Sunday, May 17, 2020

The Unescapable Logic

Let's take a look at why The Shape of Things to Come was correct as a prediction (and please remember this analysis was done at a time when there was fierce speculation even among experts that were in no way as accurate as the post).

The first principle is that the economy is a system that is always quasi-stable near some equilibrium point. Economic expansion means that excess goods are produced along with the chits to redeem  them by people who somehow are considered to have merited the chits. An economic contraction means that the causal relations for incentivizing the goods production and chit distribution squirrel cage has broken down. If this goes on long enough, the consumption necessary to sustain relative prosperity overtakes the production and a cycle of poverty can set in.

In the first round of lockdowns, we as a group decided to forego prosperity for the imaginary chits of safety. Consumption went along, but not at much of a pace that it would jeopardize the imaginary value of the chits (money given out by a government with a large printing press). What did happen, however, was that the squirrel cage of work and value was put askew. Disproportionately, the service sector was nullified and the chits standing in for the value of an education were devalued. This might go on for a bit and perhaps nothing would be the worse since much of US education is a worthless waste of time, anyhow. But, there is a but ...

What if that adjustment to the running of the squirrel cage caused enough people to decide that the education was not worth the effort? There will always be some. But what if this small trickle became a gusher? Would there be a corrective mechanism within the system to put it back in line? For STEM degrees from first tier universities, of course. But not necessarily for the rest, most of whom incidentally seek to redeem those chits in the recently nullified service sector. That amplifying confluence of forces may have an effect outside its initial expectations.

Those chits rely on the belief that they can be redeemed later in life. When that belief is broken, an alternate valuation must be adopted. The problem with university educations are that they are largely inherently worthless and already many of the students, if not the majority, understand this. Why pay for it if it is not necessary?

If enough excess value is drained by the system through consumption, we will reach a point where subsidies must be prioritized. The student loan system stands out as one where $1.4T of debt is probably too much to write off. We cannot pay students not to pay their loans even if those loans are ultimately back to the government. So some proportion of that debt will be reexamined by the students and if found worthless, a wave of defaults will occur so much so that our economic system will be forced to reconfigure the education system.

I doubt that the "new normal" can survive when children and college students are sent back to class. And when that happens, the pandemic will appear to be something of a fraud regardless the spike in elderly deaths. A reevaluation of assumptions will be the zeitgeist.

The second principle is that unexpected changes to the equilibrium have unexpected consequences, and the most difficult to predict are inflections in human value systems. For example, we once valued books not only for their information but as symbols of learning. Take a look next time you are visiting with an "educated" friend or even a professor. Where are the books? Not so much as once were common.

It is not just that so-called educated people don't own books, they do not read books or consider them important. This is especially common among today's students. Consider this as a precursor. The question is, "What does knowledge have to do with my success?" It's fine to say that this is nonsense, but is it?

These are the absurdities that appear just before major societal corrections. We once thought that family was critical to success. No so much anymore. Pedigree is not destiny.

There has been a slow but steady trend to devalue actual education. This may be the jolt to upset the institutional apple cart. If so, I doubt it was expected that 50% of $1.4T could head towards default in a catastrophe. But I do not see what there is to stop it either. Eventually, all such absurdities are eradicated from a functioning system as it changes modes.

Let's see.

Sunday, April 05, 2020

The Shape of Things to Come

Some things are fairly well known. Let's start from those.

1. In the US, for the week of April 15, the average daily death toll will be a couple thousand coming mainly from the Northeast corridor.

2. Beginning in the week of April 21, if lockdowns persist, the unemployment rate will raise to over 15% and moderate size non-service oriented businesses will begin layoffs.

3. In the week of April 28, if the lockdown persists, the central government will no longer have enough credit to float the system, and businesses will follow their own pattern of adaptation.

Which means that within the next week, (the week of April 15), the central governments around the EU and North America have a decision to make:

A. Admit that the pandemic is out of control and instead prioritize the economy.

B. Double down into economic catastrophe.


My guess is that the governments will choose A. In that case, we have a very interesting social condition that will develop in that the free peoples will be divided amongst themselves on the basis of age. Going into the 2020 election, we will see that develop in political terms as well. I would expect that the Democrats will demagogue the issues and attempt to have it both ways before strongly siding with socialist-type interventions that are not economically feasible. The Republican, lacking strong leadership, will dance in the wind as they hope for the situation to resolve itself.

So by mid-May, we will have a new normal. The economy will be reopened but the virus will not be defeated. The daily death toll will remain in the thousands, but most people will begin to adapt to the threat, having learned effectively nothing. With a depressed economy and no excess capital to spend, certain changes will need to be made:

1. Higher education will cease to be a four-year vacation for the indolent on loans. The student loan system collapses under the weight of unpayable loans built on fraudulent education, bloated administrations, and a squirrel cage system of raising costs without value.

