Wednesday, March 6, 2013

Head for Higher Ground

I’m not an economist. I took the basics in college - Macro and Micro. More recently I’ve been reading up on complexity economics, where economic theory looks a lot more like evolutionary theory rather than the laws of supply and demand. In the last chapter of his book, “The Origin of Wealth”, Eric Beinhocker discusses the end the Democratic and Republican parties as the market forces that allow a two party system to remain viable in the complex economic landscape begin to evaporate. To me there is nothing natural about a two party system, it is entirely unnatural and it’s existence and persistence on the American landscape bodes a hidden corruption I would prefer not to contemplate. Why we, as American’s, have been so blinded to it’s pitfalls staggers the sensibilities of many an external observer.

It’s easy to understand how in a complex environment there can never be two sides to an argument...there are countless positions and depending on where you sit will determine your position in any given argument. The landscape continually changes. The unnatural alliances made within our two party system is a dead give-away that something stinks. The manifestations of these unnatural forces within our two party system are now coming home to roost. Our two-party system of government is forever grid-locked and our representatives will forever point fingers at one another rather than figure out how to evolve our government in order to grow and prosper. That’s harder to do. First, however decisions must be made.

Sadly, when compromise cannot be reached decisions are still made, but this is not government. It’s randomness, exactly why we chose to have a government in the first place, so we are not subject to the random forces of nature. Choosing not to decide is still a course of action, time doesn't stand still when a decision is not reached. March 1st has come and gone, time did not stand still. President Obama signed the order to cut $85 Billion out of the Federal budget, what we know to be Sequestration. The choice not to decide and instead lapse into Sequestration was stone cold f-nuts stupid. It also represents an exciting new way for the government to tax a subset of it’s citizens. Regardless how one may view a government furlough, the end result is an effective 10% increase in the tax imposed on the individual employee it affects over the year, but more like 20% over the next six months. For those of us who happen to be of the lucky 800,000 civilians employed by the Department of Defense, ladies and gentleman welcome to the 50% tax bracket! Of course for the next 6 months, welcome to the 60% tax bracket. Don’t these percentages seem huge? And yet we quibble about a small increase in the tax on the wealthy, or the closing of a tax loophole for those who make their living on capital gains vs working income. For 800,000 Americans there isn't even a choice. We've leapfrogged past any small incremental tax increase and joined, ironically, the Europeans. But I’m not writing this blog to argue about my misfortune of being one of these DoD civilian, it’s to describe the wrong headed nature of a government that refuses to make decisions.

I’ll be the first to argue that the DoD is prime for some cuts. So cut it. Gut it if you want to. Tell me I’m out of a job, then I’ll go get a new job. I’ve got responsibilities, bills to pay, a family to care for, and an economy to invest in. I want to go to Starbucks on the weekends. I want to go to BestBuy for a new iPhone. And I want to put money away for college. Tell me I’m in the new 60% tax bracket and my life changes dramatically. First, I pull completely out of the economy. Second, I stop saving. And third, I start looking for Republicans to vote out of office. 

We need a government that can make decisions, any decisions because we don't want to live in the wild.  This is how it works in the wild. Say we all live on an island... Survivor Island if you must. The water on the island is rising by some unseen force. There are three options. Two require a decision. The first option is to move to the snowy mountain on the left, it might be cold but at least you and your family will not drown. The second option is to move to the fiery volcanic mountain on the right. It may be hot, but again, the risk of death by drowning will be eliminated. A movement to either mountain requires a decision. The third choice is to remain standing still as the water wells up around  your ankles. Soon you will be forced to swim. Some will make it to shore and perhaps to either one of the mountains. If you survive you might find yourself lower down the mountain than those who made an independent decisions to move to higher ground before the water came. Now in nature, evolution works the same way. Some will move to either one of the mountains and survive. Some will stay in place and die. The ones who move to mountains early and adapt to the hot or cold environments might survive a little longer. But in nature it’s entirely a random process, some of each will go in all three directions--like seeds scattered on the wind. Exactly like seeds scattered on the wind. We have a government for making decisions. We know if we stay where the water rises we will die so we count on a government that will lead us to higher ground (or build a working levy to hold back the water). We don’t need a government that can’t make a decision. Otherwise we are seeds scattered on the wind and might just be better off fending for ourselves. Why have a Government at all?   Republicans would rather have less Government, that doesn't mean no government, but that is exactly what they have brought to us, the absolutely worst form of Government. For 800,000 DoD employees we have little or no decisions we can make, we must live with the water pouring in around our ankles. Some of us, certainly can quit and go elsewhere, most of us can’t quit. So we will endure and sacrifice while others will scramble for higher ground simply because compromise is not an option.

