What a Nice Event Horizo

A brief short case for Google, written by a man on the inside.

Was Gruber Wrong?

An MIT economist named Jon Gruber has been in the news recently over a series of comments that he made at conferences stating that Obamacare had to be misrepresented to the public in order for the law to be able to pass.

This culminated in a congressional hearing in which Gruber thoroughly debased himself in front of the public.

The voters may be stupid, but the bigger problem is that we have intelligent economists who nonetheless advocate for socialist health care programs, despite the obvious failures of socialism, despite the strong logical and empirical arguments against socialism.

The smartness or stupidity of the American public are less relevant than the moral and intellectual failings of elite professor/consultants like Jon Gruber. The problem with Obamacare is less within the details of implementation and more with the high level design of the thing. It was never going to have a good result from the first step. The details are just not relevant.

Democracies can sometimes achieve impressive things. They can produce occasionally impressive people. The main problem with it is that it tends to promote clever villains like Gruber who are highly capable at manipulating the masses for malign ends, and are similarly capable of convincing themselves that what they’re doing is good.

The incentive structure inherent to democracy rewards men like Gruber who are able to create policies that appeal to to vices common to the American public as it relates to medical care:

• Sloth: I should not have to work to pay the doctor what he is owed.
• Lust: Other citizens should pay for the negative consequences of my lack of sexual discipline. If I get a rash from banging a stranger, someone else should have to pay for it.
• Envy: The wealthier family down the road should have to pay the doctor for me, because they have more than I do.
• Greed: I am entitled to free work from the doctor because I want it so much.
• Pride: Because I’m an American, and because I deserve it, because I’m a good and beautiful person, my medical care should be free. Oprah said I’m wonderful, so I am wonderful.
• Gluttony: Even though most of my medical problems are due to my gobbling and guzzling, other people should pay for my heart bypasses, diabetes medicine, and motor scooters to move around my bulk so that I can fill my basket with more Coke and Oreos.
• Wrath: Anyone who says that I am not entitled to free work from doctors is an evil person who doesn’t understand my fundamental rights as an American.

Gruber is so hated in part because he, unself-consciously, exposed how he exploited a population given to reveling in its own sinfulness, especially as it relates entitlement to medical care that would have been impossible less than a century ago.

This is also another way in which selecting a leadership class based on how well that they perform on quizzes is not a great idea. Whatever Gruber’s capabilities as a manipulator, under scrutiny, he repeatedly humiliated himself and betrayed his political allies. If he were going to be a villain, then it would at least be respectable if he were to be a better class of villain.

Among conservatives who were unable to muster a strong intellectual and moral case against socialized medicine from the word ‘go,’ instead tending to oppose it because it would threaten existing socialized medical care programs, it’s foolhardy for them to act as if they were really on the right side all along. Republicans and Democrats are fundamentally on the same side of the great debate over socialism, as they must be, because the people also favor socialism, whether they know it in those terms or not.

The second that you begin quibbling over the details of some socialist program is the moment that you have already ceded the central point in question: whether or not to have the state plan and regulate medical activity, rather than distributing planning and regulation in a more decentralized way.

Republicans feign shock at Gruber’s frank talk, but they themselves tend to hire similar consultants to help them to manipulate different segments of the population at different stages of their political careers using similar minor legal-vocabulary type tricks.

Stupidity is not so much a vice as it is the natural human condition among most people, everywhere, in all places. What is vicious is the flattering of the stupid that they are worthy to rule, and even worse to tell the capable that this is what’s virtuous, and that they have no other duty except to slake the greed of the mob.

Moving from WordPress.com

Some time in the next week, I’m going to be moving this blog from WordPress.com to my own domain, just because it’s been more successful than I expected it to be faster than I thought would happen.

I’m not terribly familiar with some of the newer WordPress social features like followers/following, but using Jetpack, all of that should port over just fine to the new site. If you are currently following this blog on WordPress (there are something like ~100 of you), I don’t think that you’ll need to change anything.

