Wednesday, December 25, 2013

Monday, December 23, 2013

Gold and Gresham's Law

COMEX Registered Gold 12/20/2013
The last hundred years has seen massive centralization of money and military power, and the last few decades have seen the financial system decouple from the real world and disappear into a parallel universe of pure fantasy and number. Now, however, we're seeing the inexorable operation of Gresham's Law at the COMEX. Gresham's law is one of those concepts, like the irrational numbers, that shows that the reality of the universe is beyond number and mind.

Really, Gresham's law is about price controls on commodities, and "price control" is all about reconciling a number, i.e. an idea, with reality. Reality stubbornly slips through any attempt to bind it in an inky net.

Gold is an alternate store of value to contractual devices, like dollars, stocks, or bonds. "Money", is really a way to organize (or bind) people's time and energy and thoughts. People's agreement to be bound to the system is what makes a dollar valuable. Prices are currently attached to precious metals through markets that are easily manipulated by the beneficiaries of the monetary system, but the mass of people, especially in Asia stubbornly refuses to believe that numbers are valuable.

What happens when the USD denominated gold market breaks? That's a pretty huge glitch in the matrix.

Thursday, December 12, 2013

Is Our World Really This Stupid?

Jackson Destroys the Banks
A Satanic Banker Runs Away
President Andrew Jackson kicked the "international bankers" out of the United States around 1833 by shutting down the Second Bank of the United States. Subsequently, there was no central bank; only state banks. A decentralized banking system, in theory, should benefit savers and borrowers, which really means "the people".

That mode of banking lasted until around the "civil war". The common narrative about the United States Civil War is that it was a struggle about slavery, or about two regions with divergent cultural histories--the industrial north and the agricultural south. But another interpretation is it was another theater of "great game" politics and an attempt by the British to weaken and break up the United States to maintain their empire and to re-establish a US central-bank branch of the Bank of England.

During the time of the civil war the Union was in a strongly antagonistic relationship with Britain and France, but found common cause with Germany and Russia. In fact, the Russians, under Czar Alexander II, offered military aid at a crucial moment in the war and kept the British and French from providing aid to the confederacy.

The victorious north also had a victorious financial system. The constitution gives power to the congress to issue money, and Lincoln did that with the "Greenback". The Greenback is a very dangerous idea for the bankers all around the world--it's as dangerous as the Pythagoreans thought sqrt(2) is. If people realized all wealth comes from them, and that there's actually nothing in the bank, and in fact the financial sector is, at best, a parasite, and typically more like a predator, the con would be over.

During the civil war the Union found herself on the same side as the Russian Empire, and not so coincidentally on the same side financially. However, in the decades after the civil war, Wall Street helped finance the budding Empire of Japan, and encourage them in war against Russia, and also financed the communist revolution, and toppled the Tsar. These are really the key decades in American history--when any shred of the ideas and ideals of the founding disappeared. The assassination of Lincoln, then William McKinley brought in the counterrevolutionaries and turned the United States into something more British.

This really kooky condition continues today. The friction between "The United States" and Russia is essentially this same issue. Putin booted "western" companies from Russia's oil sector and jailed the operatives of the "western" financial sector. (At least that's how I interpret those events currently) Russia's not a total financial basket case like the Western countries.

So from that perspective, Putin and Lincoln, perhaps would have been brothers in arms, while the current set of rodentates in Washington/New York are aligned with the City of London.

Saturday, December 7, 2013

Bitcoin Value

The siren song of current affairs is distracting me from the historical research. I want to take a stab at figuring out how to value bitcoin.

Bitcoin is two things, a protocol, and a network consisting of lots and lots of hardware. The "coins" are really units of computer work that's necessary for the protocol to function. Bitcoin could replace large swaths of the banking system--really the electronic accounting systems and payment transfer systems. Wire transfers, ACH transactions, credit card transactions, pay pal transactions, all these things can be replaced with a cheaper system--a theoretically cheaper system.

Is it a better system? One of the problems with bitcoin is that transactions take about an hour to settle. Order a cup of coffee--wait an hour, get your coffee? This is a very unfortunate aspect of the current version of the protocol. Bitcoin probably isn't viable unless that's cut to seconds--perhaps that's feasible.

Is it cheaper? Well, cheaper than what? Bitcoin is really designed to obviate a trusted third party for settlement. With the current protocol, it takes many thousands of computers cranking away 24/7 to accomplish this. That's expensive. Compare that to the potentially low cost of a trusted third party hosting a webservice for payment settlement--a couple servers can handle millions of transactions at very low cost. Also, there are many middlemen involved to make the system work--paradoxically they are charging a lot more than a bank or brokerage might for various services.

I think aspects of the bitcoin system are totally ingenious and valuable--like the public ledger idea. However, the inefficiency of the network processing transactions is a big weakness.

Right now, the bulk of the bitcoin price is based on speculation. I'd say the speculation is really about whether the protocol can be improved; if a transaction time can be dropped to seconds, then bitcoin will go into wider use. Even then, it will be hard for bitcoin to beat a trusted third party service.

Friday, November 29, 2013

Spontaneous Collusion

In the previous post, I hinted at something that needs to be spelled out more clearly. What's taught in economics classes all around the world is, for the most part, ideology (aka rhetoric) posing as science. Even in an ostensibly free society like the United States, ideas are formulated, promoted, and promulgated when they advance an "official" agenda. However, it's not really necessary for any authority to state what the "official" agenda is. The collusion to form and promote it is spontaneous.