I’m not an economist, but in the new economy you don’t need to be. I’ll be heading for the higher ground soon.


Ogre said...

So voting Republicans out will fix things?

Mooch said...

Of course not...the problem is a two party system that can reach a stalemate if compromise isn't an option. And just like in a Republican run administration if the Democrats were holding up the Government I would vote them out of office as well...possibly even quicker if they were unable to compromise.

Ogre said...

BTW - Beinhocker's book was pretty good. It taught me a lot about why conventional economics never made complete sense to me - it assumes an unreal world. The part on evolution was a bonus. Speaking of the two party system, I recently finished a book on G Washington that dealt with the two party system that emerged during his Presidency - I am not sure, social physics being what it is, that two party partisanship is significantly avoidable.

Mike Payne said...

I disagree with the fundamental premise of this, which you state as something like "we need government to lead us." Hogwash. We may need government to help keep order (and even then there is a valid debate to be had about how much of that help needs to reside at the federal level), but our whole American experiment is predicated on the idea that we don't need government to tell us what to do. Rather than dwell on the philosophical, however, I'd rather just ask how it is you think a multi-party system will get more done than a two-party system? (I'm assuming here that you don't want a single party system.) One of many problems with three or more political parties is that you never get a majority decision. Ever. You seem to attribute to the two party system the lack of ability to compromise and get things done. In fact, the two party system is exactly that. You call it unnatural, but the coalescing of people with different ideas into two separate parties is compromise. It is in fact compromise at a somewhat practical level with those who share broader, more philosophical principles-an apt description of our two parties, and unnatural only if you think cooperation is unnatural. The underlying problem here is a fundamental unwillingness to accept personal responsibility--on both sides. Who's responsible for the sequester? Nobody--just ask them. Who among our representatives will make the tough choices? No one. Because we don't really want them to. Who among us will vote for the representative who cuts our services?

Mooch said...

Mr. Payne, post'n a Aro would say Magnifico! And a lengthy comment at that...I don't think I can get you a full answer to your great questions any time I'll give you a series of short, less than satisfactory answers.

So I disagree, great governments do lead...that's the government I want to be a part of...the US has always been number one in the World because of it's leadership, not because we put the individual State's or the individual's agenda first. We the people, in order to form a more perfect union. I thought we straightened this out during the Civil War. JFK's "Profile's in Courage" describes what leadership in Government entails. And it's not about being popular....

You are right, if we had a three party system, and we divided the country up in thirds along party lines, we would have a stagnant three party system of government. The hope is that at some point the entire population doesn't blindly vote along party lines...because their party might represent some of their interests but not all, the more parties the better. Right now we have two parties that suffer from their own cognitive dissonance at the extremes. The compromise you describe is not compromise, rather it's some very irrational logic that binds them together for individual interests...that's not compromise. However I'm not sure I have a word for what it is...but it's not a good word. The "Origin of Wealth" goes into this backwards logic within the political parties extremely well and explains why it will be the end of the two party system. If the parties can indeed cooperate and compromise internally as you say, therefore moving past what I call "the Unnatural" after the primaries, why is it that when the election itself is over, the entire government can then not compromise or at a minimum cooperate?

