Friday, October 30, 2009

Marx and Mises sitting in a tree

Of the two von Mises boys, I infinitely prefer Richard to Ludwig. My experience reading Ludwig von Mises is to recoil at each and every page and concept. Yet he did have one view with which I sympathize.

First, a little background. When he was young, Ludwig von Mises wrote a thesis about money that has had an odd career in, of all places, America. Mises was concerned with the fact that, in a perfect free market system, we should have a mechanism that allocates capital very much outside any government diktat, and we should allow the full Darwinian mechanism of selection to operate – failures should not be propped up. Yet, with fractional reserve banking, a snake was set loose in this Eden of Entrepreneurs. Banks could get so big, and they could leverage their assets to such an extent, that instead of nice discrete Darwinian extinctions, we would have mass extinctions. In order to secure themelves, the banks persuaded governments to become insurers of last resort - and at that point, secure from Darwinian morality, banks responded not to the narrow call of survival, but to the rentseekers tremendous trumpet of speculation. In this way, the allocation of capital, instead of being in perfect harmony with the visions of entrepreneurs, was inefficiently skewed to boobytrapped schemes, rigged to pay off to the bank’s management, and to be paid for, when they failed, by the state.

Although the story is longer than this, it about sums up Mises theory.

Now, the first thing we notice about the theory is that all empirical evidence is against it.

Developed economies, with Central banks and bank insurance, were able to loosen up credit not only on the level of business, but also on the level of the individual household. Non-developed countries, on the other hand, lacked that credit capacity. If there is a single determinant of the prospects for development in the twentieth century, it is a developed financial sector. The Soviet Union, de-developing itself, refused to develop a credit system and thus was forced to borrow from abroad and curb even those fields – like computers – in which it had a human capital advantage. It was the lack of credit killed communism as surely as lack of credit (even more than lack of faith in God) drove Raskolnikov to axe the moneylender.

If you read nineteenth century from the economists point of view, you will soon notice that the limits of the worlds of the characters are the limits of their credit lines. That was the world in which Baudelaire and Bloy could find the whole notion of debt diabolical. Not that they were wrong in terms of the general economy – but we live in this world by dickering with the devil.

But there is, still, a core of truth in Mises’s idea. While any developed economy needs a robust credit system, it also needs to put stringent curbs on speculation. Otherwise, the production of real goods and services will soon serve the servants – the speculators – whose only social function is to provide capital for risky enterprises.

Here, then, is where Mises and Marx can join hands: making sure that speculation does not take over industry.

In the U.S., the way speculation has taken over industry is the equities markets. In particular, the discussion of whether the stock of a corporation should, in the aggregate, represent more than its assets was won by the yes side. The progressive Republicans of 1910 were opposed to the idea of what they called watered stock.

I’ve often alluded to the bill, sponsored by Teddy Roosevelt’s partisans in the House and senate, that would have crushed this speculative impetus. To my mind, this is a much more sensible idea than the dissolution of the Federal Bank. It would actually have the same effect – to remove speculative inefficiencies from the economy. I’ve been thinking about this since reading Ian Welsh’s blog.

I made a comment there I will reproduce here:

I’m partial to Theodore Roosevelt’s remedy for curbing the power of the speculators in an economy. The supreme result of Roosevelt’s populism - which went beyond anything else proposed in the U.S. in the 20th century - was a bill , S232, that passed the House in 1911. Here is how it is described by Lawrence Mitchell in the Speculation Economy:

“It would have replaced traditional state corporate finance law by preventing companies from issuing “new stock” for more than the cash value of their assets, addressing both traditional antitrust concerns and newer worries about the stability of the stock market by preventing overcapitalization. But it would have done much more.

S. 232 was designed to restore industry to its primary role in American business, subjugating finance to its service. It would have directed the proceeds of securities issues to industrial progress by preventing corporations from issuing stock except “for the purpose of enlarging or extending the business of such corporation or for improvements or betterments”, and only with the permission of the Secretary of Commerce and Labor. Corporations would only be permitted to issue stock to finance revenue-generating industrial activities rather than finance the ambitions of sellers and promoters. … S. 232 would have restored the industrial business model to American corporate capitalism and prevented the spread of the finance combination from continuing it dominance of American industry.” (137) In Sklar’s account of the Roosevelt era draft, ‘whenever the amount of outstanding stock should exceed the value of assets, the secretary would require the corporation to call in all staock and issue new stock in lieu thereof in an amount not exceeding the value of assets, and each stockholder would be required to surrender the old stock and receive the new issue in an amount proportionate to the old holdings.”

We didn’t put these curbs in place in 1911. Since then, Speculation has become dominant in the U.S. economy. The whole trick of neo-liberalism is to extrude the old social insurance net, which was the great product of the progressive and new deal eras, into the private sphere. In essence, crush the bargaining power of labor, loosen restraints on credit, and tie the median income class directly to the speculative markets.

This has had the effect of creating a politics that is basically about pampering the speculative sector. It is, of course, a disaster for the vast majority of people. And that there was a lively discussion about speculation at all once upon a time - from 1890 to 1914 - has been utterly forgotten. You rarely ever hear a radical nowadays say, why don’t we simply overtunr the system of watered stock? Which, in effect, would mean that if you owned stock in a company, you really owned the company, rather than a financial instrument whose value was solely determined in a secondary market. The simple genius of requiring that the stock would have to equal the outstanding assets, and no more, would shatter the whole system at a blow. It is a system that needs shattering desperately.

Monday, October 26, 2009

republican virtue and equality

The view of equality that was reflected in the first phase of Cold War liberalism could be summed up in a sort of koan: equality is one of the necessary goals towards which any good society strives. At the same time, the failure to attain equality is a necessary structuring principle that makes the good society possible.

Among the canons of Cold War Liberalism, no text was clearer about this double bind than Rawls’ Theory of Justice. In no other area of political philosophy was the difference between Cold War liberalism and its classical predecessors so significant. The experience of the devastating wars of the twentieth century, and the Great Depression, had destroyed the old gentleman’s liberalism for which Hayek pined. In its place was a liberalism that ceded, and promoted, an interventionist state. But, in continuity with the old anti-egalitarian thematic, the CW Liberals saw the danger of perfect equality from two perspectives. From the economic perspective, while conceding the performance of the mixed economies of the developed world, that performance would be endangered if positional incentives were wholly removed from the picture. Thus, the people on the bottom would be peculiarly hurt by a totally equal society, for those were the people who benefited most from the technological innovations of the private sphere. The second danger was political. To maintain equality required some body, some institution, some party. But the enforcers of equality would not only destroy liberty, but would themselves simply recreate inequality in terms of other goods. The administrator whose pay, in a capitalist society, put him well above the wealth of a worker on the assembly line, was matched by the party administrator whose perks and power, in a communist society, permitted him access to a lifestyle far above that of the workers for whom he supposedly spoke.

It is important, nonetheless, that these perspectives on the vicious effects of equality did not annul the idea that a society should strive for equality – rather, they dictated a strategy of indirection. The being in Rawls’ Original Position, here, is doing something similar to the Duke in Measure for Measure, who hides himself in order to deputize another, in the ‘ambush of his name’, to create decorum in the state. And just as the Duke’s more puritanical laws prove unworkable without mercy – that is, without interpretive elbow room, and a consideration of circumstances – so, too, laws that too bind the powerful in the state so as to lower them altogether to the common level will deaden the creative function in the social order.

