墨子 & 儒家

About 700 years before Augustine, 墨子 Mo Tze was arguing that we ought to love one and other as we love ourselves, a universal love.  He was writing in an era that saw from China to Greece philosophers doing work known to this day: Kung fu tze with his way, 儒家, Buddha and Socrates.  Rome at the time was forming its Republic.

We are familiar with these great names, but not Mo Tze, because their systems triumphed as the status quo, his did not.  Although Mo Tze was more popular in his time than Confucius, Confucian ethic won out.  How come?  Confucianism, like Keynesianism and other reigning affects, have the advantage of being well designed  to maintain a heirarchical society, top down.  Mo Tze was not down with that.  Mo tze promoted subsidiarity and was anti-war. Mo tze even predated Jesus with universal love. It did not catch on. Christians believe God himself intervened to teach us how to live.  Don’t feel bad, Mo tze.  Like in 1 Samuel 8, written about your time, the people will not listen even to God himself.

兼愛下:

今吾將正求與天下之利而取之，以兼為正，是以聰耳明目相與視聽乎，是以股肱畢強相為動1宰乎，而有道肆相教誨。是以老而無妻子者，有所侍養以終其壽；幼弱孤童之無父母者，有所放依以長其身。今唯毋以兼為正，即若其利也，不識天下之士，所以皆聞兼而非者，其故何也？”

Universal Love III:

When we try to develop and procure benefits for the world with universal love as our standard, then attentive ears and keen eyes will respond in service to one another, then limbs will be strengthened to work for one another, and those who know the Tao will untiringly instruct others. Thus the old and those who have neither wife nor children will have the support and supply to spend their old age with, and the young and weak and orphans will have the care and admonition to grow up in. When universal love is adopted as the standard, then such are the consequent benefits. It is incomprehensible, then, why people should object to universal love when they hear it.

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Emanuel Questions Keynesian Economists

On Jan 15, 2011, at 1:33 PM, Emanuel wrote:

Hi John,

For some time, I've been studying the Austrian Economics literature, and it explains a lot about the business cycle, the price of goods, the Fed, etc. However, there's one thing I don't understand. How can economists and economics professors teach Keynesian economics? How can they believe that central planning works, that the government can stimulate the economy or that tariffs should be imposed to "level the playing field" for competition? Now, I don't believe that they are fools or that there's a conspiracy or that they are paid to lie. I think a lot of them are really believing what they are saying.

***Emanuel,

Well, theya re able to repeat the arguments the system makes.  Keep in mind, we all love a system that feeds us.

I think it gets back to security over freedom.  The archetype is in 1 Samuel 8, wherein a free people, the Israelites, demand they have a king over them, like the other nations.  This is not unique to Jews, just the bible is the first reported instance. The last election is the most recent reported instance. The vast majority want security over freedom.

Second, once the powers that be come to power, they need a system, a philosophy, to rule by.  Socrates refused to recognize the state gods, and was anti-democracy.  His students overthrew the democracy, but failed to recognize property rights.  What a mess! 

They got rid of Socrates, but Athens fell anyway.

Up to the Han dynasty China was entertaining the competing ethical systems of Mo Tze and Lao Tze, with Mo Tze’s the more popualr for a while, but Lao Tze’s system, now called Taoism, became the dominant system.  Why?  It is better for running an empire.  

The powers that be get to decide the system we will live under.***

Are they shallow in thinking, choosing to focus only on specific aspects of economics such as labor or tariffs? Don't they see the entire image? How can Austrian Economics have any opposition?

***The only jobs in economics are government jobs.  Whether working for the government, teaching, or some sort of banking position interacting with the government, economics largely has to do with relations with the government.  If you want to get paid in economics, you better be a keynesian (or lite versions, such as chicago. )  Alan Greenspan was a hard money gold bug and Ayn Rand acolyte that Reagan appointed, and he immideiately went Keynesian.  

There are exceptions:  keynesian economics cannot measure or track anything, so government data is usually bad.  When airlines lost money depending on government statitistics, John Williams made a killing correcting statisitics for the airlines.  he now has a booming business just reporting reality.  http://www.shadowstats.com/ .  Also, there is  cottage industry tachign austrian economics.***

Another thing is the following. In your blog, you briefly said that business don't go overseas for cheap labor but for cheap management. Could you please elaborate this? Wouldn't cheap labor or cheap management be the same since they both result in lower costs for American businesses?

***I agree we go overseas for lower costs, which is different that saying we go overseas for cheap labor.  The distinction matters because if you go looking for cheap labor, you will end up at the wrong source.  If you go looking for the best source overseas, it will never be the cheapest labor source, but the cheapest management source.  Does thins make sense?***

John

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How It Works: Yes We Can.

Mish Shedlock quotes and article today and then adds his comment:

“What I think is the lesson from this is that the Congress needs to clarify the boundaries of independent Fed credit policy,” Professor Goodfriend said. “There should be a mechanism so that the Fed doesn’t have to make these decisions on behalf of taxpayers.”

Boundaries are Not the Problem

The Fed does not care about boundaries or what is legal or not. The obvious implication is mechanisms to define Fed boundaries would be futile. We need to eliminate the Fed itself.
(Mish)

Now here is how it works. Shedlock is right. Prof Goodfriend likely knows and understands economics they way Mish does, but Prof. Goodfriend advises what the powers that be would like to do. Sincere people are perplexed as to how Prof. Goodfriend could be so obtuse. He is not at all obtuse. He knows there is a problem, and congress would like more power. So his advice is give congress more power. In the world of courtiers, the inevitable is the ideal.

