A city of believers.

LovePosted by Eskil Sat, December 25, 2010 02:43:01
I read an article with an archaeologist bemoaning that Jerusalem was the most hopeless place on earth to conduct archeology in. You would think the rich history of Jerusalem would be a goldmine for any one interested in archeology, but No. Why? Because everyone who lives there is already convinced of a version of history before they even put the shovel in the ground. The only evidence they find is the evidence supporting what they already believe.

I read a fair bit of financial news and the stupidity or lack of basic understanding of economics that exists in finance is staggering. The idea of capitalism is that the profit motive, will motivate people to do good things. Its clear that it does motivate some people, but no one seems to care much what it motivates them to do.

If a bank manager gets a cut from the profit of the bank, will he or she give the customers the best advice how to keep their money, or try to make the bank take their customers money?

Is a private school likely to engage parents in order to deal with bullying if it may means the parents may move their kids to another school once they find out the school has a bullying problem?

If you give money to private hospital, its their prerogative to spend as little as possible of that money on health-care and keep as much as possible in profits. They may even not want people to get better because without patients, how will they make their money?

I'm being told that competition in an open market leads to the best products winning, but if that was true advertising wouldn't exist. Yes, the best products would win if every one had the all information, but to think that is the case is ludicrous. How am i suppose to choose the best doctor? I'm not even remotely qualified to say if a doctor is good or bad, because I haven't gone to medical school, that's why i go to a doctor!

They tell me I should be a "educated" consumer, but I cant go to china to check the worker conditions every time i buy a pair of sneakers, no one can.

It takes a 2 year old to figure out that everyone cant know everything, yet we build our entire financial system on this premise. The entire stock market is built upon the idea that its fair because everyone has the same information, (proving that it isn't fair at all). We have a system where its not important to do good things, but to make people think you are going good things.

Another theory economists talk about is "trickle down economics"; the idea that if we let people with a lot of money keep their money they will stimulate the economy by buying stuff. Coincidentally, people with a lot of money has put this theory forward (go figure...). Well, the very definition of rich is someone who takes in more money then they spend, making them, well, rich. So isn't rich people then the very definition stagnation rater then stimulation? Giving someone who is poor 100$ will always stimulate the economy better then giving it to someone already has got so much money that they have chosen not to spend it all. With higher gaps in income, fewer people will get opportunities and therefor we as a society will have less success. Its a big problem for society and ignoring it is like standing on the titanic and saying "Why should I care about a leak on 3rd class deck, I ride 1st class."

We have millions of economists, yet very few managed to predict the crash. Why? -Because they are believers. They have a vested interest in proving that what ever serves them is true. It is very scary to have the majority of this planet be runned on this very shaky ground. The Euro was not nearly thought through, the US has no ability to be honest about them selves and what needs to be done, and china has massive housing bubble and no previous experience of managing a financial crisis.

I have resorted to think that the best financial advice you can get, you get from cab drivers. When they tell you to buy gold, IT stocks, or real-estates, then you know a crash is near.

Any one who says that capitalism has had no virtues, clearly is delusional, on the other hand it has been poor at solving issues like health care, and education while creating massive environmental problems, and failing to see that is equally delusional.

The Soviet union had 0% unemployment, and provided education, health care and housing for all. Numbers that should be the envy of any nation. So why did it fail? Because its leaders where believers, They believed so strongly in their systems successes, that they failed to recognize its failures; lack of freedom, innovation, and accountability. They thought that one solution, one system would fix all problems. Lets not make the same mistake.

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Posted by Corey Sat, October 15, 2011 09:55:15

"Any one who says that capitalism has had no virtues, clearly is delusional, on the other hand it has been poor at solving issues like health care, and education while creating massive environmental problems, and failing to see that is equally delusional."

Take notice that education and healthcare are two industries that are absolutely not in a free market. They are under government monopolies in every wealthy nation. They need more capitalism in those markets not less.

Posted by MattyD Tue, February 01, 2011 02:13:23

I get where you're coming from, Eskil, but I believe that letting rich people be rich is what stimulates economies. They may be rich because they hold on to their money. But that's the intelligent and industrious thing to do. Remember, though, that it's because of this that they can make the big purchases, which is what makes the modern world go 'round.

Think of Miami: The cold, hard truth is that it would never have had even an iota of its economic infrastructure if it wasn't for the lucrative exploits that the cocaine trade allowed for. The city was literally built by 'drug money'.

Posted by Justen Robertson Mon, January 17, 2011 19:15:40

One who assumes that capitalism is based on the premise that everyone has equal information is drastically off-base. 99% of capitalism is information advantage. I know where resources are; I'm counting on getting them first. I know how to make a novel product; I'm counting on being the only person that knows that, so I can be first to market and build a brand. I know that someone over here is willing to pay much more for a given product than someone over there is willing to sell for; I can take advantage of that situation by moving the product from the one to the other and taking the difference in profit. The essence of the free market is crowd-sourcing; not that everyone has the same information, but that the sum total of all available information is possessed by the sum total of all actors.