I make this comparison because in the end, the striving for equality is a form of republican virtue, and the argument for it is based on that virtue.

As we all know, the Cold War liberal consensus fell apart. Its fall was the fall, too, of the ideal of equality. From being an ideal that was expressed in opportunity (always a mooncalf of an idea), it became the target of a prolonged attack in itself. Rather inequality became, if not the open ideal of the neo-liberal thinkers, at least a correlate to the triumph of the most meritorious. The most meritorious, it turned out, were the administrators of corporations, and the investors. What their merit consisted in is that they were rich. In other words, inequality was its own justification. The neo-liberal ideology rescued the old Cold War liberal critique of equality while jettisoning the saving corollary of striving for equality.

Which brings me to a comparison of two very different articles. One is this excellent piece in the London review of Books by David Runciman. It is a review of a blast from the cold war liberal past – The Spirit Level: Why More Equal Societies Almost Always Do Better by Richard Wilkinson and Kate Pickett. Wilkinson and Pickett produce a critique not of the striving for equality that was part of the Cold War order, but of the assumption that the closer a society got to perfect equality, the worse off it would become economically and socially. On the contrary, Wilkinson and Pickett use plenty of cross country analysis to show that, in any number of lifestyle measures, from prevelance of obesity to the size of the incarcerated population, the more equal the society, the better for everyone.

For everyone… that’s the rub for Runciman. He takes up a theme that is familiar to us Foucaultian-Marxy types, a theme that is ignored by the Cold War Liberal position. It is that the positional economy is all about power and its entrenchment. From this perspective, the fiction of the original position is not benign, but blinding. It blinds one to the struggle for power that makes it the case that the wealthy want to be wealthier, and more powerful than, others.

The dark tradition of Republican virtue goes back to Thucydides, and up through Machiavelli, Hobbes and Montequieu. The lesson of all Republics is that they last only as long as their institutions are not hollowed out by private power. Thus, the first duty of the state is to exercise violence against the most powerful private parties. To put it in plain English, we do not tax the rich at a higher rate because we want to use that money for social welfare, or for the poor – we do it firstly in order to make the rich less rich. This, I think is always true. Rawls’ Theory assumes that we have passed a historical point where Republics could be threatened by private parties in this way. The whole of the last thirty years, I think, proves he was wrong.

But the liberal hope lives on that the rich and powerful are, somehow, simply rational actors who, accumulating their goods successfully, want more than anything else to contribute to the social good. Thus, Wilkinson and Pickett argue that even the rich would be better off in more equal societies. Runciman doesn’t buy it:

This sounds like a knock-down political argument: more equality would give rich people in unequal societies the kind of life chances that even poor people enjoy elsewhere. Who could object to that? It needs to hold for more than just infant mortality, however, and this is where the evidence is shakier. Another area where Wilkinson and Pickett present the data according to social class instead of simply the overall average is literacy scores. But here we find a slightly different story. Finland probably has the best educational system in the world, and disadvantaged Finnish children significantly outperform disadvantaged children in the UK, just as these do better than their counterparts in the US. But it is not the case that rich kids in the UK have worse literacy scores than poor kids in Finland; they simply have worse scores than rich kids in Finland. Moreover, rich kids in the UK have much better literacy scores than poor kids in the UK, because the social gradient is so steep, so the gap between the top and bottom is wider than it is in Finland. Education, unlike infant mortality, is a comparative as well as an absolute good. Parents want their kids to do better than other kids (whereas, one hopes, they don’t need to see other people’s children die in order to enjoy bringing their own safely home from hospital). Inequality in the UK means that rich parents can see their kids doing much better than other kids, even if they are not doing as well as they might if they lived in Finland. So the politics is considerably harder here: you can’t simply say that inequality means we are all suffering together. Instead, it may mean that the poor are doing so badly that the rich aren’t interested in looking at the wider picture. They are focused on making sure they don’t wind up poor.”

Runciman baulks, here, at reading the Will to Power into the entrenching force of great wealth. I myself have no doubt. The reason a person with one hundred million dollars pays a lobbyist to pay off a legislature to make sure that his taxes don’t go up by a million dollars is not from some fear that he will be a poor, bereft fellow with merely 50 million smackers: it is because the money, at that point, is about power. And, in the ceaseless struggle for power in the Republic, when the wealthy aren’t continually attacked in their bases, the poor will be attacked.

Which is the tale told by the second article, this one in the NYT:

“MEDFORD, Ore. — Dressed in soaked green pajamas, Betty Snyder, 14, huddled under a cold drizzle at the city park as several older boys decided what to do with her.
Betty said she had run away from home a week earlier after a violent argument with her mother. Shivering and sullen-faced, she vowed that she was not going to sleep by herself again behind the hedges downtown, where older homeless men and methamphetamine addicts might find her.
The boys were also runaways. But unlike them, Betty said, she had been reported missing to the police. That meant that if the boys let her stay overnight in their hidden tent encampment by the freeway, they risked being arrested for harboring a fugitive.
“We keep running into this,” said one of the boys, Clinton Anchors, 18. Over the past year, he said, he and five other teenagers living together on the streets had taken under their wings no fewer than 20 children — some as young as 12 — and taught them how to avoid predators and the police, survive the cold and find food.”

These are, of course, the Children of the Great Moderation:

“Over the past two years, government officials and experts have seen an increasing number of children leave home for life on the streets, including many under 13. Foreclosures, layoffs, rising food and fuel prices and inadequate supplies of low-cost housing have stretched families to the extreme, and those pressures have trickled down to teenagers and preteens.
Federal studies and experts in the field have estimated that at least 1.6 million juveniles run away or are thrown out of their homes annually. But most of those return home within a week, and the government does not conduct a comprehensive or current count.
The best measure of the problem may be the number of contacts with runaways that federally-financed outreach programs make, which rose to 761,000 in 2008 from 550,000 in 2002, when current methods of counting began. (The number fell in 2007, but rose sharply again last year, and the number of federal outreach programs has been fairly steady throughout the period.)”

It is questionable how far the rot has gone in the American republic. The last thirty years has produced an amazing spectacle of the comparatively poor defending the rights of the ominously rich. A friend of mine, an avid hate radio listerner, has many a terrible thing to say about Obama’s socialism and how it will destroy our system of healthcare. Meanwhile, his brother, who had nothing, just died in the hospital, after accumulating a debt there of at least a million dollars, which nobody in my friend’s family could, or has any intention of paying. The altruistic defense of greed is surely one of the poison plants that signal the collapse of republican virtue.

As for Betty Snyder, her kind have long been targeted by the theologians of power, the economists. I’m reminded of a remark in freakonomics by David Cochrane, the University of Chicago economist, in November of 2008:

“I absolutely love the following excerpt, which better captures what it is like to hang around with Chicago economists than just about any quote I have ever seen:
“We should have a recession,” [John] Cochrane said in November, speaking to students and investors in a conference room that looks out on Lake Michigan. “People who spend their lives pounding nails in Nevada need something else to do.”

Among the things they do is lose their homes and their children, who fall prey to meth and rapists, as par of this wonderful thing – this contrarian ecstasy – that are the wages of the violence of the powerful against the miserable in America.

Friday, October 23, 2009

Address to the Academy about Political Hatred

And this I say unto you – that the Apocalypse is secretly written in the division of labor…

Or, perhaps I should put this another way. Hum.