2. The financial system will be sacked of a great proportion of its liquidity.

3. The service sector will remain contracted, not for the virus, but because there is no money to spend.

4. Capital investments will contract and political solutions will be proposed that are in fact confiscations of wealth.

5. The legal system will lose legitimacy to the degree that court orders are not enforced by fiat, but rather only through negotiation.


Well, let's see.

Wednesday, March 11, 2020

Modeling the Coronavirus Contagion



Without a vaccine, the protection to at-risk populations is a matter of not getting the disease in the first place. So, the question of the pervasiveness of the spread of the disease is of greatest importance. The answer to this question depends almost entirely on the immunity of those infected and recovered since the US is not able to institute draconian isolation measures over any large geographical area.


While there was an initial indication that recovered individuals may be contagious, this is likely a test failure. Let us therefore assume that recovered individuals have immunity from reinfection and are not contagious for at least six months. If so, then the protection of at-risk individuals is feasible if they can be locally isolated when the wave of infections sweeps through an area. The recent success of the Chinese to stem the rate of spread of the disease should give us hope even though we do not weld doors shut on apartment complexes.


Remember, there is an approximately two-week lag time. So, when you see a bump up in the local rate of infection, act quickly and decisively to isolate your at-risk populations. Be prepared for 6-8 weeks of isolation per wave of infection. Meanwhile, on the national level, the best policy is to isolate the nation and quickly saturate with testing and isolate any affected occurrences. This disease is not super-human, but it is no slacker either.


A more detailed nonlinear control model will be forthcoming from the Prof. Ellina Grigorieva when data is available to estimate the parameters.



Good Luck.

Saturday, September 28, 2019

Societal Evolution

Given the increasing division between the thinking/feeling poles in the modern integrated society, we can answer the question of how the system will evolve. Recall that in the Transnational Liberalism post, the system described had the thinking player at the exterior of an expanding universe. The feeling player is in the interior with the stability point being non-Pareto, i.e. it is somewhere within the interior between the two players. As the system grows fueled by technological advances, the periphery expands at a geometric rate and therefore the overall influence of the thinking player will outpace the that of the feeling player and the equilibrium point will tend to move towards the periphery. But this is the long term limit. The stable growth of the system can be upset as it is today by the rapid condensation of the interior as they tear from their connection to the exterior player.

Let's use the analogy of the system universe in a slightly different way. A system grows by its ability to direct useful information. The well-defined mores of a socio-political system are like the supporting structures of a tree that direct information (position) to the leaves. The feeling player gravitates to the points in the system which nurtures future generations, actively participates in the interpersonal relations of the culture, and forms the crony networks that dominate large organizations. While the exterior player creates wealth from work done with the environment, the function of the interior player is to create human value. But untethered power tends to corrupt and when the interior player does not see itself as dependent on the wealth creation process of the exterior player, the impression of dominance and self-sufficience may arise. At this context, the structures that were developed to support the productive activities of the exterior player may appear counterproductive to the interior player therefore leading to their corruption. This dynamic can lead to instability and collapse of the system.

As partisanship increases, the feeling player coalesces with the benefit of central position in being able to organize their efforts. Additionally, the feeling player has a simple common set of expressions, i.e. it is primitive in its motivations. Meanwhile, the exterior player is focused on the external environment. The exterior player typically goes about its business of working as a normal mode of operation while the interior player manipulates those with which its comes into contact as its method of extracting wealth. The exterior player experiences a lag in adapting to the initiatives of the interior player. This relationship will persist while the internal structures of the system supply information to the exterior player. If the information structures of the system are corrupted by the concentrated efforts of the interior player (it benefits from the ability to position itself against the exterior player using unrestricted interior lines), the efforts of the exterior player may collapse and it is forced to redirect its efforts into reestablishing the interior structures. This is now the present situation.

What follows is a chaotic interior struggle. The eventual winner is the exterior player due to their ability to communicate the creation of wealth and eventually, the interior structures will be rebuilt and the system reformed. Of course, the system will be the worse for this disruption and there is the chance of total system destruction should an exterior intervention such as nuclear war occur while the system is in its vulnerable state.

Sunday, August 11, 2019

Societal Learning



It would be hard to miss the fact that these times seem a little strange. Nearly one-half of the population of the US appears to have politically lost their tether and are now openly indulging themselves in hysterical, fever-dreamed fits of rage.