The mainstream reaction to bitcoin is a good current example. The value of "bitcoin", today, is sort of like the value of the early world wide web. The WWW is built on a giant stack of hardware, open protocols and specifications. Near the top of that stack is the HTTP protocol. Today, millions of web servers run the HTTP protocol, millions of business transactions take place over the HTTP protocol. Today, the WWW is essential infrastructure worth countless billions of dollars. The value of bitcoin emerges from its utility as a means of exchange, the infrastructure that makes that operate, and the ideas and concepts that make that infrastructure work.

Over the past couple of weeks as the BTC price sky-rocketed, bitcoin attracted the attention of the mainstream media. The reaction is typically skeptical to negative. There's an instinctive wagon-circling; no memo from the central office is necessary to coordinate the reaction of the many apparatchiks who benefit from the current system. (Rather than provide an example here, just read Reggie Middleton's takedown of Krugman's "Anti Social Network".) This "spontaneous collusion" model is also how I view the founding of the progressive era.

Similarly, bitcoin is an example of spontaneous collusion. Many people are waking up to the inadequacies of the institutions they grew up with, really those institutions don't serve any of their needs or further their goals. Bitcoin is one of the potential alternatives. It is part of the DIY movement and a shift to removing responsibility and power from central authorities and their useless technocratic allies and distributing it.

Tuesday, November 26, 2013

Crass Production

I'm trying to systematically describe how the United States became so fucked up--lay out the history, dig up the philosophical foundations, and stay away from current affairs. But I am going to take a break from that and jump to the present day and talk about negative interest rates.

A recent article in the Huffington Post discusses an idea that's being kicked around by the same sort of people who are the subject of my current inquiry. A century ago there was Charles Conant, and today shills with credentials and public platforms are people like Larry Summers and Paul Krugman.

In 2008, the western banking system died, but rather than composting the carcasses of these criminal institutions and exposing their owners and creditors to financial distress, they were turned into zombies that require constant infusions of cash to stay alive.

The popular conception of banks is they are wealthy institutions (i.e. loaded with assets) because people deposit their money there, and the ATM machine always has cash. In fact, almost every bank is like a middle manager neighbor that has two Lexuses, a McMansion, and kids in college; they basically eke out a subsistence living from what's left of their income after debt service and are constantly teetering on the brink of insolvency.

The story I am telling in this blog is how a really small group of people mostly in New York duped a nation, and put everyone and everything in the United States in the service of these institutions. A hundred years ago, we had the shill Conant arguing:
It is proposed to point out in this article how great this excess [capital, i.e. savings] is at the present time, how profoundly it is disturbing economic conditions in the older countries, and how necessary to the salvation of these countries is an outlet for their surplus savings [imperialism], if the entire fabric of the present economic order is not to be shaken by a social revolution.
Today, we have the shill Krugman arguing:
“Larry’s [Summers] formulation of our current economic situation is the same as my own. Although he doesn’t use the words “liquidity [i.e. "credit"] trap”, he works from the understanding that we are an economy in which monetary policy is de facto constrained by the zero lower bound (even if you think central banks could be doing more), and that this corresponds to a situation in which the “natural” rate of interest – the rate at which desired savings and desired investment would be equal at full employment – is negative.
Of course, the crucial difference between Conant's idea of capital and Krugman's liquidity, is that capital was really the result of industrial production and wealth creation in his day, while Krugman's liquidity is the result of central planners at the Fed hitting the CTRL-P keys and he wants to force that money out into the economy through easy credit.

It's really easy to fall into the public policy debate with these dudes, but in so doing, we enter the Snowglobe of Orthodoxy where sophistry poses as wisdom. That is, we enter a land of make believe where accepted axioms form the basis of arguments that fly like tiny flakes within artificial constraints.

The way out of our current dilemma is to ignore these people. The problem of the past 100 years is that the Western world actually enthroned the equivalent of philosopher kings. We live in a system, for example, where a central banker, by virtue of sitting through economics classes at an ivy league school, gets to make decisions that influence billions of people. Billions of people who become elements of an economic model.

Our fundamental problem is that people confuse symbols with reality. For example, millions believe the goal of life is to create numbers in an account. Billions of people have had this delusion ruin their lives!

Imagine an alternative reality where a craftsman builds a single coffee machine for his own use. He enjoys the whole process and produces exactly what he wants. Then he makes another one to sell. It's a really time consuming and expensive process to make a single coffee machine, but it's enjoyable. Plus, the machine might really last a long time, and will actually retain its value. Let's imagine that he doesn't ever turn to mass production. He forms a small company that makes a relatively small number of coffee machines per year--its goal is not to make money, it's to make coffee machines and to enjoy the craft of making them.

It's really just the beliefs that the society has that keeps the wretched Wal Mart/Wall Street model chugging along. These beliefs are spouted by people pretending to be scientists and philosophers, but they're really just shills.

Sunday, November 24, 2013

The German Connection

Get a Poster Here
The Germanness of the American Progressive movement isn't apparent since this contraption that was built by American financiers, intellectuals, politicians, media, and academics is as vast and noisy as America itself. But when you take a look at its foundation, it's loaded with German philosophy; a strain of thought that's diametrically opposed to the ideals enshrined in the US declaration of independence and constitution.

A great reference on this subject is American Progressives and German Social Reform, 1875-1920 by Axel R. Schäfer. According to Schafer, American students of the nascent social sciences sought knowledge in Germany in the middle to late 19th Century, and found, in the Germans' sophisticated critique of the early enlightenment, useful criticisms of the American system of that time.

Really, let's just boil this right down instead of going on and on about it. The thinkers like Locke or Adam Smith, or Even Isaac Newton, provide apparently unsophisticated models of the world, mostly because they view the world as separate from man, that is, as objectively knowable through rational inquiry. While German philosophy is based on the occult understanding of the world, that is, all understanding is subjective. (As above, so below.) So for example, in a field like economics, the objective understanding might be that a man makes a rational decision about the price of a commodity, while the subjective view sees the outcome of a purchase as the result of a psychological process.