Cioran, following in the footsteps of Bloy and Rozanov, is surely right that sociability is a thin mask covering universal hatred. The hatred we feel for each other as soon as we become political (as political we must become in modernity, it is our fate, just as it is the fate of the cow in the chute to become meat) is an astonishing and little studied fact. Or, rather, it has been thrust into a platitudinous past by British utilitarians (taking up Hobbes’ war of all against all), who, perhaps rightly, ceased to think in terms of social psychology as soon as they invented the individual – a mock Jesus, an immaculate nouveau né who popped out of an accountant’s ledger.

Still, it seems to me that we have to explain two things in this world, I mean really explain – in fact, only these explanations are really crucial, although also, unfortunately, we always fail at the task. The two things are as follows: 1., Why does man universally hate man? And 2, why does man, nevertheless, universally love man?

Now, looking at those two questions under a high powered microscope, the first thing you will notice is that, ahem, they are, ahem… totally contradictory.

This is inexplicable. And in this address (you may now put away the high powered microscopes) I mean only to answer the first question.

I would guess that the hatred is, in fact, the sublimation of the great, debilitating, I might even say existential fatigue that lays ahold of us whenever we try to explain… anything. The least little thing. By which I mean the least little thing upon which there can be some disagreement. I am not, here, speaking of the grand architecture of the entire health care system. No, I am speaking, first, of such matters as, well, the best route to take from your house to the airport. I am speaking of disagreement over the hero’s motives in a tv sitcom. Or I am talking about whether the steak you ordered in a restaurant was cooked to the degree of rareness you requested or whether they simply ignored you and set down on your plate a piece of meat that was either bleeding or dry as a crouton.

Disagreement rains down in the universe like Lucretius’ atoms. In sum, they constitute everything that happens or will happen or that can be conceived of happening. And, mark this – every atomic disagreement can give rise to an infinity of disagreement. That is to say, an infinite argument can arise over anything at all. When we look at our fellow human beings, we realize that to move them in any way we will have to expend infinite energy, and that we will have to repeat the process an infinite number of times. Now, if we were only as reasonable as Oblomov, we would immediately go to bed and never get up, for the world is too overwhelming to deal with. In some corner of our heart, Oblomov’s response is our own.

But ---
But we don’t go to bed. We dash around, we read things, we talk.
Now, here I want to call upon a fact that everybody must have noticed at some time or another, viz, the fact that children like to stay up past their bed or nap times, and the fact that when they succeed, they immediately get cranky. Though we learn to drink coffee and fear deadlines, underneath, we feel that crankiness, in as much as we are not lying under a blanket, but we are actually trying to perform the infinite task of persuading people of our point of view. This is why men will divide up a city and butcher each other, quarter by quarter. Gain is secondary, the main thing is that other people don’t agree with us. And every disagreement projects a project of infinite and futile energy, as we try to convince them that they are wrong about this very important matter – as, for instance, that the steak was raw, not rare.

And this is how, by alchemy, a fact is transformed into a disagreement which is transformed into a massacre.

Wednesday, October 21, 2009

Levitt, Dubner and concern troll denialism

Well, it looks like Levitt and Dubner are going to accrue the denialist constituency, but - to their horror - the cocktail liberal circuit has finally found them not cute. This happens. Slate was swimming along being the cute contrarian who you know is liberal in its heart even if it was a warmongering place with Steve Landsburg as its economics troll on call, when they hit the wall floating the Blacks are stupider than whites - its genetic! idea. Saletan, of course, still works there, but it does seem that even in the crazy world of today, KKKontrarianism is a hard sell.

Similarly, coming up with a very bogus geo-engineering scheme and dismissing CO2 as "not the villain" in global warming (which is like saying, Simon Legree was really an abolitionist!) has had the effect that the kewl kids, like at Crooked Timber, are not going to be having a symposium on this exciting book.

But - I do want a cut of the take, here! I predicted this. Back in 2006, on Limited Inc. I'm reprinting that post. Damn, they are stealing from me.

Tuesday, June 27, 2006

From parody to policy -- Li pats itself on the back.

There are those who think that reading, as well as writing, Limited Inc is a less valuable use of time than, say, cutting holes in the pockets of your pants so you can play pocket pool.

But LI says, au contraire!

Proof exists right around the corner of your NYT -- go to the science section today. The global warming story. The geo-engineering story:

"Worried about a potential planetary crisis, these leaders are calling on governments and scientific groups to study exotic ways to reduce global warming, seeing them as possible fallback positions if the planet eventually needs a dose of emergency cooling.


Dr. Cicerone [President of the National Academy of Sciences] recently joined a bitter dispute over whether a Nobel laureate's geoengineering ideas should be aired, and he helped get them accepted for publication. The laureate, Paul J. Crutzen of the Max Planck Institute for Chemistry in Germany, is a star of atmospheric science who won his Nobel in 1995 for showing how industrial gases damage the earth's ozone shield. His paper newly examines the risks and benefits of trying to cool the planet by injecting sulfur into the stratosphere.

The paper "should not be taken as a license to go out and pollute," Dr. Cicerone said in an interview, emphasizing that most scientists thought curbing greenhouse gases should be the top priority. But he added, "In my opinion, he's written a brilliant paper."

Geoengineering is no magic bullet, Dr. Cicerone said. But done correctly, he added, it will act like an insurance policy if the world one day faces a crisis of overheating, with repercussions like melting icecaps, droughts, famines, rising sea levels and coastal flooding."

For faithful readers, this should ring a bell. It doesn't? Mein Gott, Vhat am I doing dis fuer? I've instructed Igor to go back in the files. This is LI for February 19 2006. Hey, I wonder if I should hit this Cicerone cat up for consulting duties?

"money makin' ideas for the AEI to consider

Being broke at the moment, LI has been in search of a surefire source of revenue. And then it occurred to us: what kind of pro-active, pro-business response to global warming would warm the hearts of rightwing moneybags and bring in the checks?

Surely the thing to do is controlled volcanic management! We keep our cars, SUVs and coal generated plants going along at full carbon tilt, toss in a few atom bombs into the crater of some isolated volcano every year or so, and get the wonderfully cooling effect of pumping “sufficient amounts of ash into the air.” This package has everything: major manipulation of nature, atom bomb use, and a pro-carbon agenda. We are writing to the Scaife foundation for a grant right away! Happy days are here again!

From the Washington Post Q and A with Eugene Linden, author of Winds of Change:

Q: “As I've followed the global warming/climate change discussion, three historically based questions have always interested me. First, the drop in temperatures from the 1940s to the 1970s seems to contradict the correlation between human generated greenhouse gases and warming. Has this been adequately explained? Second, there was a significant warming period during the middle ages during which an agricultural colony was established in Greenland, but there was little or no human generated greenhouse gases at the time. Does this indicate that other factors besides human activity are the predominant causes of warming? Finally, proxies for temperature measures (i.e. ice cores, tree rings) have indicated that current temperatures are below long-term millennial temperature averages, and these long term trends track very closely to trends in solar activity. Does this indicate that current levels of solar activity are a more likely cause of current warming than greenhouse gases? Thank you for your consideration of my questions.

