This dysfunctional process leads to an over-exploitation and destruction of common resources known as the Tragedy of the Commons:

Free access and unrestricted demand for a finite resource ultimately structurally dooms the resource through over-exploitation. This occurs because the benefits of exploitation accrue to individuals or groups, each of whom is motivated to maximize use of the resource to the point in which they become reliant on it, while the costs of the exploitation are distributed among all those to whom the resource is available (which may be a wider class of individuals than that which is exploiting it). This, in turn, causes demand for the resource to increase, which causes the problem to snowball to the point in which the resource is exhausted.

The October 19, 2007 issue of Science (available only to subscribers online) contains a short article about three economists (Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson) who have recently been awarded a joint Nobel Prize in economics for their work regarding “mechanism design theory.”  This theory

aims to find schemes, or mechanisms that in sure that acting in self-interest will indeed lead to benefits for all.  Today, its applications range from how best to auction broadcast rights and other public resources to contract negotiations and elections.

How does mechanism design theory work?  It starts with the recognition

that unbridled self-interest doesn’t always lead to the greater good.  For example, if the people of the town were asked to chip in to build a bridge, each person would benefit by underestimating his or her share and letting others bear the cost.  So for lack of funds, the bridge would never get built.  That’s sort of a logically unavoidable lose-lose situation is known as a Nash equilibrium.

Hurwicz explored ways of tweaking the rules “so that the most beneficial state and the inevitable equilibrium state are one and the same.”  It seems undeniable that the free market, if allowed to run amok, is destructive to our long-term societal needs.  I was concerned about this issue in an earlier post, although I was perhaps melodramatic with my title.  What kind of tweaks does mechanism design theory offer to the markets?

“It’s a little Machiavellian,” says Gabriele Demange of the Paris school of economics.  “You design a game so that in the end the Nash equilibrium comes out to be what you want.”  For example, each person could be required to pay what others think the bridge is worth, thus eliminating the incentive to lie.

The article in Science suggests that mechanism design theory has promising applications in areas such as climate change.

Unrestricted free-markets are a proven method of depleting valuable resources.  It has happened over and over.  One of the most dramatic examples is the lack of commercial fishing in the North Atlantic Ocean, formerly teeming with fish.  Nonetheless, it is commonly argued among conservatives that government is incompetent and destructive whenever it intervenes in the economy, and that the freewheeling and unrestricted efforts of individual independent entrepreneurs are our only hope.  This blind faith in the “free market” often takes on a religious fervor.

I don’t dispute that entrepreneurs are great at some things, such as stocking the shelves with goods and services demanded by consumers. It is equally clear, however, that a society with long-term ambitions needs to somehow hook its energies to those long-term aims. 

The unregulated free market reminds me of the way natural selection works.  Neither unregulated markets nor natural selection “see” into the future or “try” to achieve any particular at long range end. That which ultimately evolves from either process is not necessarily “sought” by the real-time actors.  The result, again, is often the destruction of valuable resources upon which those short-term actors (and others) critically depend.

With notable and relatively few exceptions, corporations are short-term, shortsighted self-interested amoral entities seeking immediate high profit at the expense of preserving public resources.  When they are not regulated, corporations have repeatedly functioned to destroy valuable public resources.  They are especially pressured to run toward short term profit by the unregulated hedge funds that essentially run them.

I am not familiar with the nuts and bolts of “mechanism design theory” beyond the sketch presented in Science, but it sounds intuitively correct that free markets need to be tamed and tweaked in order to maintain some focus on critically important long-term needs.

Paul Krugman points his finger at the ever-more-visible source of the problem. Our economy is extremely fragile and we are all about to pay the price–we’ll not all of us . . .

Now the bill is coming due, and almost everyone - that is, almost everyone except the people responsible - is having to pay.

[The] people who should have been alert to the dangers, and taken precautionary measures, instead blithely assured Americans that everything was fine, and even encouraged them to take out risky mortgages. Yes, Alan Greenspan, that means you.

But another part of the answer lies in what hasn’t happened to the men on that Fortune cover — namely, they haven’t been forced to give back any of the huge paychecks they received before the folly of their decisions became apparent.

Around 25 years ago, American business — and the American political system — bought into the idea that greed is good. Executives are lavishly rewarded if the companies they run seem successful: last year the chief executives of Merrill and Citigroup were paid $48 million and $25.6 million, respectively.

Cartoons often communicate complex political ideas faster and better than prose.  For this reason, DI recently purchased a license from Cagle Cartoon Syndicate in order to reprint the cartoons of some of the best cartoonists in the business.  We are proud to support this work.  Today’s topic is oil. 

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If you think it’s difficult to read about the way America is wasting lives in Iraq, it’s just the beginning.  In an article entitled “The Economic Consequences of Mr. Bush,” Vanity Fair has examined the ways in which the Bush Administration has wrecked the American economy.  There is lots of bad news to share, including this:

Think of the interest we are paying, year after year, on the almost $4 trillion of increased debt burden—even at 5 percent, that’s an annual payment of $200 billion, two Iraq wars a year forever. Think of the taxes that future governments will have to levy to repay even a fraction of the debt we have accumulated. And think of the widening divide between rich and poor in America, a phenomenon that goes beyond economics and speaks to the very future of the American Dream.