If you’ve linked to this blog before, don’t worry about your links being broken: all inbound links will be forwarded to the new domain. The only person that really needs to be notified is Free Northerner, who has been kind enough to include my blog on his superb aggregator, Reaction Times.

In the immediate term, this doesn’t mean all that much for the average reader. You will just find my blog at henrydampier.com rather than at the WordPress URL. I am also changing the font and eventually going with a different theme, but will be doing one change at a time. If you type in henrydampier.wordpress.com, you’ll be redirected to the new URL automatically.

What this will mean for you:

• The current generic font will be replaced with a cooler serif font.
• The site will look better, in stages.
• It will be easier to read.
• There will be no more ads at the footer other than those that I place for my books and Amazon affiliate links for other books.
• I will no longer be free-loading off of the good people at WordPress.
• Will be more challenging for people to report-spam this publication into oblivion.
• Easier for me to add new features that make the site more accessible in search, make my writing easier to read over e-mail, and other similar additions.

I’m going to keep writing daily updates until I either become lazy or people start becoming bored with my writing.

Social Justice Warrioring As Justification for Student Loan Expenses

Universities do a spectacular job of convincing prospective students go to thousands and even hundreds of thousands of dollars into debt to gain liberal arts degrees which are mostly an instruction in post-modern Marxism.

After graduation, many of these students have a hard time finding work that can pay back their loans on a sensible schedule. This problem is more acutely felt at the middle-tier schools, but it affects elite graduates as well, more so than many people would otherwise tell you. An elite degree alone will not get you a good job.

Social justice fanatics may be fanatical because they are justifying to themselves the amount of money and time that they spent on getting a Marxist degree that sets them at odds with their surrounding society. They feel that, unless they join the class struggle, their expenditure has been wasted.

This behavior tends to present itself frequently in victims of scams: the more that they have spent on getting into the scam, the more fervently that they want to believe in it.

The American universities have hoodwinked entire generations of young Americans who have diminished life opportunities due to the same bad policies advocated by the professors at those institutions. It’s more difficult for people to admit that they were fooled than it is for them to double down on the narratives promoted by the people who betrayed them.

This is especially the case for radical feminists, who in many cases have destroyed their chances for having a happy family life — they squeal the loudest because they have the most to lose from any reversal in their gains. At a time when the happy infinite credit regime is loath to give out home and business loans to anyone with a heartbeat, it’s mostly happy to extend credit in enormous amounts to students with no qualifications.

The woman with the master’s degree in gender studies knows how much it cost her to get that degree — more than a dozen diamond bracelets from Tiffany’s — and she has to justify to herself that it was as valuable as the time, money, and energy that she or her family sacrificed to get that certification and the indoctrination that came with it.

Most of this money goes into the pockets of administration bureaucrats and into university endowments, which are essentially hedge funds with more favorable tax treatment.

The passion that social justice warriors show for post-modern Marxism is partly because our system has rigged a bizarrely high valuation for advanced degrees in degree programs that would have been seen as politically correct in the Marxist-Leninist universities of the old USSR. They believe that it was valuable because they saw the high price tag, and noticed that it was the middle-class-responsible thing to do to trundle off to college to learn Marxist dialectics.

This is a social distortion of the kind that is common to all paper money regimes, because the industries chosen for inflationary favor tend to bloat far beyond what they would be able to get to without the mass credit issuance, or the guarantee from the government that the face value of the loan will be repaid.

When the flow of money falters to the social justice training camps, so will the social justice warrioring. Ironically, the best way to destroy the American university system as it stands today would be to remove the government guarantees from student lending, permitting the loans to be discharged in bankruptcy. This would curtail the infinite bloat of tuition and put countless leftists out of work permanently.

Feminists Need Support From Men

Feminism can’t function without the widespread support by men, and that support can only be maintained if the people who shape the beliefs of men remain ardent feminists.

The most notable success of feminists in the United States has been the establishment of nationwide no-fault divorce laws, along with the enormous family court system that supports it.