Eugene Linden: Since human greenhouse gas emissions only truly ramped up in the last century or so, it should be obvious that past warmings were the result of natural cycles (although one scholar argues that humans have had an impact through deforestation and agricultural going back thousands of years). Moreover, periodic coolings don't contradict the connection between GHG emissions and warming. For instance, the eruption of Mount Pinatubo in the early 90s put sufficient amounts of ash into the air to cool the planet the following year. Climate is one of the most complex systems on the planet, responding at any given time to countless pushes and pulls, but, on relatively short time frames, CO2 has tracked temperature as far back as we can reliably measure. It's one big variable that we can affect, and since we've upped it by 50%, temperatures have responded much the way climate scientists have expected. There will never be 100% certainty that the recent warming represents a response to human inputs, but the consensus is strikingly strong that it does. Moreover, it's the one thing we can do something about.

Finally, even if the current warming was entirely natural, it would still represent something that we should take very seriously. Natural climate change did in past civilizations, and we've seen the destructive potential of extreme weather just recently on the Gulf Coast.”


Ah, fuck the think tank peanuts. LI is now thinking of the plot for the latest Michael Crichton novel – you know, our Rebel in Chief’s favorite expert on so called climate change. In this plot, St. Exxon (the first corporation ever to be beatified by the Vatican), trying, as usual, to save humanity, comes up with the volcano management idea. Evil environmentalists – the Osama bin Laden league for Deep Ecology – try, of course, to stop them. In the exciting last scene, Jesus Christ, played by Mel Gibson, machine guns the Laden-ites just as they are about to mess up St. Exxon’s scheme. Beautiful fadeout as Jesus turns to the CEO of Exxon – played by St. Peter – and says, in a choked up voice, “I just want my country… to love me… like I love it,” copping the finale to Rambo II – but also a wink and a nod to the idea, gaining increasing currency in the Red States, that Sly’s movie now has official gospel status.

A subplot involving St. Exxon falling deeply in M & A love with Chevron (who is pursued by a lustful, deceptive Chinee company, backed by some evil liability chasin’ lawyers) is, of course, de rigeur, since we need some nude accounting scenes – or at least nude flowsheet scenes. Hey, and to be all comme il faut and shit, how about a stand-in for you know who, toting a pellet gun loaded for bear, who tattoes cartoon images of the prophet on the buttocks of the aforementioned liability lawyers? We gotta think outside the box here, boys. Outside of the Hollywood mindset. Family values and like that. I’m going to pitch this plot to Seth."

Well, looking at our proposal, now, with an eagle eye, I can see a major flaw in it. It does have explosions. It would please the ever apoplectic male population, all pumped up on their Limbaugh brand Viagra and shit. But... it really needs to pump federal money into the South. This is, after all, pretty much the reason the U.S. exists any more -- find some reason to send another couple billion to a Peckerhead War Industry firm. I concede that, feeding the Dixie monkey wise, my simple proposal might not go over. But wait! What if we chose to explode volcanos in countries that aren't free? Couldn't we liberate them first? Which is invasion, which is moola-moola for those greasy kentucky fried fingers. And a lot of brown bodies, all torn to bits, ocassionally flashed on the tv screen. Wow. A lyncherooni of an idea.

I'm seeing if Tom Delay is available for board membership of this thing.

Tuesday, October 20, 2009

throwing the year long party

I’m reading Oe’s The Changeling to review it for Publisher’s Weekly.

Oe, like Coetzee, seems to want to find a way to write something within the novel form that can accommodate the essay. Or, to put this differently, like Coetzee, Oe is tired of people. Of characters. Of their acts. Of setting in motion a number of imaginary figures who caress or kill each other, who walk down streets only in order to get to fictitious destinations where something will happen to them, who allow themselves to be described, or become description machines for others (“He saw the red haired woman in the blue dress…”).

Writing a novel is less like writing poetry than it is like throwing a party. Except that this is a party thrown by a recluse. Unlike real parties, the novel is a party that goes on for an inhuman length. The writing can take years. The novelist/host must always be circulating among the guests; his job is not simply to keep their glasses filled, but to keep them from merging into one another, to keep them coherent, and to keep them interesting. It is no wonder that so many novelists end up as drunks, ceasing to fill up fictitious glasses and filling up real ones instead. And even if one doesn’t come out of the party with a deep yearning to drink, smoke or pop yourself into oblivion, you come out deeply tired. Conrad’s letters, after he finished his novels, always take on a tone of particular bleakness. In 1909, this is what he wrote to Pinker, his publisher, about Under Western Eyes:

“I wrote you frankly as to all I’ve done. Now I beg to point out that inn the last 231/2 months I’ve written 187,000 worlds (of which 130,000 in round numbers of Razumov – but I am a novelist who writes sometimes long novels—Outcast—Lord Jim. Nostromo--) In the course of these 231/2 monts as two honourable professional men can testify, from July last year to August of this I’ve had five severe attacks of gout – which means that actually I was either utterly disabled or sickening for it or recovering from it. That’s twelve months: but as I often worked when far from fit – yes with temp at over 100 degrees – when most men would be utterly unable to do anything—yeas and creative work too – let us deduct only 8 months; which would leave 16 monthhs of effective health and works out at the average of 11630w per moth. Out of the total there were 40000 words which you told me: “I can do nothing with that” with an air as if it were dirt which it isn’t, you know. But never mind that.”

Yeah, never mind that you treat me like scum.
Conrad’s obsessive word counts are the thing any writer knows. I have never sold a thing, a single piece of writing, in which word count wasn’t actually at the top of the list of desideratum. And yet, you will never ever hear this mentioned by a literary critic. Such is one of the small triumphs of art. We cover the word count as the very pudendum of literature.

But to return to our image of the party, the novelist, that strange creature, requires two things to feed him or her: an extended range of social experiences, and no social experience at all. One must keep locked away to write. The host at a party can’t keep getting called away to business. The party will lose its energy, its heart, its strange attractor. In this, as in so many other ways, the comparison between the novelist and God is misleading. God has infinite energy – one just has to look at the parasites that live in the guts of the parasites of ants, or notice the wind pushing a dead leaf down the street. Its unflagging, this obsession with there being things. And if you are the kind of person who is interested in a leaf being shunted down a street, then part of those things will interest you. But the writer’s task is to produce something interesting, not to produce something – even if, at the atomic level, it is word counts. It isn’t dirt, you know. God, on the other hand, can produce dirt in abundance. He’s not worried if you like it or not.

This hosting job, then, is extremely tiring. There is a part of Oe’s novel in which the main character – a novelist named, of all things, Kogito – is obsessed with the news about the suicide of his friend and brother-in-law, Goro. So he does what he hasn’t done for a long time, and watches tv. He finds, to his shock, that he can’t understand what the people on tv are talking about. Half of what they say is incomprehensible.

I understand Kogito – and Oe’s – reaction. When you don’t watch tv and then you watch a heavy dose of it, it does seem to be crazy at first. Especially the news. News is mostly a matter of text. And the texts are about the most complex motives, odd psychological states, the dense clockwork of financial and political complexities. Images are the outerwork – and in fact the images alone, unaccompanied by voice, would actually work much better to actually tell the news. If the news were a silent shift between images, there a soldier being killed, here a Manhattan skyscraper, there a world leader silently mouthing a spieech, if there were no voiceover or commentary, no explanation whatsoever, the news would suddenly be worth watching. But every image is radically deflated by hearty, sample audience tested voices that intrude upon them, that decay these images in their pores. Simply trying to understand the vocal dishonesty – dishonesty that is more than a matter of semantics, but of intonation, of the very grain of the voice – of the news is a distraction that continually leads the novice tv watcher astray.

