Tuesday, February 25, 2014

The Entire Field Of Economics Is Nothing More Than The Projection Of Power Politics?

by Thomas Eisenbach and Tanju Yorulmazer - Liberty Street Economics, Federal Reserve Bank of New York
"One of the major roles of banks and other financial intermediaries is to channel funds from savings into valuable projects. In doing so, banks engage in 'liquidity and maturity transformation,' since they finance long-term, illiquid projects while funding themselves with short-term, liquid liabilities. By performing this important role, banks expose themselves to the risk of runs: If depositors or other short-term creditors worry about their claims, they may withdraw funds en masse and cause the bank to fail."
Really? When was the last time worry about FDIC-insured bank deposits caused panicked depositors to withdraw the majority of fiat currency deposits from a plain old US commercial bank?

Meanwhile, diverse, heterodox economists (and operational bankers) routinely say that banks in a fiat currency system loan neither reserves nor deposits nor even their own financial capital.

Rather, banks, for a [supposedly] regulated fee, agree to act as middlemen to underwrite and [supposedly] manage to completion, credits & debits, which are denominated and backed by the electorate, through their agent, the Treasury, and it's checking account, the Fed.

The electorate is the real middleman in a fiat currency regime. Our Treasury, Fed and publicly-licensed banks are simply their agents.

Banks MAY have to put SOME of their own capital at risk if a creditor defaults, but my understanding is that they typically do NOT initially loan out their own or depositors capital, or banking reserves.

Rather, they RECORD matching credits/debits, and notify the Fed to adjust recorded banking reserves accordingly, for whichever banks hold the newly denominated credits and debits. (They might not be the same bank.)

Given all that, here's what I've really come to think about orthodox "economics."

It's far more sensible to describe orthodox "economics" as political economics, and admit that POWER negotiators define success as asserting control over most variables (including incomes & employment levels) by force - so that they can "manage" the performance of their preferred asset variable.

By fixing most variables within arbitrary bounds, managers try to force unruly systems to follow the projections of a simplistic model - theirs. That's standard practice in the experimental practice of the scientific method, but that's no reason to treat national politics as an experiment run of, for and by naive power-brokers with myopic aims.

The entire field of economics is nothing more than the projection of power politics? regardless of the outcome, it is still distorted by the brain-dead oversimplification of aristocracy & class, which is just one variant of Central Planning failure?

This will never work adequately for anything except the personal pleasure of dictators. Every discipline applying any sort of statistics immediately arrives at "infinite agility" as the variable driving success, sustainability and evolution. (Cue Thermodynamics, chemistry, biology, Darwin, Shewhart, Deming, Construction, and DoD force-readiness.)

The only economic concept that even comes close to an agility reference? A a "pass-through economy," where the ascendancy of Dynamic Assets - distributed and aggregate - is inherent, as an axiom.

What we call "orthodox economics" is merely the simplistic, negotiated gang-rules of a growing, squabbling mob, still trying to re-organize into a sustainable aggregate?

Such gang-rules are always rife with organizational hacks known as arbitrary taboos, covered over by DoubleSpeak.

The price of imposing crudely hacked gang-rules is a certain level of social violence, to keep people from talking about all the, taboo, Pink Elephant conundrums in the room .... such as existing fiat currency operations.

The core issue was pretty much nailed by the early Greek city states. They quite vividly discussed the organizational hurdles in transitioning from tribal to organized, supra-tribal population levels, and zeroed in on both the emerging frictions and available social methods for circumventing them.
It all comes down to speed & breadth of public discourse? If that is maintained, then any pattern of INDIVIDUAL-BASED decision-making can be countered with TIMELY, distributed feedback, to keep isolated decision-making from breaking too many existing & emerging inter-dependencies.

The aggregate or summed quality of distributed decision-making is a function of the distribution, focus and tempo of distributed feedback? That is the first corollary of all "system" theories! By definition, "systems" are those things which include internal methods allowing them to actively respond - autocatalytically - to their own interdependencies.

Yet we've gotten away from the obvious when discussing our own Democracy!

Economics discusses most local decision-making in terms of static, individual TEMPTATIONS. Yet that is a mistake. Social species are defined as those which benefit by selectively pre-programming themselves - to varying degrees - so that a large variety of dynamic inter-dependency signals can and do override the presumed static-resource-temptations which economics simplistically focuses on.