Joseph Stiglitz, the author of this article, is the former chief economist of the World Bank and a Nobel laureate.  On the heels of this scathing report, consider this additional article reporting near-panic in light of recent Congressional testimony by Chairman of the Federal Reserve, Ben Bernanke.

Whenever we take the time, we are better able to see that all issues are anchored by deep issues.   That’s the kind of day it was for me today. 

I’m in Washington D.C., attending the Consumer Rights Litigation Conference sponsored by the National Consumer Law Center.   NCLC is an invaluable resource for those of us who advocate and litigate for consumer rights.  At one of the afternoon sessions today, I had a chance to hear a panel of consumer advocates discuss recent developments in federal law regarding consumer rights. 

It’s quite depressing, for the most part.  You see, well-monied corporate financial interests own Congress.   Consumer rights are on the ropes.   Many industries are free to lie, cheat, steal and to impose onerous terms on consumers, thanks to the best federal laws money can buy.  They do this through corporate immunity, preemption and the imposition of mandatory binding arbitration before biased arbitrators.  All of these were gifts from Congress in return for huge amounts of money contributed by lobbyists.

I’ve been to Washington D.C. several times before, and I’ve always reveled in the history and the architecture.  

Now, I can’t help but feel ambivalent.  It’s a city awash in immense amounts of corrupt money. 

We are a country that preaches that the People are the government, but that is less true than ever.  If you don’t believe me, just try to call your Congressional representative, mentioning that you are a concerned citizen.  See if you can get five minutes with him or her.  Then offer to contribute $100,000 to his or her next campaign and see what happens. Here’s more proof that our lawmakers have little or no conscience when it comes to bribes:  note last week’s revelation that the head of the Consumer Products Safety Commission sees no problems taking $60,000 in gifts and trips from businesses she is charged with regulating.

Back to NCLC.  Here’s what kind of work NCLC does.  NCLC members represent the interests of un-powerful people (which includes many middle class folks these days).  It provides consumer lawyers like me with information that we need to litigate cases against powerful corporate interests.  I’ve sued predatory lenders that include payday lenders, title lenders and sub-prime mortgage companies; for each of these suits, I’ve drawn upon the guidance of NCLC.  When big corporate interests break state laws, many of them are allowed to hide behind mandatory arbitration clauses that they unilaterally impose upon their customers.  The ability to do this was yet another gift from Congress. 

Before I go any further, let me make one thing clear.  Many consumers plunge themselves into debt irresponsibly and get exactly what they deserve when the debt collector comes calling.  When a people can’t afford medicine for their children, they should never go out and put a big-screen TV on the credit card.  Again, there are many (many) irresponsible consumers.  But not all consumers who struggle financially are irresponsible.  That is why consumer lawyers feel compelled to do the work they do.

NCLC helps me (and other consumer lawyers) by providing an excellent set of legal reference books, updated by practitioners.   They offer advice to those who are new to the consumer law field.   This information is invaluable.  (more…)

The theme is well focused here.  We laugh about this, though the topic (and therefore any reasonable solution) is off-limits to today’s savvy politicians.

Today, the following Associated Press article was run on page-19 of my local newspaper (the St. Louis Post-Dispatch):

An epic drought in Georgia threatens the water supply for millions. Florida doesn’t have nearly enough water for its expected population boom. The Great Lakes are shrinking. Upstate New York’s reservoirs have dropped to record lows. And in the West, the Sierra Nevada snowpack is melting faster each year.

Across America, the picture is critically clear — the nation’s freshwater supplies can no longer quench its thirst.

The government projects that at least 36 states will face water shortages within five years because of a combination of rising temperature, drought, population growth, urban sprawl, waste and excess.

“Is it a crisis? If we don’t do some decent water planning, it could be,” said Jack Hoffbuhr, executive director of the American Water Works Association, based in Denver.

Water managers will need to take bold steps to keep taps flowing, including conservation, recycling, desalination and stricter controls on development.

The price tag for ensuring a reliable water supply could be staggering. Experts estimate that just upgrading pipes to handle new supplies could cost the nation $300 billion over 30 years.

“Unfortunately, there’s just not going to be any more cheap water,” said Randy Brown, utilities director for Pompano Beach, Fla.

Truly, this is a major story; our country is running out of a critically important resource.  Combine that lack-of-water news, though with the equally unreported news that the world is running out of another critically important resource: oil. How bad is it?  I’ve previously reported on the issue of peak oil before (and see here).

Recently, I’ve read a book that, even if it is only partially accurate, should be front page news in every newspaper in America, day after day.  

The book is The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the 21st Century, by James Howard Kunstler (2005).   Kunstler writes that

America is still sleepwalking into the future.  We walked out of our burning house and we are now headed off the edge of a cliff.  Beyond that cliff is an abyss of economic and political disorder on a scale that no one has ever seen before.  I call this coming time The Long Emergency.