That, however, is only part of it. Oe’s novelist character must know that he is in a minority – a very very small minority – of the population with whom he is trying, by a supreme and mindbending act, to communicate. With these voices dinned into their heads until they become the very voice of thought itself, it is as if he woke up one day to find that the door to his bedroom had been absorbed by the wall, and that he couldn’t get out (an image, I should say, I’ve copped from one of Clarice Lispector’s cronicas).

At a certain point in time – in the early twentieth century – the European novelists, who lived in the period in which radio and telephones were first making their sinister appearance, made a turn to the novel/essay. Woolf, Mann, Musil, Proust – they cast off the forms devised by Scott, Balzac, Flaubert, or Fontane, and – inspired by Tolstoy, perhaps, or Ruskin, or the newspaper supplement – they subordinated plot, the way the party is supposed to move, to consciousness – or, I should say, to the collective consciousness. That of an Austrian political/spiritual group, that of a clinic in the Swiss Mountains, that of the sphere of society, that of a visiting party going to a lighthouse – we are no longer in the world of adventures and ventures, of vengeful aunts manipulating the seedy desire for ass of a debauched nobility, of a sexed up, dissatisfied provincial wife, of Scot rebels.

The current turn to the essay in the novel is a bit different, however. It is eccentric, cranky, and very conscious of being not apart of the main. It is in a sense a surrender of the communicative function of the novel – the idea that the party is being held for someone, some reader, who will recognize that it is not dirt. It is all dirt now.

Is it the collapse of faith that there is, even, a thing like a collective consciousness? A faith shaken like a reed in the wind simply by turning on a tv and going through the channels? Which is an experience to make anyone wonder if consciousness is defunct, and if all that is left are these inhuman humans, to whom anyone would prefer androids dreaming of electric sheep.

Thursday, October 15, 2009

the underworld becomes the overworld

“Hundreds of representatives of various underworld groups are reported to have attended the funeral of Vyacheslav "Yaponchik" Ivankov.

The ceremony was closed to the media at the request of his family. Police were present but no arrests were made.” – BBC, “Russian crime boss laid to rest”

“Meanwhile, quarterly performance at the banking giant Goldman Sachs cemented its status at the top of the financial heap, alongside JPMorgan Chase. On Wednesday, JPMorgan reported another profitable quarter, igniting a rally in the stock markets.
Goldman, which repaid its $10 billion government bailout in June, reported that trading gains and corporate investments contributed to a $3.19 billion profit in the third quarter. In announcing its results, Goldman promptly went on the defensive about its bonuses, which are being doled out while the unemployment rates chugs toward 10 percent.

“There is a massive divide between Wall Street and Main Street,” said the analyst Meredith A. Whitney. “Main Street is suffering while Wall Street is doing great. It’s like the Olive Garden is empty while San Pietro is packed,” a reference to the posh Italian restaurant in Midtown Manhattan.

In part to allay criticism of its profits and bonuses, Goldman announced a $200 million contribution to its foundation, which promotes education.”- NYT, Bank Earnings Show Shifting Earnings of Wall Street

The Vory v Zakony is defunct. Banks and bank robbers have always, of course, existed under the sign of Janus: two faces on one body. The man who embezzles and the man who makes a loan are both dealing with money that is not, properly, theirs. But ours is not a world of fabulous absolutes, and at one point the banking system American had served the American public. In the reversal of that order, we have had a chance, us zona freaks, to see into the very bottom of things. It is sad that before a tsunami hits, the water from the shore rushes out, and briefly, the ocean bottom is revealed. And so it was with our good democracy, from October of last year until January. We saw what we suspected during the Bush years – that democracy has become a caricature and a misnomer for the kind of government we suffer under.
So it is that the bubble, concocted, once again, in the White House and by the Fed, has been a-blowing on Wall Street. Because it is a bubble that touches only the important people, it is a bubble in a very closed and restricted circle. That circle likes it. In the profile of Larry Summers published a couple of weeks ago in the New Yorker, Summers (whose very naps are subject to the writer’s adoration) is depicted meeting with some clueless Michiganers, who are, well, pleading for Federal funding to go to several worthy enterprises that would employ people outside of Wall Street. One of the Michiganers even uttered the heresy that the U.S. needed more manufacturing, citing as his authority Immelt, a CEO who has said the American economy should be twenty percent manufacturing (Americans cite CEOs the way the Medievals would cite Aristotle – to give that needed divine sanction to a statement). Summers is portrayed as a veritable intellectual Anny Oakley, shooting down such crackpot notions with his bare genius:

“It’s terribly important that we be very tough-minded about doing things that work, not things that don’t work, and about testing, challenging, claims,” he told the executives. And then, like a machine gun on a rotating turret, he went around the table one by one and questioned every claim he had just heard. “I was very much aware of Jeff Immelt’s statement about twenty per cent,” he said. “That was a very impressive claim, because if you look at every country the manufacturing share of employment has been going down, and I asked him if he had any data analysis to back up his statement. I’m still waiting for the answer.” (Immelt did eventually send him some information.)

Summers was equally doubtful of the idea that fairness required the government to bail out every struggling industry. He said, “The point that some of you made is one that, frankly, a number of the President’s more political advisers make with great frequency: how could you lend money to the big banks in New York and not lend money to regular folk who are employing a hundred people and are losing a hundred jobs?” But, he said, “just like occasionally in war there are unintended benefits, occasionally in bailouts there are unintended beneficiaries.” The bank bailouts, which, he noted several times, began under President Bush, “were directed at preventing a collapse that would have led millions of people to be out of work, not as support for those institutions.”

He also took exception to the idea, voiced by several people in the meeting, that intervening in manufacturing was as imperative as stabilizing the financial industry. “Manufacturing is very special,” he said, “but I promise you that the people involved in energy production think that it’s kind of special. I promise you that there are a lot of people involved in various kinds of retail activities who think they have a crucial role in the economy, and they’re right.”

Such turret like arguments obviously impressed the hell out of Lizza, but they look like so much bs on paper. Nobody disputes manufacturing is going down, the dispute is about the effects of that on working class and middle class incomes – effects that are worsened as nations like the U.S. shift to depending on the financial sector as the main profit center. And of course, talking about a lack of factual, the sheer impudence in pretending that the big banks were saved in the way they were saved (apparently, there was only one way to save them. Who knew?) because there collapse would have “led millions of people to be out of work” ignores that there reconstruction has happened as millions of people have been kicked out of work – and in fact, many of them come from small business which – o the joy – have been falling left and right due to lack of credit. For those wonderful multipliers of employment, the big investment banks, have been investing in … commodities, derivatives, and bank stocks.

The defender of the banker-bank robbers is, of course, on the left – meaning that he, at least, remembers that the Government saved the entire sector between November and February. Goldman Sachs has been busy forgetting that, and no doubt some bright pup from the Cato institute will chop up figures and redefine common sense definitions until he can prove definitively that it didn’t happen. The parasites live for these moments. They are the little undertakers of memory, which is such an enemy to Myth. And no oligarchy can survive long without Myth.