When someone naively fails to understand this premise, he may think that "fairness" in this system is to ensure all people have access to the same information; and on that failure of understanding attempt to coerce market actors to disclose information that they do not wish to. In doing so he creates two new classes of market actors: a class who uses violence to compel others, and a class who uses fraud to avoid this violence while retaining its secrets. The dynamic balance of the system breaks down as power flows toward those who are most willing and able to use violence and those who are the most willing and able to defraud others; further, naturally, one of the prime motivations of the second new class is to defraud and manipulate the first class in order to direct that violence at his competitors and customers and away from himself. And thus our modern duopoly of violent, oppressive regulatory governance and lying, cheating, pathological business.

How can you make this system work (i.e. produce more good than harm)? You cannot. It is fundamentally broken, as violence is a fundamentally broken tool to produce positive outcomes. To abandon its fundamental flaw is to abandon violence; to accept that "fairness" is not everyone playing with the same pieces of information (which is impossible anyway, if you understand anything about the fundamental nature of information); to accept that a properly operating market (and thus ecology) is one in which each person acts as an individual and violence is used neither to unveil information nor to repress those who possess information which works against your interests. Among other things, that means abolishing notions of "intellectual property" (to which strong pragmatic and philosophical cases independent of this one have been made). Further, it is to recognize that all costs must be paid by the individuals who incur them; not offloaded to third parties via taxation, regulation, or subsidy, or by the refusal to recognize those costs as relevant (i.e. in the case of our system of dealing with pollution and other things we glibly term "externalities").

The system that takes shape in obedience to these premises and natural laws is a system of truly free markets in which all individuals are free to trade, produce, and consume according to their own prerogative; and in which individual responsibility for the harms one causes to others cannot be avoided through the use of force, especially political force (or at least where such things are not ever considered tolerable or recognized as "public goods", as the world will always have its criminals). This is the only compassionate system, in which each person's life and livelihood is considered as important as each other's; in which each persons property is sacrosanct, in which each person's earnings are his own, in which all values, not just monetary or moral, are recognized as operant ecological forces.

Quick Re: soviet union, 0% unemployment is not desirable. 0% unfulfilled want is desirable. If I must take out of one person's table, who has produced and exchanged for equal value in order to fill it, in order to feed another in exchange for digging and filling ditches (which produces nothing and thus consumes without equivalent exchange), I have harmed both persons. The first by depriving him of his rightfully earned property and his reward for his contribution to society; the second by depriving him of time better spent doing something valuable to himself or others. Why should we all want to be working 8 hours a day, 5 days a week? That is not a valuable goal. Having all we need to live happily and in abundance is a valuable goal, whether that requires 40 hours a week or 10, and certainly will require less when more people are allowed to produce rather than waste on mindless busywork and none are allowed to waste without producing.

Further what good is universal "education" if it is provided by an entity whose overwhelming goal is to promote and further its own existence and goals? It failed to produce creative, independent, innovative people in any place it has been tried. Human beings are learning machines, they're quite capable of expanding their own knowledge on an as-needed basis and have been doing it for over a quarter-million years. Why in the past two centuries it has been assumed that they must be put in virtual cages and beaten verbally and physically in order to learn anything of value is beyond my understanding. This does not produce learning, it produces broken, obedient slaves. That is all it has ever done. "Successful" people defined by any standard other than the standard of being a hard-working, non-questioning slave, have been those who rebelled against or quietly subverted this system of "education". For further reading on education and why governments suck at it, I highly recommend the works of John Taylor Gatto, especially "The Underground History of American Education" and "Dumbing Us Down" (which despite the titles are not completely US-centric).

Quick re: Venus Project, robo-communism. Nothing new going on here, except instead of a noble, altruistic proletariat we have a noble class of robotic slaves and instead of an omnipotent, omnipresent, omniscient bureaucracy we have the same in a vast artificial intelligence. Communism-with-metal-and-silicon will fail for the same reason that communism-with-meat failed; it is impossible for a single organization to possess all information, and short of all information it is impossible to accurately predict and provide for individuals better than they can predict and provide for their own needs when free to do so in peace.

Posted by kaoD Fri, January 14, 2011 20:56:20

Not to mention that liberalism stands on another basic pillar: playing the game in equal terms, so the best individuals will have more success. That raises a question: how can you play that game fairly if you're born in families with different opportunities? I'm not talking just about inheritance (which totally breaks the fairness if you think about it) but about that family supporting that individual economically, thus breaking the system's basic pillars too.

Now, if somebody dies, where should the money go? Maybe any money that you own when you're dead should go to the state, incentivating the spending of that money and therefore stimulating the economy. However, nobody would want their money to be "stolen", or will circumvent the system spending it in their deathbed and giving the "money" to their relatives, breaking the system's fairness again. At least it would be spent and will stimulate the economy.

And it's not only money, usually richer families have access to more opportunities just for being rich. Business contacts, schools, recommendatios... The game's not fair at all.

