Wednesday, June 27, 2012

The Master Narrative Nobody Admits: Centralization Has Failed

Nobody expected the sudden collapse of the Soviet Union. Will the steady, unceasing Sovietization of America end up the same way? Will there in the end be nobody willing to enforce the steady torrent of new rules and decrees that pour out from everywhere? Will Congress become as irrelevant as the Politburo?

The primary "news" narrative may be the failure of the euro, but the master narrative is much, much bigger: centralization has failed. The failure of Europe's "ultimate centralization project" is but a symptom of a global failure of centralization.

Though many look at China's command-economy as proof that the model of Elite-controlled centralization is a roaring success, let's check in on China's stability and distribution of prosperity in 2021 before declaring centralization an enduring success. The pressure cooker is already hissing and the flame is being turned up every day.

What's the key driver of this master narrative? Technology, specifically, the Internet. Gatekeepers and centralized authority are no match for decentralized knowledge and decision-making. Once a people don't need to rely on a centralized authority to tell them what to do, the centralized authority becomes a costly impediment, a tax on the entire society and economy.

In a cost-benefit analysis, centralization once paid significant dividends. Now it is a drag that only inhibits growth and progress. The Eurozone is the ultimate attempt to impose an intrinsically inefficient and unproductive centralized authority on disparate economies, and we are witnessing its spectacular implosion.

Centralization acts as a positive feedback, i.e. a self-reinforcing loop that leads to a runaway death spiral. Centralize the entire banking sector into five corporations and guess what happens? They buy access to the highly centralized power centers of the Federal government. Like the HIV virus, centralized concentrations of capital like the five "too big to fail" banks disrupt the regulatory "immune response" that was supposed to control them.

This feedback between centralized capital and centralized government cannot be controlled by more rules and regulations--the two partners in domination will subvert or bypass any such feeble attempts with shadow systems of governance and control of the very sort we now see dominating economies and governments around the globe.

Centralization itself is the disease, and devolving power to decentralized nodes based on the transparent power of the Web is the cure. The authorities and Elites attempting to maintain their centralized fiefdoms of power are desperately trying to control the technology of the Web, but disruptive technology that offers stupendous improvements in efficiency and productivity cannot be put back in the genie's bottle. The authorities can try, but they will fail.

The analog to the printing press is but one example. The centralized authorities of the Holy Roman Empire tried to limit the citizens' access to the Bible and other books, and as their failure became evident they ramped up their oppression to extremes: printing the Bible was a "crime" punishable by death.

Despite their almost total dominance of society and the economy, the centralized authorities failed to limit the technology of printing and distributing books.

Centralized authorities face an impossible double-bind: if they limit access to the Web, their economic growth is doomed, and thus eventually so is their power as the impoverished and oppressed populace rises up to overthrow their failed Elites. But if they enable widespread access to the Web, then the populace eventually realizes the centralized authorities and Elites are burdensome hindrances to liberty and prosperity.

The highly centralized Elites controlling China are engaged in a desperate campaign to constrain the Web in China to what they deem supportive of their regime. The "Great Firewall of China" reportedly has tens of thousands of employees monitoring and censoring content. Hyper-nationalistic rants are "enabled" to spread virally, while inquiries into official over-reach and misconduct are quickly suppressed.

You can't fool Mother Nature for long, and the Chinese are trying to tame forces akin to Nature.

We already saw this dynamic play out with the Soviet Union. In the former U.S.S.R., networked computers were understood to be a serious threat to political control by centralized authorities, so access was strictly limited. Scientists and mathematicians in the U.S.S.R. were relegated to working with paper and pencils because this was "politically acceptable."

Denied access to transformative technologies, the economy and society of the U.S.S.R. withered and eventually expired.

China has played a very quick game of catch-up based on a unique set of factors:

1. An abundance of low-hanging fruit to be picked, both domestically and globally. If you watch documentaries filmed in China in the early 1980s, villagers were harvesting bamboo by hand and the village "theater" was one black-and-white television. By the time I first visited China in 2000, there was already a glut of cheap TVs and massive overcapacity in TV manufacturing.