This system is becoming more unstable as fewer people elect to go through with a feminist marriage. Feminism has always had trouble with marriage, equating it to a form of prostitution, but the financial relevance that feminism has, the thing that creates an enormous incentive for most women to cooperate with the ideology, is the institution of feminist marriage with all of the impressive privileges that it grants to women.

Dalrock coined the most salient term for describing the new female power: threatpoint. Women in marriage have a permanent advantage in negotiation with their husbands, in that they can unilaterally dissolve the partnership and be financially rewarded for it. With the help of a halfway competent lawyer, they can use all manner of libel and defamation to gain lifelong alimony, child support, and a share of the assets held in common and the husband’s assets as well.

What this tends to mean is male deference, supplication, and submission in marriage. It is not so much that the husband is supplicating to the wife, but supplicating to the wife’s ability to call down the might of the state upon the man and on the marriage. He lives as a free man only at her whim, and should her whims change, her will can be enforced by the state.

This is rather like a single employee at a shareholder owned firm being able to loot the company whenever, and renegotiate shareholder rights upon the arbitrary decisions of a government judge.

Men have increasingly reacted by opting out of marriage entirely, because it’s become a legal arrangement that uniquely disadvantages them, creating a shadow liability. The wife has a permanent option to buy the marital assets that she can exercise at the expense of her legal fees.

Since marriage-looting has become more difficult to pull off, as men either slack or just don’t pursue marriage, we see in the press attempts to scare up false rape accusations and other methods by which a woman could secure legal rights to men’s assets through the use of her sex and her wiles.

Again, men don’t have to even provide this opportunity: they can avoid women entirely, take a flight overseas to enjoy foreign women, visit professionals, or otherwise find alternative occupations than having anything to do with a woman who will demand deference while preserving a uniquely privileged option for herself.

This sort of change does not even have to be consciously pushed: feminists themselves are doing an excellent job selecting for men who hate, distrust, and fear the feminist state. The men who trust the system get looted in a systematic fashion. This sort of method selects for men who shirk marriage.

The key question is how long that feminists can enjoy their positions of influence. The answer is, didactically, stupidly, is as long as men permit them to enjoy their positions of influence, and not one second longer.

The idea behind the contractual family, the quick-dissolve family, is that it makes for greater happiness, that people should be permitted to pursue their own ends, and that permanent relationships of any kind are somehow oppressive, because they are inherently egalitarian.

Why Millennials Are Garbage

If I had to generalize, the main reasons why the Millennial generation is dysfunctional is because of insulation from competition, organizational chaos around them, and a resultant lack of healthy friendship. This is what people tend to mean when they use terms like ‘atomization.’ It’s not just that people are isolated, it’s that they’re isolated in a chaotic social environment.

People in the business press will often try to explain why millennials need to be treated differently to manage their unusual psychologies.

In the US, we’ve gone from what was once a highly competitive culture into a cut-down-the-tall-poppy culture that’s more common in Asian countries, Europe, and South America. Part of the reason for this is that this is the first generation to grow up with enormous numbers of new people from Asia and South America. The positive spin that’s often put on this is that it’s a less materialistic culture. Well, that may be, but primitive tribes without plumbing are also less materialistic. A certain amount of materialism is what keeps humans out of the trees.

This generation is also the first to really bear the full brunt of feminism and women in the work force.

All of this leads to caginess, social fracture, romantic nihilism, and corporate dysfunction.

This is a generation that, as children, tended to be used as chemistry sets for new psychiatric theories that tend to be developed and discarded in five year cycles. The results of using children’s brains as chemistry sets seem to be, at least from self-reports, widespread psychosis.

People whose formative experiences were having quack doctors tell them all the ways in which they were disabled and deficient (while simultaneously telling them that they were talented and special) lead to people with a strange sense of identity.