If we must have myth, I prefer the vory v zakone. There is a funny article (in French) at by Tobias Holzlehner entitled the Paradise of the Great Bandits – which Holzlehner mistakenly locates outside of Manhattan. In fact, he locates it in Russia’s Far East, in Komsomolsk-sur-l’Amour (Konsomolsk on Amur) to be exact. He recounts his adventures in going to see the tomb of Dzhem, which involved him in some difficulties when he was spotted photographing it. In fact, he has to hide for a bit among the tombstones, and keeps slipping on the ice, all of which must have brought some smiles to those lardy Mafioso faces.
Dzhem, it appears, was a mini-Berlusconi or Murdoch. His real name was Evgenii Vasin. In the days of Brezhnevian decay (which has numerous echoes with the American version, circa now), he was a trainer for a soccer team. But the athletes turned out to be much better at beating on the heads of local store owners than kicking a ball towards a field goal, and so they diversified. Life was good and peaceful – artisans and shop owners paid up, the police were paid off, and Vasin, ever the talent scout, even recruited manpower from prisons. In the breakup of the Soviet Union he, a man of vision, saw his chance and greatly expanded his businesses, employing all the standard business practices: motivating his work force, paying his top management bonuses, and administering the physical assault of various concerns and people who did not buy his insurance.
Unfortunately, everything started going to hell when somebody blew up the café Charodeika on February 22, 2001, killing fifteen people. Now, it was a matter of fact that the owner of the café had been behindhand in his payments to Dzhem. The awful truth is, he wasn’t paying at all. Fair is fair. Like any exec, Vasin was inspired by the great leaders. He must have keenly noted the way in which “Chechen” rebels kept blowing up apartment houses in Moscow and elsewhere right before Putin was swept into office on the pledge to kill Chechens, basically.
Things didn’t work out as well for Vasin as for Putin, and so the latter is now Dzhem of Russia and the Dzhem moulders in the cold cold ground.
There’s a warning here. Luckily, America is not the country to stand for violence from criminals, when well organized peculation can more easily and peacefully occur simply by a., grossly understaffing regulators, b., annulling laws against various crimes of corporate fraud and thievery, and c., assuring a gulled and ignorant population that mainlining wealth to the wealthiest is in all our interests, world without end.
Of course, even if the population is not gulled and ignorant, they can do nothing about it. They elect leaders whose every campaign promise and word is a lie. Then they elect their opponents, and it turns out their every campaign promise and word is a lie. Thus, the slow, fatal disenfranchisement of the plebes goes forward.
I hope Goldman Sachs consults the followers of Dzhem about this wondrous educational foundation, which is being endowed with about a month’s worth of salary for one GS highroller:

“In 1996, he opened the charity foundation Sostradanie (« Compassion ») in Komsomolsk-sur-l’Amour, with offices in Khabarovsk, Birobidzhan and on Sakhalin Island. Among the members of the charity service were found former prisoners, writers, former police officers, university professors, and many vory v zakone [3]..

Saturday, October 10, 2009

Blast from the past: drooling over the EMH

I wrote this on Monday, October 14, 2002, but it seems to have lost none of its topicality in these boom days in the zona. The ever renewed discovery that the Efficient Markets Hypothesis is a pile of theoretical dung that does not even serve to warm the huts of yakherders seems, this time around, to have even reached the Economist.

So let’s play a song that was a hit before your mother was born, though she was born a long long time ago…

"The journalist beat

For months, LI has been beating on a drum that is made out of the cyber-skin of James Glassman. The disintegration of the business press, which in the last week saw two more casualties -- Forbes ASAP and Upside -- has not prompted the kind of investigative fervor that is revved up by, say, the kidnapping of blond California tykes. Still, there's a lot to say about it, and we've been boringly, boringly on target about this issue. Well, in memes we trust -- Washington Monthly has an article about this topic by journalist Philip Longman. Longman begins in the self-critical mode, although it never reaches a properly Maoist depth. Here's a couple of grafs from the meat of the article:

"I was once proud of my profession and resentful of those who criticized it. For more than 20 years, I rode the great boom in business journalism that began in the early 1980s. I like to believe that at least some of my stories helped to enlighten readers and remedy wrongdoing. But today, I'm more likely to admit--at least on a bad day--that I spent my youth hustling Tyco shares to senior citizens.

Just as Americans put far too much faith in the integrity and intellectual prowess of stock analysts and other supposedly disinterested financial watchdogs during the boom, they also put far too much stock in business journalism, and have a right to be disappointed and angry. Like many of the industries we once covered, business journalists built their own bubble during the last decade. And now--as is appropriate for an industry that grew rich by dishing out so much bad advice and flabby reporting--business journalism is currently suffering the same financial fate as Wall Street and Silicon Valley. The Industry Standard --where reporters once took time off from chronicling the achievements of dot-com heroes to enjoy in-house massages and open-bar parties graced by belly dancers--is history, along with many other formerly high-riding business rags. And even the most venerable and established business publications are in trouble. The Wall Street Journal has suffered huge layoffs. Forbes, no longer profitable, is reducing staff and executive salaries, eliminating the 401(k) plan, and raising cash by auctioning off old man Forbes's various art collections. Business Week , which championed the "new economy" and in the late 1990s proclaimed an end to the business cycle, saw its advertising plunge from 6,000 pages in 2000 to 3,786 last year, and may finish 2002 with even fewer."

So far, so good. Alas, Longman, revving up for some fancy shooting, never takes a nice shot at a named target -- besides the obvious Cramer and Glassman. This is one way to cover your behind: criticize the bubble of biz journalism without naming the journalists. Worse, Longman apparently believes strongly in the Efficient markets theory. That this theory conflicts with the use of the term bubble, which he sensibly employs, doesn't seem to phase him:

"Few business journalists spend much time analyzing balance sheets. But even if they did, they wouldn't be of much help to folks trying to figure out how to invest their 401(k)s. This truth was forced on me when I set out to learn high finance (after years of writing about it) at Columbia Business School. Here I was, a 40-something guy on a fellowship for mid-career business journalists, surrounded by 20-something whiz kids who would shortly go off with their newly minted MBAs to dazzle Wall Street. And what was the first lesson our finance professor drove home? That even after spending two years and $60,000 at Columbia Business School, none of them would be able to outperform the markets except by sheer luck or inside information."

If Longman really believes his second sentence, than he can't really blame business journalists for the negligence alluded to in the first sentence. Oddly, he doesn't reflect on the contradiction. LI thinks that Longman is right, if he is floundering towards the proposition that business journalists should not think of their jobs as that of advising investors, as opposed to informing the public.

Still, the idea that an MBA won't be able to outperform the market over the long hall is, firstly, contradicted by some well known instances (among them Warren Buffett); and second, depends on breaking up the market into time segments, and elastic definitions of risk that are convenient to the EMH guys. In fact, Longman's discovery of this principal couldn't have been worse timed. During a down market, the pick and chose method of investment emerges as a competitive speculative tool in comparison with the idea of parking your money with a money fund and forgetting about it.

A good critique of EMH is this paper written by Andrew Smithers and Stephen Wright. The discrepency between bubble talk and EMH talk is revealed by what Smithers and Wright call the "extreme form" of EMH: that financial markets adjust immediately and perfectly to new information. Thus, the three hundred some point rise in the NYSE Friday represented a perfect adjustment of markets to new information. That information has to do with the fundamental prices of stocks. Well, although EMH detours around the problem of short term volatility, I buy Smithers and Wrights story about predictable regularities in the market that count against the premises of EMH. Smithers and Wright talk about one of them that we are getting acquainted with over the past two years: "...stock returns are negatively correlated to over the long term, so that periods of high stock returns are typically followed by periods of low returns." The EMH view, which has an ideological quotient that satisfies your average libertarian economist, is what the Longmans will always hear in their classes at Columbia. Joseph Stiglitz won the Nobel Prize, a couple of years ago, for showing that perfect efficiency would collapse the market. The market will always be incomplete, and the information distributed through it will always be assymetrical. Neither Stiglitz nor the experiments of behaviorial economists have made, or will make, a dent in the equilibrium model.