Paradoxically, strangely, and really perversely the application of this method of thinking and inquiry about human beings tends to objectify themThat is, the study of the less-conscious action of "people" necessarily requires a higher level of consciousness or alertness on the part of the inquirer. So, inexorably the great mass of people come to be viewed as lab rats by the knowers, while the knowers take on the roll of priests and priestesses. Similarly, by viewing human history as conditional and arbitrary, it gives the knowers and technocrats carte blanche to manipulate and shape the future.

Saturday, November 23, 2013

American Clubs and Societies

Red Men Certificate
Long before the Internet and mass media, ideas spread through actual social networks. There are countless examples of people combining together outside the official structures of society, or forming cliques within the structures of society. For example, the cult of Mithras spread within the Roman Legions. Really, wherever there are people, there will be clubs. Where there are clubs, there is specialized knowledge, and where there is specialized knowledge there is argot and cant.

An example I am particularly familiar with is bicycle clubs. Among cyclists, there is deep and specific knowledge of all forms of two wheeled self propelled transport, and likewise there's deep knowledge about the preparation of both of the body and the machine that's required for racing. Out of the billions of people in the world, there are only thousands, or maybe tens of thousands who know these things, yet there is a relatively large industry that supports them, and the cyclists work to promote the sport and to exert political influence, even though their actions are not coordinated in a significant way. Indeed, in cycling, there's even more esoteric knowledge that was and is practiced by the elite athletes in the sport. It's the knowledge of doping, which is like the black magic of cycling. (Read Tom Danielson's deposition for the insider view.)

There's a long history of fraternal orders, some just simple drinking clubs, and others that served financial purposes, like providing life or health insurance to members. The value and influence of these organizations can wax and wane with the tectonic forces of the day. For example, the Order of Red Men and Tammanies formed at the end of the colonial period. The Freemasons formed at the dawn of the Enlightenment. Indeed, maybe the arrival of new ideas spurs the creation of these groups--the new thought, and the reaction to the new thought.

We are currently living through such a time. The systems that were fashioned around the turn of the century are failing (the supposed New World Order), and a new order is emerging. For example, the Eurozone and the Euro currency is a total failure. The long con that made the dollar the reserve currency of the world is failing, and the Federal Reserve is shown to be nothing more than Three Card Monty, bolstered by Nobel prize winner shills, and ivy league shill factories.

The late 19th century and early 20th century were when German philosophy came to America. German philosophical thought is really central to system we live in today.

Thursday, November 21, 2013

Who's Yer Daddy

Aum Shinrikyo,
1990s Japanese Cult
Before we continue the dive into the historical rabbit hole of 19th century American politics, lets talk about cults, because they'll be popping up all over the place in various forms as the story unfolds.

The family is part and parcel of being human. It's potentially a great strength for people, sadly though, it's often a great weakness, and the psychological and behavioral patterns that childhood family life imprint on people makes them easy to manipulate. That is, the childhood needs we have persist into adult life--to be accepted, to belong, to be valued--and give manipulators easy ways to exploit us. As an aside, it's pretty interesting that this really basic aspect of human nature is hardly brought off the shelf for discussion and examination through the whole course of education.

Cults take these basic human needs and relationships and repurpose them. That cults form over and over again shows how strong these needs are and how people will bond with almost anything that fills them. The Aum Shinrikyo is my go-to example, over a relatively short span of time, the group grew to have thousands of members and many millions of dollars in assets in pursuit of what appears to be an agenda that, hopefully, any individual member would have rejected were it presented outside the context of their family substitute.

But really, what's a cult? A cult can be the pupal stage of religion, or civilization. Alternatively, a cult can operate in secret, remaining "outside the city" and form an alternative civilization, which can more readily fill the essential human needs of its participants than the established order, especially for the people who have a basic need to be "outside the city". A cult can operate within an established religion, adhering to a completely different set of beliefs than those practiced by the typical congregant of the religion.

Sunday, November 17, 2013

Erasing What Came Before

According to Conant, the rapid militarization and modernization of Japan in the late 19th century was a laudable thing. Japan went from an isolated, medieval island nation, to an industrial militaristic empire in a handful of years. (Commodore Perry arrived in Japan in 1853.)
Japan has already made her entry, almost like Athene full-armed from the brain of Zeus [emphasis added], into the modern industrial world. The increased capacity of her people for production, giving them increased command over the products of other peoples, is producing its natural effect in the rise of wages and increased importations.
Part of Japan's "increased command" was raping, murdering, and plundering their neighbors. For example, the Japanese first destabilized, then invaded Korea, looted the country and made a concerted effort to erase all traces of Korean national identity.

That same process has been repeated time and time again on peoples around the world and continues today. Their past is devoured and replaced with a new mythology that serves the invaders. The native Americans were systematically schooled to erase their past. Medieval Europeans' ancient religions were erased and incorporated into Christian myth. The modern American school system, founded in the late 19th century, continues this process of molding people.

Saturday, November 16, 2013

The American Counterrevolution

The Snowglobe of Orthodoxy
The current structure of the American way of life, and the establishment of a wasteful and corrupt empire was laid down in the late 19th and early 20th century. This is not an ancient and remote event. My great grandma, who was a constant presence in my childhood, was alive at the time when the scheme was concocted; Much of the story takes place in Ohio.

Furthermore, the history is well documented, so we can easily see how America was remade, and we can see how the construction continue today. (Eventually, we're going to go back farther to get to the older roots, but this is a good jumping off point.)