2. An abundance of mobile global capital to fund the initial industrialization.

3. The ease of stealing/copying existing technology. It's always easy to steal/copy existing technologies: strip down the motorbike to its parts, machine-tool a factory to make the parts and voila, you are soon producing "Yamaka" motorbikes in quantity (and drinking "Starbuck" coffee).

But once the low-hanging fruit has been picked, you have to develop new technologies on your own to keep growing. The U.S.S.R. was able to keep up by stealing technology for decades, but once the pace of innovation slipped from centralized labs (where spies could be highly effective) to decentralized networks of innovation, the game was over: stealing technology became inefficient and/or impossible on the necessary scale and timeline to keep up.

The Web also feeds social innovations. Centralized authorities move with glacial trepitude because any change, no matter how modest, steps on the exquisitely sensitive toes of some vested interest, protected fiefdom or favored Elite. So while the centralized Elites and their apparatchiks in government are detailing more regulations of the buggy-whip industry, the entire industry is bypassed by social and technological forces beyond the control of the Elites and their flunkies and factotums.

The forces of centralized authority will not relinquish their power easily. In Egypt and many other quasi-feudalistic nation-states, the Empire of centralized Elite authority is striking back, often via the "shadow" systems of governance and control they established behind the thin veneer of legitimacy created by their organs of propaganda.

But all centralized systems, open and shadow alike, act as heavy taxes on the society and economy. Their attempts to retain control will fail because of the conundrum outlined above: if they succeed in stifling the Web and the powers of decentralization, their economy will wither and their impoverished people will eventually tire enough of poverty to rise up and crush their oppressive Elites.

If they allow access to the Web and the innovation-driven power of decentralized networks of knowledge, collaboration and information, then their political and financial control will be eroded. Either way, disruptive technologies will dismantle their power base and wealth.

Here in the U.S., our Central State and Financial Elites are also desperately trying to maintain their control, even as their control strangles the economy and social innovation. Being controlled by five "too big to fail" banks and six media corporations is like being dominated by the buggy-whip industry and the horse-manure-collection industry.

The way forward is to dismantle the five banks and six media companies and allow 500 banks to compete in a transparent market but be unable to buy other banks or other companies. If there are 500 banks that are forced to compete in a transparent marketplace, it will be very difficult for those corporations to purchase the political power the TBTF banks own.

The Federal Reserve is the ultimate centralized horse-manure-collection industry. Like the Catholic Church trying to control Gutenberg's printing press, the Fed is terrified of transparency, liberty, competition and the technological forces of networked decentralization. Though those in power cannot dare contemplate it, their highly centralized institution and the chokehold of its authority are already doomed.

Centralized control leads to stagnation and poverty, which leads to the overthrow of oppressive political Elites. If the centralized Elites attempt to corral the Web to serve their own narrow self-interests, it will overflow their narrow channels and erode their power. Either way, their attempts to control disruptive technology will fail. Their only choice is which path to destruction they wish to tread.



On Reason TV, Andrew Ferguson Discusses the Parasite Economy of Washington, DC

Back in February, I posted this startling map showing that 10 of America’s 15-richest counties are the bedroom communities surrounding Washington, DC.

There’s a lot of money in Washington because federal bureaucrats are wildly overpaid, as I document in this video, and also because there is a huge shadow workforce of contractors, consultants, and lobbyists who have their snouts buried deeply in the public trough.

In an interview for Reason TV, Andy Ferguson talks about how these well-paid parasites have created a bubble economy in Washington.

And you know it must be true because even the leftists at Politico wrote a story acknowledging how the DC area was thriving at a time when the rest of America was struggling.

In other words, the poor and middle-class people in the real world are paying high taxes to subsidize the indolent moochers of Washington.

You would think that’s one kind of redistribution that the left would oppose. Heck, it’s almost enough to make you think that it would be a good idea to reduce the size and scope of the federal government.