So, Longman should have thought a little bit before unsealing his astonishing revelations among the hotshot MBAs."

The Nobel Prizes have been funny this year, but the funniest is yet to come: the Nobel looks like it is going to be awarded to Gene Fama for the EMH this year. This will be a beautiful and invigorating sign of the complete uselessness of economics to any but the wealthy - as of course EMH predicted, with unerring certainty, that there was no housing bubble and that we live in the best of all possible worlds, except for pesky government regulation! Which, I can confidently predict, will be the burden of Fama's little song when he accepts the Nobel. Never have the cheesiest looked cheesier - but remember, the elite have concluded that this unfortunate chapter in the looting of the masses is now closed, and the NYSE is set to leap and bound upward, under the tender loving gaze of Larry Summers.

Zona prediction - this is complete and utter horseshit. Zona prediction two - the lucky ducky economists are about to come out from under the covers when Fama takes his little Faux Nobel. Highlights will include the always wrong and often repulsive Casy Mulligan of the NYT Economix. I'm expecting some wetting of the pants, yelps of joy, and explanations that the big unemployment figures are an illusion, caused by our lucky ducky but perennially lazy working class. This should be good.

Friday, October 9, 2009

This just in: capitalist bootlickers snapped in orgy of factoids

Although I celebrated the NYT’s awakening interest in actual news, the foreign policy thumbsuckers are still reassuring bits of canned Reaganism, mixed with doleful cries that some country x hasn’t destroyed their labor unions and privatized their economy in order to create a funnel of wealth to entertain the top one percentile.

Thus, we have a truly splendidly, sidesplittingly stupid article entitled: FINANCIAL CRISIS PUTS EUROPE BACK IN THE SLOW LANE.

What is meant by the slow lane? The slow lane signifies that predatory bloodsucking Wall street types – oh, I mean, the great gray makers of the world’s wealth! – aren’t going to be able to go in with the forks and knives and make European worker’s lives a living hell, destroy social mobility, and privatize social services, thus amping up big Pharma profits. I’m crying!

‘Two years ago, Europe was growing more rapidly than the United States, and the Old Continent finally seemed prepared to tackle longstanding economic challenges like rigid labor markets, runaway government spending and a rapidly aging population.
But as Asia and the United States emerge from the global economic crisis, Europe appears likely to be the world’s laggard, threatening a return to the dark days of “Eurosclerosis.” Leaders who once spoke optimistically of fundamental changes aimed at enhancing productivity have turned to the more prosaic tasks of protecting jobs and avoiding painful political choices.”

I’m not sure what tackling a rapidly aging population means – I suppose Death panels. But we know that whenever rigid labor markets are mentioned, what that really means is destroying the sources of median household income in order that the reptilian class can expand its power. However, poor Europe. As the U.S. “emerges” from the global economic crisis (an emergence powered by a marvelously non rigid labor market that is currently at 17 percent U unemployment), Europe, incredibly, is not laying off its working population and cutting the funds to luxuries like education. And thus, the EU does not have the proud 9 trillion dollar future deficit that Americans can rely on as they cut the gov down to bitesize, and smash American living standards to Somalian levels – where the labor markets are so flexible you can practically twist them with your hands!

This part will surely make you weep, however. It is sad, so sad – those Europeans could be like Californians! But no, behold the bad news:

"When he was elected president of France in 2007, Nicolas Sarkozy spoke of the need for a “rupture,” including the loosening of a highly regulated labor market to better compete in the global economy.
But now, “President Sarkozy has gone, if not 180 degrees, then at least 90 degrees in the opposite direction,” said Charles Wyplosz, director of the International Center for Monetary and Banking Studies in Geneva. “The things he talked about then still need to be done if we want to have growth, but the crisis has slowed some of the impetus for change.”

In Germany, Angela Merkel, who was elected last month to a second term as chancellor, has also avoided taking on the country’s powerful unions and its regional banks. She has embraced the “social market economy” and has insisted that there is no alternative to relying on exports rather than consumers to drive growth.”

Ah, what is lovely here isn't just the gross ignorance. We are used to that. It is the tone, the more in sorrow tone, like that of an undertaker who has just had a likely corpse snatched from his grasp. Germany (sob) still (sob) manufactures things, instead of putting many many fine knickknacks from Walmart on their 17 to 19 percent per annum charge cards! And Sarkozy didn’t roll back the Socialist triumph of the 35 hour work week. Why, it makes me want to go to the club and beat the shoeshine boy! How can such things be?

All of this, of course, is to insulate us from unpleasant facts:
“To be sure, the American economy is not out of the woods yet, either, with unemployment still on the rise, homeowners still burdened by mortgage debts and Washington offering few details about how it will cure its own huge government deficits.

But the euro’s recent surge against the dollar mostly reflects higher interest rates on the Continent rather than optimism about Europe’s prospects, and the stronger currency actually makes European exports less competitive globally.”
To be sure! In fact, to be sure, lackies like the two writers of this fluff, fluff unworthy of the Pravda, probably have a higher chance of being unemployed next year than their counterparts on, say, the FAZ. But until that blessed moment comes, they will lick the loafers of the Wall Street set with the full meat of their tongue. Do a good job boys.

Thursday, October 8, 2009

Pearls before Swine

Mucho yucks were provided this week by the hapless Conservapedia’s project for driving liberalism out of the Bible – an exorcism that will, alas, also kill the good book for Christians, as it seems to involve driving the Son of Man out, too. I am feeling so humorless this week that I actually looked upon this suggestion with horror, as a sort of sign o’ our demonic times. Perhaps it is proof of an old saying: “Give not that which is holy unto the dogs, neither cast ye your pearls before swine, lest they trample them under their feet, and turn again and rend you.” In the zona, we have proved over and over again that this is an iron law.

For mucho yucks of another but parallel sort (since it has to do with the swine that are rending you with the biggest smiles on their faces, and then explaining that it happened because of jobs, jobs, jobs, and could we please hurry up with another helping of pearls at this end of the table), Brad Delong wrote this uproarious post:

“I Would Award This Year's Nobel Prize in Economics to Ben Bernanke and Mark Gertler...
...for their work on the credit channel and large downturns, if I were running things. It has been the most valuable thing done in the past half-century in helping us to think through policy issues today.
No matter who gets it, they are the ones that deserve it.
Just saying.”

That neatly wraps up the worldview of economists. Some look out and see 17 percent Unemployment (U), continuing its rise, and cry out that the system has buckled and the political elite are all sitting insouciantly in a circle jerk; but others look out and see very, very clever schemes being hatched and superintended to channel Government money to the richest people on earth, the banksters, and they want to nominate the man at the heart of it all, Ben “the subprime has been contained” Bernanke for the prestigious and totally fake Nobel prize in Economics.

Some say a man ain’t happy, truly, till a man truly dies… o time.

Monday, October 5, 2009

Extra! Extra! Then NYT actually acts like a newspaper!