Kunstler writes that the main problem is the end of cheap oil and natural gas.  These resources

underlie everything we identify as a benefit of modern life.  All the necessities, comforts, luxuries and miracles of our time-central heating, air conditioning, cars, airplanes, electric lighting, cheap clothing, recorded music, movies, supermarkets, power tools, hip replacement surgery, the national defense, you name it-we owe their origins or continued existence in one way or another to cheap fossil fuel.

Kunstler argues that the steady technological progress we’ve experienced thanks to cheap oil has tricked us “into a kind of Jiminy Cricket syndrome, leading many Americans to believe that anything we wish for hard enough can come true.”

What are Kunstler’s facts?  Here are some of them (starting on page 66):

The total planetary endowment of conventional nonrenewable liquid oil was roughly 2 trillion barrels before humans started using it.  Since the mid-19th century, the world has burned through roughly one trillion barrels of oil, half the total there ever was, representing the easiest to get, highest-quality liquids.  The half that remains includes the hardest oil to get, lowest quality liquids, semi-solids, and solids.

Worldwide discovery of oil peaked in 1964 and has followed a firm trend line downward ever since. (more…)

Senator Bernie Sanders writes that the American Middle Class is being decimated.  He cites some interesting numbers.  Here’s a couple shockers:

Robert Frank, a Wall Street Journal reporter, has detailed the lives of the rich and famous in the book Richistan. He writes that households with a net worth of between $100 million and $1 billion last year spent an average of $182,000 on watches. Meanwhile, in the real world, 400,000 qualified students were unable to go to college because they lacked the funds.

Frank also details how during this one-year period the economically elite households spent $311,000 on cars, $397,000 on jewelry and $169,000 on spa services. At the same time, President Bush presented a budget in which he proposed cuts that would deny child care to 300,000 families and food stamps for 280,000 families.

Why fear the Invisible Hand?  Because the invisible hand is evil.  As construed by those conservatives currently in power, it is the economic equivalent of the Devil. 

This conclusion is going to come as a shock to many conservatives, because they give homage to the invisible hand as though it were the Fourth Person of the Holy Quartet. 

Before going further, let’s consider the literary origin of “the invisible hand.”  The phrase was coined by Adam Smith, as recounted by Wikipedia:

In The Wealth of Nations and other writings, Smith claims that, in capitalism, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”. In detail, a free competitive market ensures that those goods and services perceived as most beneficial, efficient, or of highest quality will naturally be those that are most profitable. Thus, self-interest striving for profit has the side-effect of benefiting everyone by increasing standards. Smith saw the mechanism for this as being the free price system.

Conservatives have grabbed this metaphor of the invisible hand as though it were both descriptive and prescriptive.  The current use of the phrase by conservatives is admittedly more expanded than Adam Smith’s original use.  The modern conservative claim is not only that the invisible hand controls the economy.  They also claim that the invisible hand should be in charge.  They believe that millions of private purchasing decisions are automatically and deftly coordinated by the omniscient and omnipotent Invisible Hand. We do the bidding of the Hand.  We benefit “the good of the community as a whole” when we buy our whiskey, our triple cheeseburgers, our stacks of gambling chips, our Barbie Dolls and our Hummers. 

Conservatives are convinced that the Hand orchestrates all of our private local urges into decisions that are also “best” for our communities and our world. When we race out to buy anything at all, then, the Invisible Hand allegedly smiles Its approval. To violate the Will of the Invisible Hand would be to contravene the will of God, for conservatives.  Lucky for us, however, even our most impulsive seemingly-irresponsible purchases cannot, by definition, violate the Will of the Invisible Hand.  Everything we buy is pre-approved by the Invisible Hand.  Foolishness is the equivalent of intelligence, by the grace of the Invisible Hand.

To be socially responsible (according to conservatives), we don’t need to give any thought to our purchase decisions.  Nor does government need to regulate any industry.  It’s all taken care of by the Hand.  “The Free Market will take care of it,” conservatives assure me, “no matter what it is.”  It is the Government that screws up the economy; the remedy is to stay out of the way of the healing powers of lassie faire, they say, i.e., kill government spending.  When we stay out of the way (by not interfering with the Majesty of the Hand), the Invisible Hand watches out for us, takes care of us and solves all problems in an utterly perfect way.   That’s what conservatives claim, even though they dramatically and irresponsibly increase government spending.

I disagree.  It’s time to judge the Invisible Hand by the damage It has wrought. It’s time to be irreverent, even blasphemous.  It’s time to mock the Hand and then kill it.

Under the Hand’s reign, we have seen our forests, soil and air contaminated.  The Hand has repeatedly given Its approval when we frivolously waste non-renewable resources like oil and fresh water.  The Hand has is conspicuosly silent now, however, in light of the total loss of commercial quality fish from most of the North Atlantic. The Hand approves that we are spending big money on foolishly while many of our schools are desperate for funds.  The Hand has allowed pesticides and toxins spread far and wide, despite the fact that we have almost no idea how these chemicals are affecting the health of humans. Our individual spending decisions are making us fat and sick and stupid, but that’s all OK by the Hand. 