We live with the legacy of this scheme--vast public debt, and private fortunes concentrated in the hands of a few, lots of violent death, crumbling public infrastructure, and declining standards of living. When you look at the chain of empires, it's almost like an evil moves from the declining power to the ascendant power, hijacks it, drains it, and leaves the carcass.

So, the theme for the next several posts is going to be an investigation of this story. My initial entry point comes courtesy of Murray Rothbard's The Monetary History of the United States, which provides many references for research. Rather than detail and describe the ideology, I'm going to try to document the families and organizations that were involved in originating it, and look at the techniques they used to disseminate it.

The investigation will start with Charles A. Conant. Conant wrote "The Economic Basis of Imperialism" (September 1898) and a number of other works which helped sketch the framework of the new structure.
The United States today seem about to enter upon a path marked out for them as the children of the Anglo-Saxon race, not yet traversed because there has been so much to do at home. Almost as if by magic [emphasis added], the importance of naval power has flashed upon the mind of the country. The irresistible tendency to expansion... seems again in operation, demanding new outlets for American capital and new opportunities for American enterprise.
This new movement is not a matter of sentiment. It is the result of a natural law of economic and race development.
Conant argues that America has too much money to usefully invest at home, so needs to open overseas markets by force when necessary. In other words, by scheming, murder, and by using the resources of the nation, investors will get a better return on their investment. Conant advocated altering the constitution to centralize power in the executive branch, after Tsarist Russia, and also argued for centralized power in industry.

It seems likely that Conant had no original thoughts, but was a talking head of his day, acting as the public face and promoters' of another entity's ideas. So hopefully, it will become apparent where these ideas originated from in due course.

Sunday, November 10, 2013

Systematic Laziness

When I was about eight years old, my family lived in a neighborhood where there were several other kids. We often played outside, or when the weather was bad, we played indoors. At that time of life, we were discovering how easy it is to make up rules or change them to suit immediate needs. For example, when playing kickball, if a tree was in the way, it was easy to redefine the field and just keep playing. Comic books and collector cards become types of currency and we easily contemplated the value of any swap with full awareness.

One of the strange things that happens to adults is this ability becomes dormant. In adult life, people seem to set about trying to maximize perceived gains from the systems they've inherited (or that were imposed on them by force). The received systems and ways of thinking take precedence over ad hoc or invented systems that might better suit particular circumstances. Dependence on existing systems is also driven by laziness (energy minimization) and a pervasive desire to avoid thinking, and faith is placed in what already exists, instead of a new design.

In other cases, painful experience resulting in a general loss of trust in others makes the creation of new systems nearly impossible. That is, people invest a misplaced trust in the creators and beneficiaries of existing systems and distrust in their fellows.

Thursday, November 7, 2013

Feeding Imagination

I used to live in a house that's on the property of a 3500 acre privately owned park in northeast Ohio. The back yard was a huge field that blended into the park. There was a garden in the back yard, and the tomato plants were constantly under siege from groundhogs. Eventually, we put an electric fence around the garden, but they still got in. One day, I watched a groundhog try and try again to get in. It was persistent, and finally just found a weak spot in the fence and slipped through. I was impressed. I adopted the groundhog as a personal symbol.

Way back, several posts ago, I wrote about how speech and writing are basically a form of lossy compression that are very far removed from direct experience. Speech and writing also have features in common with woodland game trails or inter-city highways, in that they're energy minimizing devices. The mind is lazy, and tends to stay on these well worn tracks, rather than making new ideas. In fact, even though private thoughts should be as free as the wind, they're also influenced by social norms and the urge to be accepted. Also, no matter who we are, we're born into a world that's already underway and we take part in projects that are already started, and sort of depend on orthodoxy to keep them moving.

Direct experience--a personally novel experience, then, is not actually easy to have. And when we have one, we won't have the language to describe it. It can take years to make the translation.

Trinkets and totems can be one source of direct experience. A strange object, like an old coin, or a figurine can provide a momentary glimpse of a new idea. Working and shaping materials like clay or wood provides a direct experience with matter and a conversation with the matter. Drawing or painting allows the artist to see a world that's not there. The direct experience is a momentary escape from the infinitely regurgitated stories, myths, social conditioning and symbols the shape our mind.

A world that relies on systems, like ours, is really a world that's starving for ideas.

Saturday, November 2, 2013

Global Mass Society is Rancid

Global mass society is rancid. It's motto is "Get more of what you don't need." The city on the hill doesn't gleam like a beacon of truth and reason. Their city on the hill is a shitty city.

Dudes and dudettes, it's the Matrix. It's a pyramid scheme of the old variety, the kind that involves people wasting their lives stacking up stories of rocks based on stories. But don't despair, unlike the drama of the movie escape is easy--and once you leave the city, you just don't go back. You pursue your happiness. The escape involves discovering your happiness and living your own life and recovering lost power and freedom.

Thankfully, the centralization, corruption, and poverty of mass society makes it extraordinarily fragile and weak. It requires the consent of the people it defrauds and disenfranchises. It requires the work of decent and intelligent people to build systems of control, and systems of commerce that impoverish their friends and neighbors. Those are things good people, the vast majority of people, don't want to do.

The things that keep them on this path are insubstantial and imaginary.

The Money Illusion

In the previous post I continued the thread that where there are people, there should be industry. However, in a global economy, even an activity that's as basic as diaper manufacture, is conducted on global scale. Diapers are made in China using raw materials imported from around the world and the finished product is shipped world wide. This is possible because there are global shipping systems, and because free trade laws allow free flow of goods and money.