When people who vote for change sit by docile as the agent of change just does the same, but worse than the last president, why bother pushing for a good answer, or even the right answer?

Confucius and Lao Tze both had ethical systems for the powers that be in China. Mo Tze thic was actually the ascendent system, until the ancient powers that be in China figured out of all the systems, the Confucian was best for the powers that be. In the realms of ethics and ideas, they way to succeed is to advise the powers that be what they CAN do, not what they should do.

When the fundamental organizing principle of the state is the monopoly on violence, it does not matter what they should do, what matters is what they can do. As they say “Yes, we can.”

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Mish Shedlock is quoting top policy wonk and economist Larry Summers as saying the solution to the econ crisis is more of the same, and then,

Larry Summers may be one of the best examples of the Peter Principle that you can ever find.

However, I suspect a case can be made that Summers did not rise to his level of incompetence, that he was never competent in any position, ever, and that he got where he is out of sheer luck, birthright, bribery, or some combination thereof.

People need to understand that an inherently evil activity, that is government, needs a belief system and philosophy to maintain it.  Keynes wrote his economic thesis as the previous "philosophy" was falling apart, and new one emerged.  Every one of these ideas has an internal contradiction, and that is necessary to maintain the system.

When Joseph advised Pharoah on an economic system, it was clear to Pharoah it was a bad idea for the people, but good for Pharoah.  Every system since then has adopted an internally contradictory construct.  they last for a while, and fall apart.  Mo Tze developed a system of governance that would be recognizable in Hong Kong today, but Kung Fu Tze (Confucious) cam up with a system that rationalized the overwhelming governance system that the Chinese suffered under for 2500 years.  The system that wins is necessarily a bad idea for the vast majority of people.

So when a public official says something nuts like to solve the problem we need more of what caused the problem, they are just doing their job.  They know very well it is a bad idea, but they also know the vast majority of people say "oppress us, but fight our battles for us..."

So the powers that be are clear on this:  agree to the people's demand - oppress them AND take THEIR children to fight their battles for them.  The hallmark of every "great" civilization is child sacrifice.  Americans clamor to have their children shipped overseas to fight their battles for them, so they can be safe.  It has never turned out well in history.

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Why Bad Public Policy Triumphs

Time to review something I've covered over the years, and that is how come the State ends up with such counterproductive public policy.

I noted how Mo Tze clearly had the best philosophy of his time, anticipating Christianity, but few have ever heard of him.    The ideas of his lesser contemporaries flourish to this day.

Keynesian economics wins out because it feeds the state best, not because it is most beneficial.  Keynes wrote in the introduction to the German edition of his Magnus Opus how his ideas would work even better under Hitler.  Nice!  (OK... it was 1936, when Hitler was still widely admired around the world.)

The theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. 

He who pays the piper calls the tune.  When the powers that be command a policy, even people who know better will sing the tune, heck sake, they will write new compositions, to satisfy he who pays.

Max Weber got famous for pointing out the obvious, and that is the state is an entity with a monopoly on violence in a given territory.

"Every state is founded on force" said Trotsky at Brest-Litovsk. That indeed is right. If no social institutions existed which knew the use of violence, the concept of "state" would be eliminated, and a condition would emerge that could be designated as "anarchy" in the specific sense of this word. Of course, force is certainly not the normal or the only means of the state - nobody says that - but force is a means specific to the state. Today the relation between the state and violence is an especially intimate one. In the past the most varied institutions - beginning with the sib - have known the use of physical force as quite normal. Today, however, we have to say that a state is a human community that (successfully) claims themonopoly of the legitimate use of physical force within a given territory. Note that "territory" is one of the characteristics of the state.

That puts the state at odds with the good, the true and the beautiful, and essentially anti-human.  Given that, it is not possible for the state to arrive at good public policy.

Update, July 2013

Every policy has a winner or a loser.  It is not possible to form a policy that is neutral.  Someone is always unhappy, and for very good reason.  If you are losing, you are unhappy.  On the other hand, we all love a policy that works for us.  If the policy does not work for you, then there is something wrong with you, according to those for whom the policy advantages.

This can get complicated when voter's expectations are not met. What you see happen is people will say either "we need the right leader" or "we need the right policy."  If their hoped-for leader cannot help them, they say the policy is wrong.  If their hoped-for policy does not help them, they say the leader is wrong.  What few people understand is freedom from policy will yield the peace and prosperity they seek.


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The State Advances Necessarily Bad Ideas

Do all realize that this discussion was nearly three years ago…? 

Stiglitz calls absurd Hendry’s prediction (more of an assessment of the facts.) Go back in History, as far back as Mo Tze and Confucious, bad ideas are rewarded and good ideas are marginalized. States need bad ideas to flourish. The state itself is a bad idea, and there is no good form of it. Just less bad. Stiglitz was touting his book back then, and has another out now, just as delusional.

Hendry’s body language is delightful, a man who sees the wickedness for what it is, but also knows it is tradable. “What you are doing is wrong, I am making money off of it.” He and the shortsellers are necessary and sufficient regulation of the financial markets.

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