All of this can only lead to one conclusion. The Invisible Hand is not benevolent.  Based on the waste, pollution and reckless spending allowed by the Hand, it is clear that the Hand is evil.  It’s time to publicly acknowledge the Hand’s evil and destructive intent so that we can make some big changes.  What’s the biggest change? 

We’re going to have to start thinking for ourselves when we make purchases. 

We can’t depend on the Invisible Hand to keep us “helping” our communities in blissful ignorance anymore.  No purchase should any longer simply be presumed to be beneficial–many purchases are damaging to the community and to our environment. There needs to be a counter-weight to private decisions to consume and confiscate.  No purchase should any longer be considered completely local–many products have wide-ranging damaging effects.  Nor should purchases any longer be presumed, in the absence of evidence, to be community-enhancing or amoral.  Many private purchases are destructive and immoral. We need to acknowledge that dollars are not fungible and that every purchase has moral consequences.

We need to start thinking more when we make purchases, or else we will continue to crap up our planet to such an incredible extent that the next generation will curse us every day for our failure to think.   

It’s time to kick the fiction of the Benevolent Invisible Hand out of our lexicon.  But first, it is time to expose the Hand for what it has become for too many people who currently hold political power: The Invisible Hand is an excuse for our collective refusal to think, our failure to care about others and our failure to care about even our own future. 

The current version of the Invisible Hand amounts to a total abdication of responsibility. It is a license to hurt others and destroy our own future. It’s time to kill the Hand before it kills us.

This video and attached article is so incredibly depressing, to think that this man is the leader of our country. Did I say depressing. Maybe I meant embarrassing or horrifying.   Especially horrifying in light of the economic shipwreck that is going to happen under the not-very-learned command of George W. Bush.  So much of this was totally unnecessary. The next generation will be often wondering why we betrayed them.

This set of charts is shocking.   It’s part of a website entitled “Too Much.”   Here’s an excerpt from the “About” page:

Each and every week, Too Much explores excess and inequality, in the United States and throughout the world. We cover a wide swatch of economic and political territory, everything from executive pay and lifestyles of the rich and famous to the latest research insights on how staggering income and wealth divides are impacting our health and our happiness.

In Osama Bin Laden’s latest screed, one of the things he exhorts people to do is give up interest. The charging and paying of interest is forbidden in strict Islam. Known as riba (increase), it was the subject of some of Mohammed’s most vehement condemnations. One can see why with only a cursory look at history. Namely, moneylending was largely an uncontrolled practice that guaranteed a class structure that could not be broken, incurred debts that led to involuntary servitude, and was an all around nasty way to keep the serfs in the fields. Mohammed, rather than suggesting some form of regulation, vented spleen and condemned it outright.  Christians, of course, had their own attitude toward it, which led to out-groups being the only ones allowed to lend money (Jews, famously, but not exclusively). The prohibition was based mainly on two Biblical passages (both Old Testament): Leviticus 25:36–37 (”Take thou no usury…”) and Ezekiel 18:13 (”He that have give forth usury, and hath taken increase: shall he live? He shall not live…”).

The Catholic Church used to excommunicate moneylenders. The law said: Quidquid sorti accedit, usura est “what exceeds the principal is usury.” (The Italian Renaissance, aside from great art and a few geniuses, also revolutionized banking. The bankers noted that this applied only to loans, not contracts, so they erected a facade behind which they could do exactly what they wanted. They made no loans. They traded in Bills of Exchange. Technically, it was a sale of one kind of money in exchange for another that could be paid at a future date. As rates of exchange varied, interest was built in automatically without there seeming to be any charged.)

Islam is not so vague, though. In this article the author explains the prohibition in no uncertain terms. Lending anything with an expectation that it will be repaid plus a profit is prohibited. Period. There are of course downsides to this, as shown in this article. What is permitted in Islam is charity—in fact, there is built in a poor tax, called a Zakat. People of sufficient means pay a percentage of their wealth for the maintenance of the poor.

Which leads us directly to the major problem with such a prohibition (and the assumptions entailed by claiming that the Zakat is just substitute): it is based almost entirely on a notion of static wealth, wealth which is not subject to any deterioration by simple, even low-level inflationary tendencies, of by the more complex medium of economic dynamism based on supply and demand and the introduction of variable factors—population growth, invention, drought and famine, excess harvests, disease, life expectancy—factors which guarantee that the value of coin, no matter how it is determined, changes, because the world in which it exists changes.

In short, there is no mechanism for the predictable increase in personal—or community—wealth. Such increases are made by conquest or accident in such a system. If it is assumed that one may not profit from one’s property other than through the price charged for product, then the system is likely to remain static at best, deteriorating at worst.

Which is what has happened to all the great empires, including the vast and impressive Islamic Empire of the 8^th, 9^th, and 10^th centuries.