The main reason industry flowed from the United States to China or Mexico is that the money that would have gone into local factories went to build factories in China or Mexico. At the same time, those factories reach markets through global retailers, like Wal Mart. The net result of this arrangement is that the benefits of the factory workers' labor flows to global investors, likewise, the profits from retailing those goods flow to global investors. It's easy to conclude that global manufacturing destroys local wealth creation because so many cities like Cleveland or Detroit were ruined by it.

However, obviously because people remain in those cities, the ability to create wealth, to make and invent things is not lost. The thing that disappeared was the ability to organize people based on money, i.e. symbols, and numbers that represent their time, energy, and creativity. A precondition for that organizing principle, was that people were trained to only accept those symbols in exchange for their time, energy, and creativity--they accepted the money illusion.

Monday, October 28, 2013

Local People, Global Business

A Sunday drive on the side roads from the outer ring suburbs of Cleveland to the heart of the city goes through a variety of neighborhoods. The outer ring suburbs are prosperous--some are enclaves of great wealth. The "inner city" is often a post industrial landscape of declining or poor neighborhoods, vacant lots and buildings.

The Garfield Memorial
From the mid 19th through the early 20th century, Cleveland was a powerhouse of industry, and Ohio was pivotal in American politics. Eight men who were born or lived in the state were elected to the Presidency. Cleveland was a center of the production of steel and the home of Standard Oil during the massive growth of the American industrial economy. The Lake View Cemetery in Cleveland serves as a sort of monument to that era. The photo at the left is President Garfield's memorial. J.D. Rockefeller is interred there as well.

The burgeoning industrial economy of Ohio paralleled emergence of industry all around the world. "Industry" is people working together to transform raw materials to a finished product--an activity at least as old as civilization, now powered by oil and coal. Where there are people, there should be work, jobs, etc... It's the people who need the stuff, and people make the stuff.

For example, where there are people, there are babies, and where there are babies, there's a need for diapers, so there should be a diaper factory not too far away. That same chain of thought can be applied over and over again with different goods and services, and the supporting industries that supply tools, machines and the like.

That's sort of what I'd expect the "normal" condition would be, the businesses making stuff that people need would be near the people, and grow to meet regional needs. However, what's happened is global businesses have displaced local industries. Really, the history of diaper manufacture tells the story. A large scale need is now met by mega corporations manufacturing on a large scale.

The backdrop in the diaper story is two world wars helped spur the growth of large scale shipping and industrial production and the type of organizations that can make use of tens of thousands of employees. At the same time, free trade agreements made it possible for businesses to seek the lowest cost labor and raw material sources. Global shipping organizations can connect a factory in China to every WalMart in the United States.

Saturday, October 19, 2013

Networks and Centralization: Part Three

Commerce in our time is a global phenomenon. Goods and raw materials move by ship around the world. Similarly money flows around the world with very little friction. As a result, manufacturing has mostly moved to the lowest cost, least regulated countries, which turned manufacturing powerhouses like the United States into formerly industrialized countries.

Presumably, there's enough wealth, and work, and things to do in every locality, region, and country. For example near my home in Ohio, there are several Amish neighborhoods. They are generally located in rural areas. The roads in the areas are built so cars can easily drive through, but are more suited to low speed travel with buggies, wagons, and on foot. The types and number of business per capita in the areas probably resemble what the United States was like before the widespread use of cars.

One of the features of the Amish areas is that many goods are produced locally. For example, within 30 miles of my house, (which is only about 10 miles from Amish areas), there are many more sawmills per capita than in cities. The sawmills serve local craftsmen and home builders. Additionally, there are many, many small businesses. The businesses exist because the people are there, which seems like a no brainer. Where people are, there should be business, industry, and manufacturing. More people, should be more business.

Albert Duce / Creative Commons
However, in the global economy, the businesses are not attached to any locality or group of people. They are structured to extract wealth from a large region and transfer it to owners, creditors, and shareholders. Retail outlets, like WalMart, Home Depot, or even Amazon, are international in scope built on international transportation systems and financial systems. Goods are delivered from a central system, only a tiny fraction of the store's sales are paid out as wages, and the bulk of the sales are hoovered out of the locality and transferred to owners, shareholders, and creditors around the world.

Where I live, this system exists side by side with the Amish economy. The Amish live the way they do by choice. Furthermore, the Amish actually take advantage of the global system, but don't seem to let it take advantage of them. The global economic system has been thrust upon people through numerous well known laws.

This trend, then, which seems to take advantage of and possibly been propelled by "forces" like economies of scale, was created according to a plan. The wreckage that's in it's wake is really the wreckage left by monopolists and businesses moving on from areas to take advantage of a new system. The people left behind were disenfranchised even when the businesses used their labor. The tendency toward centralization and monopoly tends to create monoculture economies in cities and towns. The picture above of one of the ruins of Detroit is a prime example of the danger of relying on one industry and on national or global markets that feed it.

So, back to the question--is it laws and customs, or is there some underlying phenomenon that drives centralization? Dude, it's laws.

Networks and Centralization: Part Two

As discussed in the previous post, a fundamental aspect of life is that nature limits available energy and power production. Many patterns emerge from this limitation. For example, in human settlements, like cities, where energy can be expended by machines or lots of people, roads, property, and buildings tend to be built following geometric plans like a grid, rather than along the energy minimizing routes like deer or pedestrians make through fields.

The logical pattern of these natural energy minimizing routes is a star network. Nodes are linked by one or several connections. Between cities, roads, like the US interstates, follow these energy minimizing paths. Even airports and air routes follow the hub and spoke system. The star network introduces strategic value to locations in the map of nodes and routes.

