My Latest at the League of Ordinary Gentlemen

I've decided to stop cross-posting altogether. Cross-posting cheapens posts and reeks of empty self-promotion. Go read and comment at LoOG. Here is a link and an excerpt:

In order to pretend to have a meritocracy, there must be some semblance of fairness. Since there are only limited resources available to devote to finding the person most deserving of a particular station, some element of abstraction is necessary. Hence, the cover letter-resume one-two punch. (Japan maintains its meritocracy – more successfully I’d argue - via an elaborate public examination system.) The errors wrought of abstraction are enough of a problem to begin with that when (1) gatekeepers and applicants alike forget the reason why cover letters and resumes exist in the first place and start seeing them as ends in themselves; and (2) the number of people tasked to evaluate resumes and cover letters decreases significantly while at the same time the number of resumes and cover letters thrown at a particular job increases significantly, the entire meritocratic job procurement system begins to hemorrhage à la BNET. LinkedIn, a guerrilla wielding a double-machete, jumps out of the jungle to cut through the staggering and blood-gushing meritocracy. Investors applaud. LinkedIn is pro-NMJP, in contrast to BNET’s cargo-cult pro-meritocratic posture. LinkedIn is also favored by companies and well-organized. Before joining LinkedIn, it took me several days to find one job I was interested in, write a cover letter, tweak my resume, and not get any kind of human response; in the same amount of time using LinkedIn, I can fire off ten or fifteen applications and get immediate and cordial rejections to them all. This represents a major increase in productivity; plus, constructive negative feedback is priceless.

More Farms, Smaller Farms

Now made with real fruit!I'd like to respond to Josh's last post by modeling what I see as the obverse. Economies of scale in agriculture are desireable when the alternative is crippling poverty. Nevertheless, in developed economies where starvation remains of secondary concern to self-inflicted overeating, more food of less homogeneous nutritional composition and higher quality even at higher costs is sorely necessary for the public welfare. Looming over all of this, the Mathusian insight that gave birth to both modern agriculture and modern economics remains true - the human population will always increase at a greater rate than food production efficiency. (My theory is that the Mathusian condition is an emergent consequence of the tendency for humans to be unrealistically optimistic about the future.) 

For this reason, in developing economies, it remains prudent to hedge against economies of scale in agriculture and some of the evils born of placing ourselves too far from the source of our sustenance via extreme and unnatural occupational specialization. (Indeed, it's possible that all of culture comes from food. And "you are what you eat" is wise on several levels.) The Summer 2011 issue of Lapham's Quarterly does a good job of balancing and weighing all the complex considerations at the intersection of development, agriculture, poverty, and nutrition.

The short version of my counterpoint to Josh is that what we need in America is different than what we need for countries that can't feed themselves. It might even be that there's a natural developmental arch that all civilizations must follow, and the stage that a particular civilization is in determines what course of action that country should take to maximize welfare: first (1) there's a community wrought of nature based on equality and living harmoniously, where everyone is a subsistence farmer or hunter/gatherer and everyone lives and dies at the whims of the seasons; then (2) primitive accumulation goes down and a primitive capitalist society develops - whether this is a result of contact with other capitalist societies or natural forces, it's safe to say this is where Africa is; next (3) capitalism matures until it can mature no more - intra-industry national power emerges concentrated in few hands, and these hands - instead of toiling honestly to coordinate supply and demand for the well-being of all - begin to build walls and moats around their citadels (see regulatory capture, patent over-filing, health insurance tethered to corporate employment, credentialing and licensing, etc.); (4) diminishing returns compel a premium to be placed on solving social problems or coerced egalitarianism - this is the stage where the United States and other mature social democracies find themselves; Marx went on to speculate that societies after this stage advance to (5) perfect, blissful communism as the profit motive is grdually removed from aspects of socety where it is (deemed) detrimental to the general welfare. Many others (generally social democrats) think (4) is as far as we can and should go. I think these intellectual frameworks are dangerously naïve and/or cowardly; we can combine lessons learned from (3) and (4) in a self-similar federalist/libertarian/anarchist structure that allows for unfettered individual expression and positive-sum cooperation while minimizing the effects of individual recklessness and coercive association.

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Cutting the Gordian Knot Between Socialism and Libertarianism

Alexander cuts the Gordian Knot

It is popular within the libertarian blogosphere to label pejoratively any recommendation of the use of state power to achieve liberty as "statist", as if any policy suggesting the use of the state apparatus to solve problems of insufficient liberty is objectively evil and destined to lead us all down the road to totalitarianism.  Not only is this tantamount to mindless orthodox hackery, but it is also quite absurd.  