All of them accrued wealth through conquest—Greece, Rome, Egypt, the Hittites, even little Israel, which basically kicked the original owners out of Canaan and absorbed what they found. Islam spread like fire in the first couple centuries of its existence, absorbing numerous principalities, and their productive capacities and, most importantly, their latent wealth. The Greeks and Romans had the best handle on how to keep it—through complex trade systems and, in the case of the Romans, premodern banking methods that allowed for variation of local value, periodic economic fluctuations caused by anything from bad harvests to a local invader. Others didn’t really have a good handle on it. Islam continued as an Imperial force by eventually absorbing Byzantium, but even they had to get into a little bit of the borrowing game when Christendom came bashing on their door as competitor. In the transformation of systems that occurs during major wars, a kind of tax on devastation and rebuilding occurs that looks, sometimes, like growth, but really it’s a reconsolidation into smaller and ever more concentrated realms.

It was those Italian bankers that eventually, through the methods they developed and which later turned into full-blown credit systems after the Reformation, that spelled hegemonic doom for any system that couldn’t—or wouldn’t—keep up.

I do not wish to go into a long disquisition about the benefits of credit systems—or their myriad faults— but it is clear to anyone not hampered by culturally-enforced expectations that any system which does not allow for the possibility of one’s neighbor collapsing is itself doomed. Islam does not prohibit trade. Trade is great, it is necessary, it is the thing that keeps the whole show running, but it is not itself a static entity. If, say, after a century of trading commodities with your neighbor, one year a blight wipes out the crop of whatever you’ve been happily trading for. Your neighbor now has nothing to trade. You now have no one to dump your exports on, because they can’t afford to pay you. You either look for someone else to take it, or…

Or what? You now have an excess of what you had before. You can dump it by discounting it to someone who doesn’t need it as much, which threatens stability on the homefront because you’re going to take a loss. You can give it to your longtime trading partner as charity, but now you have a shortfall in what you’ve been getting from them and have to make up the difference from someone else, with whom you do not have the same arrangement. The whole edifice teeters.

Or you can set up credit arrangements and base payments to your domestic producers on what your neighbor will pay you once they’re back on their feet, which of course means you still have the expense of subsidizing those domestic producers while you wait, which is an expense you wish to recoup, so the credit you’ve extended comes with an expectation that they will pay a bit more to cover that expense (over time so it’s not a crushing payment) and gives them time to recover.

That’s called Interest, that fee, and in this scenario is helps maintain the overall stability of both systems.

But there’s a far more personal element in the prohibition against interest that is not often discussed and is more to the point. (more…)

These are not poor cities, yet their citizens prefer getting around by using bicycles.

It’s been interesting watching Ron Paul hammer the other candidates of both parties on the issues Iraq and our out-of-control deficit economy. The Republican elite and the corporate media have no idea of what to do with Paul–he just won’t fall in line.

Here are a couple examples of Ron Paul articulating his positions on these two issues (and others).

In an article from the Washington Post we learn that the United States has slipped in the ranking for life expectancy in the world to number 42. Douglas Adams aside, this is not a good thing.

The article lists a good many factors contributing to this fact, which seems paradoxical since, as stated, we spend more on health care than any other nation. I’m not surprised. Americas in general live as though built like Abrams tanks. We work hard, we party hard, and we loaf hard. We eat badly, pay no attention to our personal health, assuming that if anything really goes wrong “the doctor can fix it.” We believe, innately, that we’re indestructible and can do anything. This leads to careless habits. One factor cited is that 45 million of us lack health insurance. Which brings me to the peeve of this post.

There is a talk show mouth named Mark Christopher.  His show is out of Nashville, but you can hear him (in St. Louis) on KTRS 550. This guy is a Rush Limbaugh wannabe. And one of his horses to ride hobbyistically is an ongoing rant against national health care. He’s phobic about this. Every other day he has some little tidbit about how bad health care is in other countries that have a state health care system. He commented yesterday on this report in the Washington Post. Now, aside from the fact that he cherry picked the article, which cited factors he then went on to name as if the Washington Post had not, he displayed a profound case of Innumeracy.

He said (I paraphrase) that in a country of 300 million, 45 million people is a “drop in the bucket.” Meaning that we ought not overturn our wonderful private health care system (which is going to bankrupt us eventually) for so few who just fall out of the system. 45 million out of 300 million is 15%. That is hardly a drop in the bucket. To put that in perspective, that would be one and half out of ten, or three out of twenty. Fifteen of every hundred people. Which means that on an average city block (which I determined by standing on my street and counting) of roughly 35 houses with an average of four people per house, there are around 21 people with no reliable health care. On one block.

Let’s assume for the sake of argument that among those 21 we have 2 or 3 cases of tuberculosis (which is a rising problem in this country). Tuberculosis is highly infectious. How fast might that spread among the various blocks around us? Another way to look at it. The worst battlefield casualties the United States ever experienced were in the Civil War, which sometimes reached 30%. They averaged between 12 and 18%. A modern army–-ours—regards 5% heavy and anything approaching 10% unacceptable. And fighting a war is by far more expensive than average health care costs. The unbelievable inability—or, more likely, carelessness—of someone with a national talk show to understand the most basic arithmetic in this way verges on criminal.