To see the network in strategic terms is to adopt the view of a predator, like a wolf pack stakes out a watering hole or along the paths leading to it, or a mountain lion hides in a tree overlooking a path to wait for a deer. Or, in terms that aren't flattering, it's the tapeworm that takes up residence in the gut of a cow, or the leech that waits in the watering hole to attach to the leg of an unfortunate animal.

In human societies, laws and culture govern the equivalent of the producer-parasite relationships. However, the effectiveness of the laws is limited (or amplified) by nature. In commerce the hard work, creativity, time, and energy of the builders of a company become a mere cash flow that's acquired by a financier. The builders of the company do the hard work of transforming and working material to make useful things. The financier extracts all the value with a few signatures and shuffling of paper.

Generally, businesses are organized to expedite their acquisition--as if they come with handles attached. Their "value" is represented in symbolic or paper terms--this is often a side effect of the accounting that's necessary to pay taxes. In the US, the laws shape them from the very beginning creating a hierarchical organization from the start, so when an acquisition is triggered, a few years of cash flow are brought forward with a loan, the principle divided among the owners, and the debt and interest transferred to the company and its workers.

However, if you look at the flow of information and energy and work within a company, the vast flux of that flow is through the workers, while the management and ownership are off on an island. However, they accrue the tapeworms' share of benefits. In some cases, the management or owners are utterly ignorant of the essential elements of the business and see it only in financial terms. Hence, the tendency of companies to grow larger through acquisition and the tendency toward monopoly and combination, and typically, eliminate redundant systems and workers to accrue more benefits to owners, seems to be at odds with this.

Here again, the principle of "inside/outside" is at play. The strategic view of the owners is completely at odds with the workers. The workers are, perhaps by necessity of the numbers involved, unable to participate in strategic decision making, or they're just duped.

So the essential question is: do these tendencies arise from natural laws, and represent underlying natural processes, such as network effects, or are they actually contrary to these effects and merely imposed arbitrarily by the laws and customs of men?

Friday, October 18, 2013

Centralization and Network Effects: Energy and Power

The fundamental governing principle of life is that time and energy are limited. Life boils down to energy, and the expenditure of energy--the physical quantity of energy expenditure is power, or energy per unit time. For most animals--people included--the ability to generate mechanical power is limited by physiology, which in turn limits the amount of oxygen that can be delivered to muscles per unit time.

Game Trail in Northeast
Ohio Woods
Various patterns emerge from these limits, for example, if you walk through the woods in Ohio, you'll find numerous game trails, which are basically roads made by deer. The deer follow the tracks of their friends and wear a narrow path between sources of food, water, and shelter. If you follow these trails, you realize, quickly, that the physical capabilities of deer are a lot different than people. Rather than following the gentle slope of a hogback up from a stream, for example, a deer path will go directly up an earth wall.

Sometimes you'll find trails that are made by pedestrians which cut through fields, or small stands of trees, or cut across a lawn. These trails exist because it is easier--that is, less energy intensive--to get from point A to point B using them, rather than bushwhacking a new trail, or following the orthogonal roads or sidewalks, and making the walk 41% longer. In a pastoral world, these human trails crisscross the landscape, however, in an industrial society, only small segments of these trails connect roads.

In an industrial society, machines overcome the limitations of human power production. The energy that's stored in a cup of gasoline exceeds the amount of energy stored in a cup of food by orders of magnitude, for example 31,500 calories versus 320 calories for a cup of ice cream. The power that's produced by a machine is, again, orders of magnitude larger than the power that's produced by people. A typical healthy young man can produce less than 200 W for a long time. A 5 hp lawn mower engine produces 3,728 Watts as long as the tank has gas.

Within a city or town that grew in the industrial era, roads are shaped by geometry and plans, because machines make it possible to shape the landscape, and there's a reciprocal relationship between the machines: the trucks and cars and bulldozers, and the roads. That is the roads must be large enough to carry a truck, because the trucks must be large enough to carry the machines to build the roads.

However, the human imposed geometry generally disappears at the city limits, and the roads linking cities and towns are more like deer trails.

Wednesday, October 16, 2013

Inside and Outside

In almost every human society there is a ruling elite and a mass public. Indeed one needs to look far and wide and comb through historical and anthropological sources to find counter examples. In organizations like the military, or business there is usually a top down approach to ruling, and decision making is centralized. Freedom of thought and action declines toward the bottom of the hierarchy at the base of the pyramid. (This pseudo-geometric analogy is not a good one. decision making is centralized because of network effects... more on that in another post.)

By mere nature, just the numbers involved and the difficulty of sharing ideas described in prior posts, information, thus decision making, is shared unequally. However, countless examples in history and present day experience show that it is often necessary for the elites to, at minimum, cloak their activity in a guise of myth and morality or to hide them altogether.

The United States is a prime example of such a society, it's split between a domestic constitutional republic that's ruled by laws and a global empire which is outside the reach of the laws of the nation and runs through the executive branch. A sizable portion of the resources of the nation of hundreds of millions of people goes to further the interests of a small group of people.

General Smedley Butler (1881-1940)
Smedley Butler provided insight into this aspect of American society. In War is a Racket he wrote:
A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small "inside" group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.
He fought as a marine in US imperial/commercial wars of the early 20th century and furthered corporate interests.

I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912 (where have I heard that name before?). I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.

Always, American wars are presented with the rhetoric of morality, security and national interest, while the actual speculative strategic interests or venal economic interests are not discussed in public. The benefits of fighting are conferred on a few, while the cost is borne by the public, the soldiers, and the countless civilians who are killed. Any official who might argue that a war is being fought to just advance the fortunes of a friend would be met with furious indignation.