This is societal learning. Learning is like the five stages of grief. It is a reaction and reconciliation with an external reality that throws one off of their balance. When society is composed of essentially two poles with fundamental learning differences, reality will hit both poles differently. The exterior player will adapt to the external influence while the interior player will fight the change before more slowly adapting. This is the model presented in the Transnational Liberalism post. The interior player are the DNC/Socialist party and the exterior player is the RNC/Conservative party. They are differentiated by the fundamental modes of feeling/thinking of their members.

The change is due to technology which has produced an integrated economy fused with politics as never before possible. The red-blue shift over the years has been accelerated by technology and has produced an economic and political dipole. Now, politics and economics are correspondent, ubiquitous, and omnipotent factors in determining nearly every other aspect of US life. As predicted in the TNL post, in such a situation, the interior player must eventually find themselves dependent and inferior to the exterior player since the exterior is where the ever expanding percentage of economic activity is sustained in a growing system. The recent adjustment of American conservative politics to populism and the concordant alignment of DNC/Socialist politics in opposition to populism is one aspect of the Trump phenomenon. This alignment is a mega-trend and not due to one individual.

Confronted with its decline as seen by a recent irrelevance in wish-fulfilling fantasies, the American left has gone from denial (the Russian hoax) to anger, and will soon enter the bargaining stage. Every election is a bargain or sorts, but this is a bargain to sustain an unrealistic internal state--the fantasy that the policies of the left are praiseworthy and not simply primitive selfish rationalizations.

What is clear at this point is that the next election will be one between pragmatism and open delusion. Learning will only take place if pragmatism wins out.


Thursday, February 28, 2019

Evil by any other Name

When one decides to destroy what is innocent, to pervert what was righteous, or to subvert the truth, it is evil. This is not a matter of a misunderstanding, mistake, miscalculation, or misdemeanor---it is the fundamental crime of nature.

We see today the traces of certain evil. In the United States, the Democrat party as an institution openly supports infanticide and lies about it. In North Korea, a maniac supervises the murders of hundreds of thousands while he steadfastly builds the capability of murdering millions, but tries just as lamely to hide this fact. For us, to be naïve about this evil is not presently forgivable. The only acceptable moral choice is to act against the evil.

In the United States, that moral action is to destroy the Democrat party by all legitimate political means possible. In South-East Asia, the imperative is to destroy the Kim regime root and branch. They are both of the same evil nature and they both leave no other option.

Enough foolishness. This should have been clear before. Now it is clearly inescapable.

Friday, August 17, 2018

Afghanistan: What and Why

The problem of Afghanistan, from an American perspective, is the fact that it is a sinkhole for many of the evils of Islam in the Asian subcontinent in direct proximity to the dysfunctions of the bastardized nation-state of Pakistan. And Pakistan has the bomb---more than just a few now. Should that precarious government fall into the Islamic abyss, then those bombs would need to be recovered if at all possible. Otherwise, they would be used.

But a problem for which there is no solution is not a problem. As they say, it is merely a condition to be endured. That struggle which is present day Afghanistan does serve a purpose in stabilizing a greater system. As long as the central urban skeleton of Afghanistan continues independent of Taliban control, then Afghanistan acts as a killing field for the castaways of the slums of Quetta. The government of Pakistan avoids its most direct threat and no one is much the worse. To maintain this balance becomes just another cost of global prosperity. Since it is displaced upon America, you might say if you wish, that it is part and parcel of the "white man's burden".

But we believe that it needn't be so. We hope that we all might be better to our fellow man and that such suffering is not absolutely necessary. Is there a way from this quagmire to a place less odious?

In short, no. As long as there is Islam, there will be places such as Afghanistan. But by itself, Afghanistan would die a slow heat death as one generation of fighters grows old without greater conquest. To contain the Taliban's expansion is to bleed it to death. The Taliban is ultimately maintained by the throwaway wealth of the global jihad--by petrodollars of Riyadh.

Islam is a system that gives moral license to those who would take from others rather than to create. As a revelation-based theology, it is not possible to disprove its central tenets and to reform its masses. To cause a following for Islam, one must simply have a want to take rather than to create. There are many of such people in the slums of Quetta and the oil palaces of Riyadh. These are not people that grew to value an honest day's work and it is not within their culture to change that predisposition. The cause of that dysfunction is the excess of free wealth in Riyadh and the dearth of the apparatus of wealth in Quetta. This pipeline of misery flows both ways.

The positive evolution of Afghanistan is not unlike the ultimate evolution of Cuba. Once external funding is cut and the opium exports are eradicated, a slow process of reform will eventually overtake the country and drive out the death cult. It will take decades, not months.

Until then, the best we can do is to learn to value patience and discipline ourselves against acts of rash stupidity. We must continue to allow the derelicts of Quetta to learn the hard way as we demand that the princes of Riyadh learn the easy way. So far, we are now on the right track, but it would serve us to do away with the opium as we mind the palaces.