In a liberal regime, state power is best understood as what ultimately (I use this term in the sense of "finally" and not "fundamentally" as I generally support vigorous primary social restraint on undesirable behavior, i.e. shunning or boycotting) prevents the war of all against all.  Indeed, the present scope of state power can be best understood as the result of historical forces and individual aggregate self-interest operating within the liberal program.  In the words of Alexis de Tocqueville:

(In a democracy) no man is obliged to put his powers at the disposal of another, and no one has any claim of right to substantial support from his fellow man, each is both independent and weak. These two conditions, which must be neither seen quite separately nor confused, give the citizen of democracy extremely contradictory instincts. He is full of confidence and pride in his independence from his equals, but from time to time his weakness makes him feel the need for some outside help which he cannot expect from any of his fellows, for they are both impotent and cold. In this extremity he naturally turns his eyes toward that huge entity which alone stands out above the universal level of abasement. His needs, and even more his longings, continually put him in mind of that entity, and he ends by regarding it as the sole and necessary support for his individual weakness. 

Of course, state power has tended to excess, and it must be controlled by the collective balancing forces of a bottom-up, democratically-conscious populace (which explains why democracy-building seldom works) and liberal, private institutions, but there are elements of state power which all citizens can (and have) agreed are for the best at least in principle if not in practice: proscriptions against murder for instance, the national defense, the police, even anti-trust regulations to prevent private institutions from subtracting from the general aggregate welfare (or challenging the government power monopoly).

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Peter Boettke's Economic Meta-analysis

Termite cathedral = spontaneous orderFrom Peter Boettke at the Coordination Problem blog:

I often use a 2 x 2 matrix to communicate to students the different schools of thought in economics.  The rows reflect the problem situation we are find ourselves in (simple or complex), the columns reflect the outcome of our interactions (order or disorder).  Neoclassical economics is found in the simple/order cell; Keynesian and market failure theory is found in the complex/disorder cell; Marxism and critics of economics are found in the simple/disorder cell.  What does that leave?  The complex/order cell and that is the intellectual home of the Classical economists such as Smith-Say, the Austrian school from Menger to Mises to Kirzner, and the New Institutional school of Alchian, Buchanan, Coase, Demsetz, North, Olson, Ostrom, Smith, Tullock and Williamson, etc.

The Austrians occupy a central place in this cell because they emphasize not only the cognitive limitations of man, but also the complications of uncertainty, time, and I think importantly modifications to our core understanding of money and capital.  Money is non-neutral, and the capital structure in an economy consists of combination of heterogeneous capital goods that multiple-specific uses.  Once these propositions are included in the analysis, along with other messy aspects of the real world, our understanding of market theory and the price system shifts drastically.  Nothing can be treated as given.  Everything must fall out of the analysis of exchange and production.  Economic analysis is about economic forces at work, not the analysis of situations after those forces have done their job.

The traditional perfect market versus market failure debate is stale --- the perfect market folks don't tell us how the story of the market unfolds, and the imperfect market folks stop the story short right when it is getting interesting.  Journalist can understand this simple characterization of economic ideas, but economists should know better.  Back in the late 1940s, Kenneth Boulding (John Bates Clark Medal winner in 1949) actually raised this issue in his review of Samuelson's Foundations in the JPE.  Boulding wondered if the flawless precision of mathematical economics would prove impotent in terms of dealing with the real world in comparison with the literary vagueness of classical economics and economic sociology.  Not many listened to Boulding, and instead of doing messynomics in the sense of complex/order cell, we got a stale debate between simple/order and complex/disorder. And it still is going on today.

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That E.D. Kain is So Hot Right Now

I've been reading E.D. Kain for quite some time now (aren't I such a great hipster?), and I've had the opportunity to witness his meteoric rise from twelve posts a day at the League of Ordinary Gentlemen to being profiled by Conor Friedersdorf for the Daily Dish during Andrew Sullivan's hibernation (Cause he's a bear, get it?).  I read Kain's posts on Capitalism, Anarchy & War today (I think that's the first time I've ever typed an ampersand.  Seriously, I had to look for it.) and was absolutely floored: it was as though Howard Beale had been crossed with Mikhail Bakunin, cloned by Norman Borlaug, and then grown by Dame Julie Andrews and John Valjean with Michel de Montaigne as a private tutor a la Aristotle.

Kain:

When our government wages a war overseas against terror or domestically against drugs (or overseas against drugs and domestically against terror) [extremely pithy, emphasis mine] or when they tell you that they’re trying only to stabilize Afghanistan or resolve the conflict in such a way as to make a graceful exit, etc. these are lies.

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On Marxist Interpretations of the Financial Crisis

Image from the Financial TimesI recently tweeted the RSA Animate of David Harvey's April lecture "The Crisis of Capitalism", the tagline of which is "Is it time to look beyond capitalism towards a new social order that would allow us to live within a system that could be just, responsible, and humane?"  As I noted in my tweet, I agree with Harvey's positive, specifically with his deconstruction of the various, often contradictory media analyses of the economic crisis and classification into five distinct genres, each with a degree of truth.  Here are Harvey's five genres of media narrative, with my commentary:

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