In a very real sense, though, that indignation is a sign of a problem. The public's goodness is used against them. Very simply, because they are essentially "good", the people assume everyone else is too. They can't imagine that a person or group would manipulate them each and every day to simply steal from them, or to trick them into sending a son or daughter off to die on behalf of a corporation.

Saturday, October 12, 2013

Mental Colonialism Part Three

To wrap this topic up for now (Part One, Two) , the systems that affect day-to-day life of people, even the mundane things like how the banking system works, have one part of their foundation in the "real" world and one in the world of ideas and beliefs.

In many cases, the ideas that support the systems of the day have a monopoly on the minds of the people, and have a physical manifestation in the mass of humans that believe them. The ideas serve as a channel that directs a river of meat toward various ends. Where ideas and their associated systems hold a monopoly, the lack of competing ideas means that a failure of the dominant system brings total collapse rather than a quick transition to a new way of life.

The title of these three posts includes the word "colonialism"--which implies these ideas are imposed. That is, a person or group develops the ideas and imposes them to achieve a goal. It's easy to confer an almost god-like status on those who succeed at creating these ideas and systems, or at least set them apart from all other men by assuming that what they imposed was born from perfect clarity of thought and purpose, and that the thing they created matched their concept.

In more mundane terms, having "left the city", and creating a new thought, they returned to conquer by teaching (or violently imposing) their new ideas. While the impulse of the creator is toward freedom--a need to leave the city to simply think, invariably the manifestation of their idea is the gray sleepiness of the systems of the city, and their own reanimation as an undead, which is at the very least, an ironic fate.

However, this description of the thinker and society might be more of a myth than a reality. The role of understanding or consciousness in shaping systems and society might be less important than nature and the nature of human beings. That is, the mass action of people, and the shape of societies and systems is maybe an emergent property, where simple rules combine to create complex systems.

One example of this is the tendency of capitalist corporations to grow bigger and bigger through acquisitions or monopoly practices that destroy competition. One can view this as the result of ideas. There are historical examples where collusion and scheming resulted in systems that are favorable for monopolies to flourish. However, there are analogies to this in nature, specifically, where larger animals require proportionally less energy per pound than smaller ones. That is the metabolic energy is proportional to the mass of the animal to the 3/4 power, so an elephant takes less energy per pound than a mouse, so there is an underlying mathematical principle that tends to drive this outcome.

Perhaps the mixture of these two concepts provides a more genuine description of the true relationship of thought and the systems that people inhabit than one or the other alone.

Monday, October 7, 2013

Mental Colonialism Part Two

My first job out of college was at a small high-tech company--call it Crystal--that was bought by a French multinational corporation. I was surprised at how the purchase was financed because it seemed improbable--a loan was used to buy the company and the debt was transferred to Crystal, which paid it off over a number of years. The company's intellectual property, developed by scientists and engineers over a couple decades, its land and equipment, and its profits became the French company's property essentially at no real cost to them, because the company paid for the purchase on behalf of the French company. Really, it was like a magic trick.

A similar procedure is performed on a daily basis with land and houses. A home buyer puts a deposit down and obtains a mortgage and a deed for some property. In the simplest analysis the bank uses the buyer's deposit, and through fractional reserve lending creates the rest of the purchase price with nothing but a flourish of paper and pens writing signatures.

The items of value in the transaction are: the buyer's deposit, the mortgage payments (which are really the time and effort of the buyer), and the property. What the bank provides is as substantial as smoke or symbols and numbers. However, in the bank receives payments of the principal and interest for years, or gets the property in the event of a default.

This truly remarkable arrangement between bank, buyer, and property is made possible by laws, customs, and most importantly by beliefs and ideas that are widely held. These ideas, in fact, have a near complete monopoly on people's minds.

Saturday, October 5, 2013

Mental Colonialism Part One

A prevalent theme in literature is that a person needs to wake up or escape from their received ideas to think freely and to understand. Another metaphor for this is to leave the "city"--civilization and other people--to obtain freedom of thought and understanding. Yet another metaphor is that obtaining this wisdom is akin to a trial of physical pain and sacrifice. One of the implications of these metaphors is that free thought is at odds with "city", civilization, and the family. In the city, people partake in a system and fulfill a role, and there's a reciprocal relationship between ideas and these systems; the systems exist because corresponding founding ideas are believed.

Through most of recorded history, it's been dangerous to even discuss new ideas, or to question the ones that are in place. Human creativity and new ideas intrinsically mean that the way things are is not the only way to live, and may not even be close to the best way. The body of ideas that circumscribe the political and economic systems of the times drives competing ideas and beliefs to the fringe of public consciousness through physical violence, such as against the Cathars, or just by exclusion from canonical education.

These beliefs and the systems are yet another case, like the vampire and the cross, where the public confuses the symbol or an idea with a thing. In the United States a large part of the population confuses the bible with history. That is, the collection of borrowed and rehashed myths that became the founding story of one tribe is regarded as the universal story of all people. The story that's been assembled through scientific inquiry into history is less well known and ancient myths and old religions are all but forgotten, or are just academic curiosities, or fodder for comic books, or artistic memes that are "understood" by only a tiny sliver of the population.

Egyptian Horned Goddess Hathor
Hathor in Cow Form
The concepts and symbols associated with those religions would have been the stuff of day-to-day life of people living in the pre-Christian west, and probably regarded with the same level of confusion that Christians have for the cross as a symbol as a thing with magic powers.

The two images above show the depiction of the Egyptian Horned Goddess Hathor, on the left in "human" form, and on the right as a cow. Bountiful nature is given a fitting symbolic form--as a cow, and a set of horns. Likewise, the parallel male horned god, like Pan of the Greeks, or Freyr of the Norse, is found in many religions.