Humans simply do not behave as reliable calculators of dynamic outcomes from simple, reliable static-value inputs.

Rather, they behave as an analog computing device, where an incredibly large number of different inter-dependencies may or may not be triggered, by a wide variety of cues, themselves gated by a wide variety of variable conditioning factors. 

Legions of studies have shown that people and groups who reliably act certain ways in given contexts, may be easily triggered to act differently, by introduction of the seemingly most unpredictable cues. That is certainly not even unique to humans. There is no known formula that can provide real-time advice useful for managing the incredible - and increasing - numbers of inter-dependencies and degrees of freedom which all aggregates display.

It is always, by definition, a mistake to apply any rules-based approach to contingency management for a dynamic aggregate. Rules, by definition, presume static degrees of freedom, where no stasis exists.

Human cultures will little note nor long care who receives another Nobel Prize in Economics for pointing out that things long known in thousands of other disciplines can be added to the naive field of Political-Power-Economics? Surprise, surprise!

No wonder system-scientists & statisticians are so against the very concept of distracting prizes. Any feedback structure that strays from aggregate success being it's own reward ..... ends up, by statistical definition, giving isolated people individual prizes for shitting in their own aggregate's nest!

And humans think they are so smart? In reality, you can always detect brain-dead credentialism by the combined crowing and trailing odor.

Monday, February 17, 2014

Building Aggregate Agility ... By Continuously Tuning Increasing Numbers of Inter-Dependency Functions ... With Increasing Numbers of Automatic Stabilizers

Finance and Economics Discussion SeriesDivisions of Research & Statistics and Monetary AffairsFederal Reserve Board, Washington, D.C.
Inequality and Poverty in the United States: the Aftermath of the Great Recession - July, 2013 

Washington U faculty papers
Inequality, the Great Recession, and Slow Recovery - Jan, 2014

What do these data mean to you?

To me, they're simply interesting data, produced too slowly to be of functional use in a still missing RESPONSE to changing context.

What are we doing here? How are we doing it? And why are we waiting so long?

Instead of documenting the bad outcomes, why aren't we just focussing on improving policy in real-time?

Something is completely out of whack in our policy apparatus, and our civics.

We would NOT use economics to train jugglers! Why try to use them to advise policy development - which must, by definition, be either agile, or irrelevant?

No offense to economists ..... but the entire field of economics could - eventually - precisely document how every war was lost, but couldn't EVER actually win one, since that requires practice at a different skill set?

How does economics help us succeed at juggling, or even in real-time operation of a business venture? Let alone national policy?

This situation should make all citizens realize that the economics profession can never instruct us on how to ride a bicycle. It can only precisely document (eventually) why we fall off? :)

Let's get real. The act of falling off a bike is self-documenting.

As are depressions. 

Keeping an aggregate on a bike (or any growth path) requires us to constantly train increasing numbers of automatic stabilizer functions to respond and adjust in real-time ... to real-time data sets, called feedback.

Keeping all feedback data sets within tolerance limits is how complex systems juggle internals in order to survive context. To ALWAYS ensure that ALL internal functions can be kept within local tolerance limits, we
1) generate tremendous diversity, and
2) generate large numbers of inter-dependencies, and
3) demand distributed - i.e., "fiat" - adjustments to adequately distributed feedback,
4) all in order to thereby maintain distributed, systemic resiliency.

That is what agile aggregates, and Democracies, do - when they survive.

And they do it all in either real time ... or else.

The logic of social species is to guarantee survival of all components PLUS the aggregate, by distributing all stresses experienced by the aggregate. If all components adjust a little, then no component EVER need be stressed beyond survival tolerance limits.

So why on earth are we killing our MiddleClass? Is there a plan? Some Desired Outcome? Whose?

Social organization boils down to building aggregate agility by continuously tuning increasing numbers of inter-dependency functions. That's not rocket-science, only distributed PLUS aggregate practice at tuning inter-dependencies.

Where does the field we call economics fit in this social logic? 

Seriously. The very application of orthodox economics is entirely too academic, and inadequately operational. Since our context changes unpredictably, our aggregate reality is that NO model of anything works for more than a fleeting instant. Survival is a dynamic, unpredictable art of extension by highly distributed innovation, and NEVER a static model.