We’re what happens when you have classes for middle schoolers that explain why promiscuity is healthy and masturbation is a great idea. This was a bold social experiment, and now we know what the results look like. It’s not just the chemicals, but the pioneering psychological theories pushed onto people without much thought about the potential damage that might be done. Libraries have been filled with books of untested notions, and then those ideas have been promoted at scale at schools, universities, clinics, and hospitals.

The baby boomers get a lot of credit for being the vanguard of the ‘sexual revolution,’ but even those that have divorced tend to have an idea of what romance and monogamy means. It’s difficult for people in the older set to understand how, among young people, even in the upper classes, monogamy has become strange, and even a perverse behavior, before increasingly fewer feel the pressure to go into a sham marriage to satisfy someone’s baby rabies.

While millennials are highly educated, they’re educated in a system that has watered down standards to the point of uselessness. Meanwhile, many of those people with watered-down credentials believe that they are entitled to high positions in the workforce. This leads to frenetically chaotic competition in which employers with limited legal means to discriminate among employees based upon ability have to sort through huge numbers of people who are all desperate for work, without being permitted to efficiently test the capacities of the people looking for that work.

Additionally, many of those people are saddled with debts that push them to compete much harder for work than they probably should be. Demand for labor to repay debts (created ex nihilo, with a ‘native advertising’ campaign called K-12 paid for by the government) displaces demand for labor based on capability and interest to do the job.

That all happens in the larger context of economic chaos caused by Federal Reserve policy, egregious acts like Obamacare, and foreign competition taking advantage of the civil conflict within the US.

Faced with this pile of problems that single people can’t solve, the typical response is to pray for the apocalypse. That’s understandable. It’s also the morally wrong response.

A lot of the common life problems that millennials experience are due to people no longer really looking after one another. Families, which are supposed to fulfill this purpose, have been greatly damaged or obliterated in enormous numbers. It’s sort of like what happens when formerly owned dogs become strays. Their hair gets patchy, they don’t eat good food, they develop weird habits, they have trouble socializing, and they become incapable of doing ordinary dog-like things.

People aren’t much different. Without close friends, family, and spouses, people tend to become unhealthy, erratic, and unproductive. They begin worshiping strange idols, obsessing over useless paths of knowledge, making bad art, and abusing drugs. The people that are supposed to help other people to resolve their problems will tend to instead just do what they can to triage the dysfunction, tell the person who has made themselves worthless that they still possess essential worth, and go on to the next dysfunctional person.

The reason why we hold each other to standards of behavior, health, and appearance is because a breakdown of this process causes the breakdown of civilization: city by city, town by town, village by village, family by family, person by person.

Apocalyptic violence only makes those problems far worse and usually has multi-generational negative consequences. Chaotic civil war doesn’t select for civilized traits. The people who thrive during chaotic civil wars are killers, pimps, smugglers, and whores in that order. The higher arts disintegrate almost immediately, because delicate spirits must either coarsen or escape to survive the conflict. Keeping the electricity running and the plumbing working is a big enough challenge: producing literature and advancing technology becomes impossible.

Baby Boomers Will Be Kicked To the Curb

Because it’s not possible for the government to meet its entitlement obligations to the Baby Boomers, in part because previous generations pursued a strategy that increased the expenses of raising children to the point to which the government had to pursue mass immigration to fill the gaps in population growth, the baby boomers counting on government checks to handle their medical expenses and pensions are certain to be disappointed.

No one will tell them this, because to do so outside of a crisis situation would be to provoke an enormous political backlash for all the people involved. It will not be possible to pass a ‘responsible’ budget, because a responsible budget stiffs a large portion of the country out of what they’re owed.

The left-wing solution, which would be to seize the assets of corporations and high net worth individuals, would only provoke a capital flight of such stunning swiftness that it would be truly shocking. Unlike previous eras, in which most wealth was tied up in physical goods and inventory, now most wealth is expressed in terms of ownership rights, in terms of access to information and talent, and other intangible goods that can be transferred across borders within hours or days.