While these broad religious beliefs are interesting to think about, the more commonplace pervasive beliefs of day-to-day life have a substantial impact on the way people live, and on the organization of society. I'll discuss the concept of a mortgage and real estate ownership in Part Two.

Wednesday, October 2, 2013

Information Theory, Speech and Writing

Claude Shannon
Information Theory provides broadly useful concepts; it describes the physical limits on recording or transmitting data. Broadly speaking, information is change. It's present on the microscopic scale in the spin of electrons, the orbital states of electrons, and chemical reactions. On the large scale, it's present in the tides, the rising and setting of the sun, gravitational fields, and the like.

The concepts can also be applied to the problem of transferring thoughts from one human mind to another. The rate of data transfer through speech or writing is small compared to the rate of data transfer through visual media, like a video. However, writing or speech does not rely solely on the information that's present in the words. From an information theory point of view, speech or writing is like a compressed form of data transmission. It relies on information that's already shared between the speaker and the listener, or the writer and the reader.

Part of that shared information is cultural, taught since childhood, or learned through study. Part of it is inborn, recorded at the level of organs, cells, and DNA of our ancestors, and even in the inert matter that led to our most ancient single cell ancestors. That information comes from the universe. The part of that shared information that's encoded from the universe doesn't necessarily translate easily to speech, because it predates words and speech by millions and billions of years.

One of the fundamental problems of communicating ideas, then, is the shared experience of the author and the audience might not overlap, so, in information theory terms, the message is transmitted with lossy compression, and only an imperfect version is received.

Sunday, September 29, 2013

Money and Magic

As an adult, day-to-day experience and the routines of life make people forget how powerful imagination is and how fluid the boundary is between what exists in the real world and what's only in the mind.

Almost every thing that's designed and crafted by people has its beginning in the imagination. Even the most pedestrian utilitarian things start as a concept, become a plan, and get built using methods and tools that help maintain the link to concepts--like a carpenter's square keeps boards orthogonal.

Likewise symbols, images, and myths easily enter and affect the mind from the outside world through barriers that are so porous as to be non-existent. Indeed, grown adults readily confuse a symbol with a thing, or form an emotional bond with objects, or attribute magical qualities to pieces of wood, metal, bone or stone.

Whole societies are shaped by religion, which is a particular genre of fiction, and the people are shaped yet again by all the fiction and stories that are told as entertainment. People's day-to-day behavior is profoundly shaped and crafted by whatever they use as money, which in our time, is just numbers in a bank account, yet people give up their whole life to make that number bigger. Advertisers connect people's desire for social status and sex with objects like cars or bottles of beer, and people completely confuse the two things.

The well worn scene in the vampire movie--where a living person holds off a vampire with a cross is a portrayal of this aspect of human nature. A piece of wood formed into a symbol is shown to have a physical effect--like the repulsion of poles of a magnet. The audience readily understands the scene, because it neatly summarizes their experience.

It shouldn't be surprising, then, that many of the people who are compelled to understand the world are attracted to the occult. Isaac Newton is a famous example of a scientist who pursued numerology, biblical prophesy, and alchemy. However, it seems like Newton pursued the occult in an earnest and simple way--as if that study was amenable to the same type of inquiry as the study of gravity. While what's truly amazing and mysterious is that math, just plain old algorithms and numbers, can represent natural processes to the point where math appears to go beyond representation and actually exist in the universe as well as exist in the human mind. Math is the symbol that's also a thing, or a bridge between two realities.

The occult appears to be almost the opposite thing in the sense that it's cut off from the universe and is all about the ghosts of the mind's eye. Take the question, "what's a vampire"? One can undertake a sort of scientific inquiry into the subject, which will start with there are no vampires, and then transform into a sort of anthropological and historical survey of the subject. But a more subtle inquiry starts with the premise that since the boundary between what's real and what is imaginary is fluid, vampires are, in a significant sense, real. They exist in the mind of billions of people, and are as real as money, and as real as the power of the cross to repel them, and are as real as the power of a wooden stake to destroy them.

Saturday, September 28, 2013

This Blog

Since I was old enough to form coherent memories, I've been researching and thinking about a handful of questions that interest me. I can't help it. I'm compelled like a dog needs to sniff the ground.

I have been reluctant to put my thoughts in words, though, because squiggles and lines on a piece of paper are a feeble medium for transmitting the images and concepts that are alive in my head. Hopefully, all the tools of the Internet will provide a better way to convey them.

Writing, is at best, only the evidence of motion of an active mind, just petrified foot-prints. A reader can follow the path, and see the muddled gray version of the sights that the author saw, and obtain some version of the experience that was in the author's brain. For example, when I write about walking through the woods near Cedar Road in Munson Township, the image in my mind is detailed. I recall the pine needles underfoot, and the roots of trees, and the sunlight filtered through branches. I think about one afternoon when I was a teenager, and I walked right up to a fawn that was standing there. While the passage of years has muted my memory of the colors and the movements of myself and the deer, I know that a reader only sees stick-figure versions of that scene in their mind's eye.

In the worst case, writing becomes the inky blood of institutions, and an animated corpse of long dead authors. The desire to dominate is, perhaps, the only emotion that outlasts the men who nurture it. In the worst case, writing enslaves people and pickles the brains of the living and puts them to sleep.

There's an ongoing struggle between the living and the undead and their minions. At times, this struggle manifests in physical form: in wars, or in commerce, but mostly it's a struggle of individuals. It's a struggle to see and understand the world, and to find and accept freedom of thought and action.