If 15% of our population dropped dead tomorrow, I assure you we would notice. It would not be “a drop in the bucket.” We are nationally anxious about 6 coal miners in Utah who may be dead and if they are, we will demand an investigation. We can’t 6 people dying in a mining accident. But in the sphere of health care, 45 million people become a drop in the bucket. The phobia that has taken root over this issue has become one of those insurmountable arguments that has run headlong into panic.

We Americans—I think all of us, it just depends on what aspect of our lives is under discussion—our suspicious of government. If it’s not national health care, then it’s Big Brother. Liberals, conservatives, and combination thereof, Americans can find something we don’t want the government to run. We have always been like this, it’s nothing new. And we are often stupid about it. But the world is shrinking and in so doing making it less and less possible for us to escape the consequences of ill-considered, knee-jerk prejudice. I don’t care how this issue gets resolved. Even if we do end up with some kind of federalized health care system, we will abuse it, it will cost too much, and it will still be bent to the service of a nation of people who act like they can do anything they want—play, eat, party, work, or loaf—too much and think nothing bad will come of it.

Which means that the most cost-effective health care system—prophylaxis—will not be the one that gets the priority. Insurance companies must be made to offer things like well baby care and prenatal coverage now. Taking care of a problem before it becomes something that lands us in the emergency room costs far less, but we don’t, for the most part, do that now. And we have a absurd and irrational devotion to extending Life far past any possibility of meaningful living, which is still where the bulk of our expense here falls (though obesity related health issues are rapidly catching up).

Whatever we do, the basic tenets of good health care will probably still be ignored by a people who think they don’t have to pay attention personally to their own health care. Which is reflected in the Washington Post article as well. But I am profoundly tired of the misinformation spread by both sides of the debate, and the incredible lack of grasp people who ought to know better have on the most basic aspects of problem-solving.

End of rant. You may now return to your regularly scheduled panic.

Once in a while, I tune into KJSL, a St. Louis Christian talk radio station.  I do this as part of a conscious effort to make myself listen to people with views that are dramatically different from my own.  Perhaps I will understand those views better if I take the time to listen more.

While I was driving last week, the station featured a show called “News and Views,” hosted by a man named “Dr. Larry Bates.”  The host repeatedly painted the future of the US as bleak, thanks to irresponsible financial policies by the federal government.  Because I have some sympathy with that general conclusion, I continued to listen.  It turned out that Bates was predicting the imminent financial collapse of the United States.  Although I doubted that conclusion, I continued to listen.

Bates then indicated that he is also a big proponent of religious “End Times.”  In short, he believes that Jesus will soon be returning to Earth in order to sort things out.  I have no sympathy for this religious view.  In fact, I find End Times beliefs to be irresponsible and destructive for the numerous reasons.  For example, I do not hold the Bible to be inerrant. Based on my study of the Bible, although it offers some good stories and some reasonable moral instruction, it is also rife with bad advice, contradictions and senseless violence.

“Dr. Larry Bates” wears many hats.  He claims to be an economist, publisher, editor, former member of the Tennessee House of Representatives, former bank CEO and a “nationally recognized expert on political systems and the Federal Reserve.”  Bates is also the President of First American Monetary Consultants, Inc. (FAMC), an organization that allegedly does “economic and market forecasting, in addition to offering a wide variety of other End Times services.  “News and Views” is a syndicated radio show, available dozens of radio stations across the U.S.  Larry Bates is thus well known in some circles.

After listening to Bates for only a few minutes, I learned that the United States needs to immediately and mercilessly bomb Iran because of what “those people” have done to “support terrorism.”  I also learned that we need to support Israel without question, based upon what the Bible says.  I persevered to the end of the show, saddened by and frustrated with the flimsy manner in which Bates attempted to support his conclusions. 

At the end of the show, it was announced that Bates was going to be featured at a half-day conference in St. Louis, I took the bait.  I thought it would be interesting to better understand the basis for the views of End Times (both economic End Times and religious End Times) proponents. The conference was called “Perilous Times: Significant End Time Events.”  I paid $20 and showed up at the Crystal Ballroom of the Renaissance St. Louis Grand and Suites Hotel in downtown St. Louis.  Here’s my ticket:

                              
At the registration desk, I received a folder full of information.   One of the pamphlets advised me that legalized gay marriage is a major obstacle to democracy:

When the US Supreme Court ruled in Lawrence v. Texas last year that sodomy is a constitutional ‘right,’ the director of the lambda legal fund-a radical homosexual-agenda of pressure group-gleefully explained that this marks the beginning of the end to traditional marriage.

Another pamphlet advised that the United States is officially a Judeo-Christian nation.  It quoted William Penn: “Those people who will not be governed by God will be ruled by tyrants.”  This pamphlet, printed by FAMC, “proves” that the United States is a Christian nation based upon the fact that the Constitutions of many of the states mention “God,” or “the Creator.”  As though non-Christian religions don’t believe in a “God” or a “Creator.”