With regard to voting for the representative who will cut our services...I will vote for that representative. But I agree, many will not. That is why we have representation. Our representatives are not supposed to vote for our individual interests. They are supposed to vote for the greater good considering our needs as well as the needs of everyone, everyone, every single one they represent. And in almost every case that means can it mean anything else? They choose to represent one thing and one thing only, their parties position...that is not representation at all.

Mike Payne said...

It's strange, but I just might be the optimist in this discussion. I don't see petty party politics as the primary force at work here. It's there--I'm not denying it--but I think there is something even bigger. And it has more to do with the first paragraphs of our comments than the rest. There is a titantic philosophical struggle going on--between the collectivists and the individualists, between communism and capitalism, between statism and classical liberalism, between subjugation and freedom. We can deny it all we want, and focus on the petty name-calling and horse racing of the daily news, but we do so to our own peril. Most of it is distraction from the real issue: how best to govern ourselves? The debate is not over. And the lust for power over men is greater yet than greed. Maybe that's not exactly optimism, but it seems a happier battle than groveling for the next vote.

Mooch said...

It's definitely not petty party politics...those have always been there. It could indeed be the lust for power over men, which itself is a form of greed and, as it turns out, a form of gambling...but they gamble with other men's lives, not their own, to achieve their selfish end state. Since I've quoted from the new theory of complexity economics earlier, now I'll quote Adam Smith, and the old school of economics with regard to gambling. "The overwhelming conceit which the greater part of men have of their own abilities and their absurd presumption in their own good fortune" allows them to believe they are correct in their bet. They will hold firm to their hand, not folding or taking another card. Petty politics shouldn't prevent compromise. Gambling would because the payoff must be perceived to be much larger than the compromise and therefore the egocentric bluff...let's home not.

Part two could be, and I also agree somewhat, that there is something bigger going on (not as big as the gamble) that is preventing the compromise and that something could be ideological. Sadly I am not the optimist and I believe that the "philosophically titanic" difference in ideology that exists is wrong...although many would have you believe it to be true. It's the Democratic party...not the Socialist Party. Maybe if we had a Socialist Party (we do, according to Wikipedia we have 8 of those) the Republicans wouldn't be so quick to group democrats as socialists...or as in the case above...with communists (really?). Socialists align with the Democratic Party because they are softer on social programs but to believe the Democratic Party is not a Capitalist party is simply not correct. Many have argued, including the socialists, that the two parties are identical when it comes to things that are not socialist. For the Democrats it is possible to be both a Capitalist with a keen sense of social responsibility. Many others scratch their social responsibility itch through the Church for example, and not the state. If you don't believe in God, you might still want to scratch that itch. One can argue that it is both not the place of Government and exactly the place of Government...and for me it's always that pesky Pre-amble that keeps creeping in..."Promote the General Welfare..." So there is a role. And that role swings back and forth with Republicans not necessarily shying away from their role in promoting the General Welfare when necessary.

I'm for a single country, not fifty independent states, but I recognize certainly that everything doesn't have to be the same everywhere. But Americans should all be Americans. If San Diego-ins, or San Diegons, or is it San Diegans are all well feed and Baltimorians are starving then they can't all be Americans, it's as simple as that.

The other thing that has to be understood is that a capitalist who exploits, rapes & pillages, sacks the environment, and otherwise does damage to what's common and shared by all, are not capitalists at all. They are exploiters, rapists, and slave labor bosses, etc. Conscientious capitalists are not socialists, they are conscientious capitalists and generally speaking tend to be more aligned with the democrats, particularly the ones who are of a more environmentally bent. That doesn't mean they belong to Greenpeace in the same way that being a Republican doesn't naturally mean you are a member of the NRA.

So I'm glad you are an optimist, one of us few, and I'll wait patiently for your response.