Tearing the fabric of the entitlement state would destroy the keystone of the nation-state, namely the social security and medical care programs that have been affirmed repeatedly as the only method by which an abstract governmental entity can ensure that everyone has some skin in the game with the federalizing institutions.

It’s not something that can be simply cut to balance a budget without provoking a political crisis in the way that burning buildings and lynched government officers constitute a political crisis. While it may be possible to make it balance on the spreadsheet, it’s not possible to make that balance with the capricious mob which is both emotionally and legally entitled to money which is not there.

The only ‘responsible’ move, which would be to raise taxes and lower entitlement spending, is not feasible, because lowering entitlement spending is what would provoke crises. Introducing means testing to these entitlement programs would have similar negative effects — the entire program is less important because of the actual money involved, but because it gives everyone in the society a stake in the survival of the federal institutions. If you remove that stake, you remove some important symbols of egalitarian citizenship, along with the incentive structure that makes it all work.

The honest, responsible solution would be to devolve the Federal state into a collection of smaller, regional states with governments more appropriate to the differing characters of the residents. The responsible way to handle it is to address the insolvency of the state before crisis forces a resolution.

John Paulson’s Puerto Rican Exit Strategy

John Paulson, a hedge fund manager that you might know from books like The Big Short, has been spending the last couple years promoting Puerto Rico to New York’s financial elite as a way of avoiding Federal taxes without dropping their American citizenship, thanks to a 2012 tax shelter law.

Business Week wrote a long article about it back in June, and various firms are promoting Puerto Rican real estate to entrepreneurs and investors as a way to both reduce their personal and corporate tax burden. The gist is that if you spend half of the year living in Puerto Rico, they don’t have to pay Federal taxes anymore, whereas they would need to if they were living in most other foreign countries while keeping their citizenship. US expats, unlike most other countries, are often double-taxed, although there are some minor loopholes that are more accessible for people earning below a certain amount.

The slogan ‘exit over voice’ is being implemented right now, and being used by some of the biggest names in finance. The funny thing is that it would not take a large number of people listening to Paulson to upset the fiscal boats of both the United States and various extremely left-wing American cities, which are entirely reliant on the very wealthy to handle their budgets. Paulson himself donated $100 million to the upkeep of Central Park — and it’s worth noting that, during the restoration of New York City, the renovations of the parks around the city was handled almost entirely by wealthy donors.  For comparison, Central Park’s annual budget is typically half of what Paulson gave to it.

One of the reasons why Paulson is pushing hard on the Puerto Rico point is that he has personally come into conflict with New York City’s Communist mayor, De Blasio. Whatever you think of Paulson, he’s almost certainly in the region of thousands of times more competent and intelligent than the mayor, and certainly more connected.

If there is a problem with the plan, probably the biggest one is simply the presence of Puerto Ricans, and the connection with the US government. On the other hand, from the government’s perspective, this sort of halfway measure can keep a lot of wealthy people who would otherwise expatriate to remain citizens.

This sort of initiative can do more damage to the size of the American government than 10,000 Ronald Reagans winning elections.

‘More Right’ Responds to Brin

After about a year, Michael Anissimov at More Right has responded to science fiction author and screenwriter David Brin’s attack on Neoreaction.

The key passage:

I stand by these statements. Aristocratic systems are more fiscally stable. They are more decentralized and less susceptible to failures of the central government. This is exactly the kind of “antifragile” governance our chaotic modern world needs. The current system is highly susceptible to catastrophic failure. We need less federal and state spending, and more local spending. It’s a question of resilience. Communities will shape their own fates; not have their fates shaped by compulsory entanglement with the federal and state governments. As for governance, private government is more reliable and predictable. Let others take their chances with public government. We’ve seen what public government can do, and we don’t like it.

Most of the positions advocated within the ‘Dark Enlightenment’ are, in fact, moderate positions when considered in historical context, even completely non-controversial. The only context in which they are radical is in the current one, in which radicals who share David Brin’s point of view enjoy a temporary perch of influence atop what was once (but is no longer) the largest economy in the world.