There were numerous products displayed and advertised at the conference.  These products are the sorts of things you’ll need to have if you are going to be prepared for the economic and religious End Times.  If you want to prevent cancer, you need to load up on Glutathione.  The pamphlet says “your life depends on Glutathione.”  To buy it, contact FAMC, according to the pamphlet. 

What if you just want to make sure that you have access to “the most universal antibiotic” known to man, colloidal silver?  It’s a “tasteless, odorless, non-toxic, purer, natural substance consisting of submicroscopic clusters of silver particles suspended by a tiny electric charge placed on each particle.” According to the pamphlet, you drink it.  It kills all those pesky pathogens and protects all your good cells.  According to the pamphlet, it is useful for treating allergies, boils, herpes, stomach flu, lime disease, gonorrhea, bladder irritations and chickenpox.  The list goes on and on.   Colloidal silver can be used vaginally, anally or dropped into the eyes.”  You can even make your own colloidal silver out of silver wire, using the $189 generator you can buy from FAMC. 

Another pamphlet advised me of my right to participate in jury nullification whenever anyone is being prosecuted for a gun crime. That is because “corrupted, anti-gun prosecutors and judges are common.”  This information is distributed by the Fully Informed Jury Association.

After the economic collapse, you’ll need to make better use of all that expensive gasoline that all of us are going to need.  Therefore, make sure you buy the “Power Plus Mpg” additive.  Using this Power Plus, you can save 25 to $.50 per gallon.  During his talk (which I’ll discuss in detail further down), Larry Bates bragged that his 5 mpg SUV improved its mileage 50% (to 7.5 mpg) after he started using this Power Plus.  Those attending the conference were even invited to sign up as Power Plus distributors. 

Additional Pamphlets were available advising how to support efforts to find those “30,000 POWs [who] were known to be behind alive after WWI, WWII, Korea, Vietnam, Persian Gulf and War on Terror.”  There was also a table full of conservative-message bumper stickers.    

The nice old fellow minding that table offered me a chance to take any one of those bumper stickers for free.  (more…)

In recent news, another highway bridge collapsed. Every 20 years or so, a major bridge fails unexpectedly. The nature of civil engineering is to understand how things fail, and design the next generation to avoid that failure. Each failure leads to better designs. Each of the major bridges that collapsed had been certified as less-than-acceptable, but no imminent danger. As are a significant fraction of bridges built decades ago. So why do they fail?

The compromise part of the equation is that a perfectly safe bridge can be built, for about the cost of a few days of our occupation of Iraq. This is a huge number, compared to the cost of a normal bridge with a known, small statistical chance of failure.

The current cost estimate to bring all of America’s thousands of sub-standard bridges up to spec is still less than a month of our expensive venture over there. Prohibitive. But this recent collapse has people in power considering the option.

The basic cause of bridge failures is a combination of simply wearing out and changing conditions, like the riverbed, the weather, and increased demands on it. Failures happen.
A more complex underlying cause is politics. How can a bridge get built, and who will pay how much for it? How can congress allocate so much public money to benefit apparently a small area? How much safety can builders put in and still win a bid? How much money can be allocated to upkeep? This last, critical and unglamorous, number is where bridges fail. If every bridge had a full time engineer and maintenance crew with an uncapped budget, then no bridge would ever fail. But how can so much money be spent, be justified, if the end result is…nothing?

Bridges have to fail occasionally to remind people that maintenance must be paid for. How often is optimum? Well, history shows that about once a generation is about right.

This time, fewer lives were lost in the collapse than can be expected to be saved by having the corridor closed. (Multiply fatalities per interstate mile in urban areas by the number of interstate miles that will be closed for how many months while the bridge is replaced). Had it been winter, the death toll would have been higher.

The shocking part is that it could have been any of us on the bridge at the time. I’ve driven across it, myself. But I was more impressed by the 1983 rural Connecticut bridge that failed in the middle of the night, and travelers kept sailing into the abyss until someone managed to stop in time and report it.

The topic of usury laws and payday loans arises frequently these days. Payday lenders commonly charge interest rates of 300%, 400% or more on their loans to desperate consumers. Why do I suggest these consumers are desperate? It’s because they are writing postdated checks to payday lenders, agreeing to give up a large chunks of their next paychecks, and paying exorbitant interest rates in the process. How many people who are not financially desperate would be willing to sign away the proceeds of a future paycheck and pay 450% interest for this “privilege”? With repeated real-life scenario as the backdrop, the question often arises: do usury laws exist anymore? This topic has been addressed by Christopher Peterson in a comprehensive law review article entitled “Usury Law, Payday Loans, and Statutory Sleight-Of-Hand: an Empirical Analysis of American Credit Pricing Limits.”

It’s not hard to determine what motivates Peterson’s work. He writes that the American consumer is now dealing with “a new, largely unregulated credit marketplace.” The center of the storm is the payday lending industry which, “despite spending millions on lobbying and public relations, is at the center of an inferno of rage and public controversy.” Peterson takes time to discuss the history of usury laws throughout the history of the American republic. Usury laws, according to Peterson, have “historically been the foremost bulwark shielding consumers from harsh credit practices.” At the time our country declared its independence, no state had an interest of greater than 8%. Benjamin Franklin warned of the social and moral dangers of indebtedness:

The borrower is a slave to the lender, and the debtor to the creditor, disdained the chain, preserve your freedom; and maintain your independency: be industrious and free; be frugal and free.