Thomas Sowell has some fun with the trash that Leftists talk

Since this is an election year, we can expect to hear a lot of words -- and the meaning of those words is not always clear. So it may be helpful to have a glossary of political terms.

One of the most versatile terms in the political vocabulary is "fairness." It has been used over a vast range of issues, from "fair trade" laws to the Fair Labor Standards Act. And recently we have heard that the rich don't pay their "fair share" of taxes.

Some of us may want to see a definition of what is "fair." But a concrete definition would destroy the versatility of the word, which is what makes it so useful politically.

If you said, for example, that 46.7 percent of their income -- or any other number -- is the "fair share" of their income that the rich should have to pay in taxes, then once they paid that amount, there would be no basis for politicians to come back to them for more -- and "more" is what "fair share" means in practice.

Life in general has never been even close to fair, so the pretense that the government can make it fair is a valuable and inexhaustible asset to politicians who want to expand government.

"Racism" is another term we can expect to hear a lot this election year, especially if the public opinion polls are going against President Barack Obama.

Former big-time TV journalist Sam Donaldson and current fledgling CNN host Don Lemon have already proclaimed racism to be the reason for criticisms of Obama, and we can expect more and more other talking heads to say the same thing as the election campaign goes on. The word "racism" is like ketchup. It can be put on practically anything -- and demanding evidence makes you a "racist."

A more positive term that is likely to be heard a lot, during election years especially, is "compassion." But what does it mean concretely? More often than not, in practice it means a willingness to spend the taxpayers' money in ways that will increase the spender's chances of getting reelected.

If you are skeptical -- or, worse yet, critical -- of this practice, then you qualify for a different political label: "mean-spirited." A related political label is "greedy."

In the political language of today, people who want to keep what they have earned are said to be "greedy," while those who wish to take their earnings from them and give it to others (who will vote for them in return) show "compassion."

A political term that had me baffled for a long time was "the hungry." Since we all get hungry, it was not obvious to me how you single out some particular segment of the population to refer to as "the hungry."

Eventually, over the years, it finally dawned on me what the distinction was. People who make no provision to feed themselves, but expect others to provide food for them, are those whom politicians and the media refer to as "the hungry."

Those who meet this definition may have money for alcohol, drugs or even various electronic devices. And many of them are overweight. But, if they look to voluntary donations, or money taken from the taxpayers, to provide them with something to eat, then they are "the hungry."

I can remember a time, long ago, when I was hungry in the old-fashioned sense. I was a young fellow out of work, couldn't find work, fell behind in my room rent -- and, when I finally found a job, I had to walk miles to get there, because I couldn't afford both subway fare and food.

But this was back in those "earlier and simpler times" we hear about. I was so naive that I thought it was up to me to go find a job, and to save some money when I did. Even though I knew that Joe DiMaggio was making $100,000 a year -- a staggering sum in the money of that time -- it never occurred to me that it was up to him to see that I got fed.

So, even though I was hungry, I never qualified for the political definition of "the hungry." Moreover, I never thereafter spent all the money I made, whether that was a little or a lot, because being hungry back then was a lot worse than being one of "the hungry" today.

As a result, I was never of any use to politicians looking for dependents who would vote for them. Nor have I ever had much use for such politicians.




In praise of consumerism: "We generally hear the term ‘Consumerism’ used as a term of abuse, usually by religious movements, pro-state economists, environmentalists and so on. I would argue that, properly constituted, a ‘consumerist’ society is exactly the type of society that we should be striving for. However, part of the pejorative use of the term comes from a particular meaning attached to it."

Litigious Apple loses one: "A US judge on Friday ruled that Apple cannot pursue an injunction against Google's Motorola Mobility unit, effectively ending a key case for the iPhone maker in the smartphone patent wars. The ruling came from Judge Richard Posner in Chicago federal court. He dismissed the litigation between Apple and Motorola Mobility with prejudice, meaning it can't be refiled."



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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