Thoughtful ideas you have there.

Posted by kriss Sun, December 26, 2010 19:55:48

The problem is that faith works.

Its very hard to persuade people not to do something that is working for them, even if it means the end of the world(tm) tomorrow.

Chaos magick is perhaps the only sane answer, except of course, it is not very sane.

Posted by Jacques Sun, December 26, 2010 13:46:00

They may not be able to predict the next die roll all the time, but they'll certainly be close a lot of the time. I think it's disingenuous to think that they don't apply scientific method, even if what they do is pseudo-science.

I think you're probably right though Eskil, in that mathematical models to analyse economics are dangerous, and having traders playing with money that effectively isn't theirs doesn't help the situation.

Posted by Eskil Sun, December 26, 2010 02:42:06

In order to do math, you need all the input that influences the output, and in a huge economy nobody has that, so its always pseudo science. If a role a die 20 times, and gives that series to a bunch of mathematicians and ask them to find the pattern in the series of numbers and tell me what the next one will be, they will be able to find patterns in the numbers, but that wont make them any better at predicting the next die roll.

I would argue that using "advanced math" to analyze economics, makes us less safe because it fools people in to thinking that they are in control. "Sure our money is safe, the guy who told me so went to MIT and had a white board full of formulas, he must be right!"

Posted by Jacques Sun, December 26, 2010 01:20:21

LogicalError, that's a complete fallacy.

There's a hell of a lot of scientific method applied to making money. Look at investment banks, you think they just guess where they'll spend their money? Of course they bloody don't.

Posted by Borror0 Sat, December 25, 2010 23:10:06

"I'm being told that competition in an open market leads to the best products winning, but if that was true advertising wouldn't exist."

That's what Dan Ariely calls "the fallacy of supply and demand."

Posted by Coppertop Sat, December 25, 2010 13:33:01

I fully agree and that's precisely why I'm in favor of the Resource Based Economy, a system without money advocated by the Venus Project. Not only because it takes the extremely harmful profit motive out of the equations, but also because it's based fully on technology and the application of scientific method to all problems, thus giving at least a chance of flexibility. It automatically eliminates most of the monetary problems, from poverty down to the majority of corporate and private crimes, but it also serves as a framework for changes. I'm not gonna go into explaining the whole design and the reasons why it should work here, so don't go "oh it doesn't make sense a bit" after reading just a few lines written in a hurry, ok? The point is that in the RBE nobody has interest in preserving the system. Quite the opposite, actually. People have actual interest in preserving resources and developing technology and science, instead. Combined with the changes in social structure that this system would cause (and need), the main idea for fixing stuff would be changing stuff, providing new solutions coming out of innovation, rather than the idea of what will result in more profit.

Now, before someone says it -- my enthusiasm for the concept doesn't mean I'm a believer. In fact, when I see what problems the attempts to implement this idea face it makes me kinda skeptical, even though most of those problems come from the peoples' current conditioning rather than the concept itself. Still, advocating a solution because it looks, from the technical and sociological standpoint, better than the current one isn't, I think, a bad thing at all. Also, it is not, by any means, a utopia. It's a framework for constant evolution, while utopia is, by definition, a static system. If you think about it, our current system seems more of a utopia than RBE. It doesn't change a freaking bit and, as any utopia, as time passed it's changed into a dystopia because it hasn't accustomed itself to the changes in technological and scientific developments on any level.

Anyway, I think everyone who has any real idea about the current system is also aware that the profit motive is bullshit. It only motivates people to get more profit and doesn't serve as an incentive for innovation at all. Quite the opposite in fact when it comes to more sophisticated work. So why not try to advocate another option instead of trying to fix the Titanic when it's already split and half the way to the bottom of the ocean?

Posted by LogicalError Sat, December 25, 2010 11:27:58

I completely agree.

I would also like to add that calling economic science "science" is an insult to "science", there's no scientific process applied to anything to they do.

And when actual research once again confirms that economic science is based on faulty ideas, it gets ignored

Posted by frank Sat, December 25, 2010 10:51:40

I would receommend watching the documentary Zeitgeist:Addendum, and checking out the Venus Project, heavy critics of the monetary system, but also having devised a workable solution as an alternative.

Posted by rawr Sat, December 25, 2010 07:07:58

Verse could solve the world's problems....... :D

Posted by Cunk Sat, December 25, 2010 04:49:50

I don't think capitalism was ever intended to be about motivating people to do good things. Who ever said that? Also, competition doesn't have to mean only one product wins. There can be plenty of "bests" since your best cola is different from my best cola. And that's why there is advertising. But I agree completely with your overall point that capitalism and free markets are not capable of providing a society with everything it needs.

Posted by Draco_2k Sat, December 25, 2010 04:13:05

The realization that there is something inherently wrong with our system is more important than that of a first rebellion against a corrupt dictator.

While the corruption of a small ruling class are obvious, corruption of society as a whole is invisible to us simply because we're part of it.

Now. Won't we do something about it?..