Peterson writes of a “second phase” of the Republic, starting in the late 1800s, when groups of high-cost lenders known as “loan sharks” charged triple digit interest rates exceeding 500%. The did this through “salary-assignment” schemes that were so devastating to borrowers that the FTC eventually cracked down on them (see CFR 444.2(a)(3)). Another approach to social reform was to “raise the old traditional usury limits to a point where more mainstream financial institutions could profitably land of small amounts to working-class borrowers.” States follow the strategy, typically kept interest rates at between 24 and 42% per annum.

Competition among lenders and aggressive law enforcement worked reasonably well. Things changed again in 1978 with the Supreme Court decision of Marquette National Bank Versus First of Omaha Service Corp., 439 US 299 (1978). In Marquette, the Supreme Court ruled that a national bank lending money across state lines must apply the usury laws of the bank’s home state, rather than the usury laws of the borrower’s state. This decision was based upon the National Bank Act of 1864. The Marquette decision was an invitation for national banks to make a lot of money by relocating to South Dakota or Delaware, states that did not have meaningful usury laws. The result, according to Peterson was “a frenzied race to the bottom and American usury law.” State-chartered banks quickly pressured state legislatures to grant them the same power held by nationally chartered banks in the form of “parity laws.” When the dust settled, what remained was

a grand illusion. Every state in the union, save two, had a relatively aggressive usury law on the books. And yet, even though no legislature had ever passed a law saying as much, the new synthesized usury rule became: any bank can charge any interest rate it wants anywhere it wants. (more…)

I was checking on the latest news about the Creationist Museum, and found myself browsing a conservative blog site, Townhall.com. The hot issue of the day is debunking the whole Al Gore Global Warming issue. Try this post, for a taste.

What truly bugged me is that, among the innumerate and sometimes marginally literate responses, there was a kernel of actually reasonable doubt. Those who follow the actual science (a minority on that site) know that there is no doubt about the present warming trend, nor about the unprecedented rise in fossil CO₂ in the last century. However, there is no certain model for the causality leading to or spawning from these facts.

Doomsayers love the fantastic, sudden, apocalyptic models of global warming that Hollywood likes to portray. It’s quite dramatic, and cannot be ruled out. However, most models show that the big and civilization-altering changes that are likely to occur will take generations to notice. The present conservative movement is more interested in the next fiscal quarter than the next generation. Therefore, this is not a “real” problem.

The real problem with the Gore campaign is that it is covered as a binary issue. Either Global Warming is a big and serious and immediate problem that requires drastic solutions, or it an imaginary scare tactic. The truth is somewhere in between. Fossil atmospheric carbon dumping is (and will be) a tiny blip in history. Maybe three centuries total out of the almost hundred centuries (so far) of human civilization (or 46,000,000 centuries of geological record).

What scares me is the total ignorance expressed of what Global Warming really is. Everything I read talks about the average temperature rising. Most people hear this and assume that a degree of temperature rise means adding a degree to every reading we now have. In practice, it means adding energy to the weather system, which means wider spreads from highs to lows. Sharper warm and cool fronts. Bigger low and high pressure systems. Faster transitions from one to the next. Bigger winds. Bigger storms.  Heavier winters and harder summers. (more…)

Just wanted to pass along this link to an article by one of favorite columnists.  He goes over the edge some days, but most of the time he is spot on in his rantings!

Enjoy -

As reported by Newsweek, on May 11 Barack Obama told Detroit that it could do much better.  This scolding came at a time that American automakers “lost more than $16 billion last year, while Toyota earned a record $14 billion and surpassed GM as the world’s largest automaker.” Obama castigated Detroit

for driving our dependence on foreign oil. “For years, while foreign competitors were investing in more fuel-efficient technology for their vehicles, American automakers were spending their time investing in bigger, faster cars,” Obama told an audience stunned into silence after greeting him with a standing ovation.”Whenever an attempt was made to raise our fuel efficiency standards, the auto companies would lobby furiously against it, spending millions to prevent the very reform that could’ve saved their industry. Even as they’ve shed thousands of jobs and billions in profits over the last few years, they’ve continued to reward failure with lucrative bonuses for CEOs.” What played as an act of courage in the rest of the country, is being seen as political suicide here in Detroit . . .

After reading Erich’s post, I thought I’d put this up.  I wrote it–most of it–some time ago, for a different venue, but I’ve added to it since, and, well, along with Erich’s it might add more flavors to the stew of memory.  So.

I have friends who thought it was a great thing when Reagan became president, who now reject any such accusation, and refuse to believe it when I remind them that they said encouraging things about him when he took office.  One quote, during a ceremony broadcast on television, that I’ll never forget: “He just looks like a real president!”

Time passes, policy comes to the fore, and most of those people no longer recall these initial bouts of near-patriotic enthusiasm.  They have conveniently forgotten.

I didn’t li