It should be noted that Taleb’s book, Antifragile, earned a $4 million advance from a mainstream publisher and was a New York Times best-seller. That book is more closely in accord to what neoreactionaries write about than it is in accord with universal-enlightenment-democracy advocated by a figure like Brin or Francis Fukuyama.

Compared to Taleb, as Anissimov writes, most Dark Enlightenment writers are ‘fringe figures’ in the contemporary sense, but when compared to the historical norm, it’s representing the ordinary, mainstream position in the European tradition.

“Believers In Markets Out-of-Step With Markets”

Jim Grant has always offered a good balance between a theoretical understanding of economics and a practical experience in working the markets. Last month, he gave a keynote speech at the Cato Institute about the post-bailout monetary era.

In the speech, he notices an apparent contradiction in markets and public opinion: people who are advocates of markets tend to believe that asset prices are currently over-valued, whereas people who oppose the market system tend to think that company fundamentals are not terribly relevant to asset prices. As Grant says in his speech, “…they distrust the resiliency of the price system.”

For the ordinary person, what the time since the financial crisis has meant is that people who have been able to attach their personal wealth to asset markets have done quite well, whereas people who have been less connected to the monetary spigot have done poorly (as in most laborers who are not bringing in money from a pension of some kind).

This is actually a common historical progress seen in other paper money regimes: enterprise suffers, while paper speculators thrive. This is because of the real process of inflation, which differs from the bureaucratic definition as a ‘general increase in prices’ as defined by a committee at the Federal Reserve.

The disconnect happens for a simple reason: there are choices about how you allocate your funds.

You can buy a stock, or you can buy products and services with that same money. That money is staying in the asset markets. You give your cash to the broker, who handles the exchange, delivering that money to the seller, and taking it as a cut. The money might eventually go into the real economy circuitously, but as more money piles into the asset markets, it tends to stay there, or get recycled into the asset markets after a brief detour into the ‘real’ economy.

In the corporate sense, the companies can do stock buybacks or they can invest into expanding operations by hiring new people, building new facilities, or giving raises to existing employees. In the case of governments, increasingly state governments have to allocate funds into the asset markets to pay past employees, while having to cut payrolls for existing employees. Apple spent $17B last quarter on share buybacks instead of spending that $17B on hiring, as an example.

One market is subsidized in infinite amounts by the Fed, and the other gets the deferred trickle-down, and even then only in certain markets.

We see this sort of time-displaced asset jump in markets like the SF-Bay, where pension money goes into the hands of venture capitalists, and is then deployed into money-losing companies and then into the hands of real estate developers & hipster hackers spending $5,500 a month on rat-infested apartments with water damage. The money gets deployed to the SF-Bay first because the people who manage the assets allocated to them don’t want to fly to the cooler markets, and the entrepreneurs aren’t either, because the point isn’t to allocate capital intelligently into profit-making structures, but to allocate capital from the asset markets into their pockets.

When you reward people for pumping up asset prices as high as possible without regard to the fundamentals, entrepreneurs will do things like fill a company with useless employees because the companies are valued based on technical headcount rather than fundamentals. If you value the company based on a compelling investor story, you get fraudulent stories that are more common to mafia-run pink sheet scams than they are to brand name venture capital firms.

Or, at a larger scale, you’ll get executives who borrow tons of money on the bond market, and then use it to build out sham product lines that never sell, or otherwise just use it to push up the stock, which they then sell, and recycle into some other investment. To people who primarily work in the asset markets, it seems like a boom, because it is, whereas the people who don’t will tend to see it as depression conditions.

If earnings are not a primary determinant of stock prices, then employees who grow earnings will be under-valued compared to how they have been in the past, because what matters most is boosting the stock price instead of the fundamentals that are conventionally supposed to be driving that price.

Because markets seek equilibrium, eventually, the disconnect corrects, with a convergence between the pumped-up asset market and the liquidity-starved market for the underlying assets.

Update

Charles Hughes Smith covers the corporate bond issuance & stock buyback trend.