The New York Times has surprised me lately by acting like a newspaper. This is so unusual that I didn’t know, at first, what was going on. The investigation of drinking water (one of the great triumphs of the state in the 19th century, now being retracted in the American Imperium as it goes into its tailspin) was the first clue. The story was not really a surprise – in the zona, one expects that the majority of the people will be screwed to the max, through their bones, in their calcium and phosphate ions, by the morally bankrupt demons that reign on Wall Street and in D.C. This is the old news that hasn’t even figured in the newspapers for years. In my lifetime, I’m seeing something vast. The America of my childhood was still, visibly, the slaveowning, Indian killing country of our forefathers. But that America was changed, and even, briefly, became a democracy. Then, of course, it became first an oligarchy, and now it is a joke on a Soviet scale. Beyond the fact that the inhabitants of one of the capitals of one of the states, Charleston West Virginia, couldn’t safely trust themselves to the water in the shower without being burned by the acids and mineral salts in it (from coal companies that no longer have to obey the rules, as they now make them in that thuggish merger of the corporocracy and DC characteristic of the Bush-Obama era), this story was also told as an old fashioned newspaper story. That is, it was not half p.r., half spin, and wholly a lukewarm mélange of viewpoints that crept into a hole of conformity. Rather, it strove to be, my God, truthful. This was a surprise.

This is the NYT. The all purpose driver of the getaway vehicle for the great bank robbery heist of TARP, the invasion of Iraq, the all too numerous schemes of peculation and fraud that have roamed the country in the name of free enterprise, ripping off the mass of the population to gorge the upper 1 percent with blood for the last decade. I had long ago ceased to regard the Times as a newspaper.

And then came the hamburger article, about another catastrophic regression from the civilized norms of the late nineteenth century – which is when the state got into the business of inspecting meat. This was excellent muckraking. It showed the power of the combination of business and government, the gross neglect of the safety of the consumer, and the way in which information, with the full collusion of the state, has been closed off, so that it is difficult to find out anything about the testing of hamburger meat for e. coli. As a bonus, it include a quote from an official in the Obama administration that was wonderful, a description of Obama-ism in action:

“Dr. Kenneth Petersen, an assistant administrator with the department’s Food Safety and Inspection Service, said that the department could mandate testing, but that it needed to consider the impact on companies as well as consumers. “I have to look at the entire industry, not just what is best for public health,” Dr. Petersen said.”

Today the business section –the section for which freshwater economist Casey Mulligan and various George Mason libertarians regularly float their hilarious version of country club mythology, as for instance Mulligan’s idea that the unemployment figures show the sloth of American workers, who are quitting big time to enjoy more leisure, those lucky duckies – had a real story in it today. It was a story about the predators known as Private Equity firms. It describes how they descended upon and destroyed Simmons Mattress company. Yves Smith, the great analyst who runs the Naked Capitalism site, had one criticism: they didn’t call the fucks by their name. The NYT politely avoided the word looting:

“PE firms in risk-blind environment preceding the credit crunch got into the habit of producing good to stellar returns by modifying their usual formula. The traditional model was to buy companies with a ton of debt, then improving their bottom line by a combination of partial asset stripping (selling off ancillary operations), cost cutting, and once a blue moon, actually doing something to improve operational performance. Then the company would be sold, either privately, usually to a corporation, or taken public.

But the PE firms found a much easier approach: just pile on more and more debt, and pay themselves a special dividend. No need to do any work, just keep borrowing until you had recouped your investment and then some. And that way you did not need to care how the company fared. If you destroyed the business, it was of no mind to you and your investors. Other saps were left holding the carcass.

George Akerlof and Paul Romer called that activity looting in a famous 1993 paper and depicted it as criminal:

Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society’s expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.”

Although I am not going to celebrate this newfound interest in what is actually happening in America just yet. The New Yorker, who I love like a family member, saddened me by publishing a Lizza profile of Larry Summers that majorly kissed Summers ass. The elite that rule us are crooked beyond belief, and Summers is a typical product of that venal group. Lizza even omits in his profile Summers amazing luck, after he was canned at Harvard, when instead of having to go into the unemployment line, he received an offer to consult for D.E. Shaw, a wall street firm that was so grateful for his one week of work that they gave him 5 million dollars. How sweet! A fact very kindly remembered by Felix Salmon, although Felix is convinced by that article that Summers did the right thing with the banks – a call I think he will regret.

Saturday, October 3, 2009

Never a theseus

Quelle singulière destinée que celle de ces pauvres petites filles, frêles créatures offertes en sacrifice au Minotaure parisien, ce monstre bien autrement redoutable que le Minotaure antique et qui dévore chaque année les vierges par centaines sans que jamais aucun Thésée vienne à leur secours. – Gautier on le rat

In Raynar Heppenstall’s fascinating essay, Balzac’s policeman, he alludes to the fact that the man who reorganized the French secret police, Fouché, and the man who famously represented the new figure of the detective, in the first half of the 19th century, Vidocq, both had places in La comedie humain.

Heppenstall’s name does not light up anybody’s neural pathway nowadays – the shock of recognition has gone on the junkheap, and we, who hoped that the British novel would pull itself out of its realism by the skin of its teeth, sit by the waters of Babylon and weep. Heppenstall was crazy avant garde novelist in a Britain that despised avant garde novelists (Cixous accredited himm with the first nouveau roman), and he was too early to get picked up as an oddity, like Ballard.

Heppenstall was never more English than in his taste for murder. Dickens, it is said, would put such energy into his reading of the murder of Montague Tigg in Martin Chuzzlewit that it shortened his life – the tourette’s syndrome buried deep in his psyche would come out. English novelists make a fetish of excellent murders, and Henry James is not the only high art potentate to adore William Roughead. But the native murder wasn’t good enough for Heppenstall. No, he had to fetishize the French one.

As startling as a murder in Dickens is Heppenstall’s allusion to a scene that I must look up and know more about. There was, a couple of years ago, a vogue for pop philosophy history that took some central confrontation – Hume and Rousseau, Wittgenstein and Popper – and beat the stuffings out of it over a hundred and fifty some pages. This insta-coffee way with the history of philosophy makes me all snobbish inside: this is definitely not what Hegel was talking about. But the scene in Heppenstall’s essay cries out for a fiction of about one hundred fifty pages:

“Within a year or so of the publication of Les Chouans, he must inevitably have heard a fair amount about Vidocq, the four volumes of whose ghosted memoirs enjoyed a great vogue, though it appears that Balzac himself did not buy them until early I830.4 During the revolution of that year and the riots of two years later, he wrote a very great deal but none of it about police matters. In I833, we meet his first escaped convict in Ferragus, a short novel to which, the following year, were added two others, La Duchesse de Langeais and La Fille aux Yeux d'Or, making up Histoire des Treize. In Ferragus, Vidocq 'and his sleuth-hounds' (limiers) are mentioned briefly and supply useful information by way of 'le chef de la police particuliere', an expression to which I can give no real-life meaning. On Saturday, 26 April i834, Balzac dined with Vidocq at the house of the rich philanthropist, Benjamin Appert, in Neuilly. This dinner party must have been one of the most remarkable occasions in literary or perhaps any other history. Among the other guests were Alexandre Dumas, the public executioner, Sanson the younger, and the English radical Lord Durham, who was greatly interested in the guillotine and in French prisons.”

Such a répas seems faintly unreal, as though, while Balzac was writing his novels, his novels were writing his life.