Just set functional tolerance limits for all components ... including education, nutrition, liquidity, employment .... and let distributed, not concentrated, adjustments be mediated through existing and added Automatic Stabilizers. It should be easy.

Where does that leave the entire field of economics? It has clearly been a colossal, operational mistake to even attempt to use economists in policy offices, rather than just having them tally accounting reports after the fact, and spend more time on the golf course.

Accounting & economics involve fairly boring tracking of basic fundamentals, and NOT dynamic exploration of emerging options.

Our survival is a simple question of keeping boring fundamentals separate from the emerging options which we must explore?

That means setting goals, keeping boring fundamentals as fundamentals vs dynamics, and making any and all distributed adjustments IN REAL TIME, that are necessary for aggregate exploration of aggregate options.

Once seen that way, our key Desired Outcome is to maintain aggregate resiliency precisely by maintaining all of our social components - and especially our Middle Class - safely within operational tolerance limits.

If all citizens focus on avoiding application of excessive stress on other citizens, then we'll never have to worry about our aggregate resiliency. That is the logic of all aggregates.

It is the logic of social species.

It's also the logic of statistical process control (distributed control of net variance).

And the logic of diverse expressions of military science (force readiness by managing frictions generated while aligning highly distributed decision-making). Believe it or not, armies at war are much more democratic than our electorate at home.

And, by the way, it is the logic of using automatic stabilizers in fiscal and social policy.

In conclusion, to maintain National Security as national resiliency, functional policies are those that 

a) provide us with freedom to execute distributed expression of more Automatic Stabilizers, and 

b) guarantee us freedom from the stress inherent in the clash of random ideology. 

In short, make coordination of a more perfect union, not civil or class war.

Building Aggregate Agility ... By Continuously Tuning Increasing Numbers of Inter-Dependency Functions ... With Increasing Numbers of Automatic Stabilizers.

That is what evolving systems do. That's all they do. That simple logic allows evolving systems to solve seemingly any challenge ..... by throwing more nested layers of the same logic at whatever options emerge.

Any and all ideology just gets in the way, and slows down distributed adjustments.

Why can't we teach this simple paradigm, to all students, by age 10?

Saturday, February 15, 2014

What we're really evolving here is a Group Brain, to support a Group Intelligence.

This raises a very simple question. If a GOP-Pres could cut FICA 20%, why can't a DEM-Pres cut it 100%?

Obama = enough rope for the MiddleClass to hang itself?

It's now been four generations of the poor & MiddleClass in the USA, arbitrarily over-taxed, just to hold them down!

Them's bitter fightin' words, and a shamefully vicious inequity.

Paul Meli writes:
"Yes, it was done so that "conservatives could never take away workers retirement money…since they "saved" for it".  
Our entire monetary arrangement is one of the biggest cons ever perpetrated. 
Our well-being is being dictated by an accounting system that has unlimited input, but has a few added loops to confuse the rubes (a kind of shell game) into thinking we have to borrow from our right pocket to fill the left. 
Anymore all I say to people I know is 'spending = income. If you can figure out a way to cut spending in that relationship without cutting your own income I'll vote for it.' "

Paul hit the nail on the head. Especially the 2nd line, about a massive self-con.

At this rate, we're only going to defraud ourselves until we're weak enough to be conquered by some population less stupid. [My tongue-in-cheek, perennial favorite is Iceland. :) ]

If YOU heard a voice from some God - or just a voice of sanity - saying that something has to be done, NOW .... where would you start?

We have 400 years of history, from John Law, to Ben Franklin to Abe Lincoln to Walter Shewhart & W.E. Deming, to Marriner Eccles (& FDR) & then on to Warren Mosler ... all saying that we can't (by current methods) explain and/or teach our way to sustained success ... or at least not fast enough.

It seems that we really do need a devious plan, to save our crooks, fools and self-parasites from themselves, without the delusion that all can be taught everything. We need to address all 3 of the 3i's, simultaneously.

Impact.       (mitigate and stop the stupid)
Intercept.    (stop rewarding incoming stupid)
Instigation. (stop generating so much emerging stupid among developing students)

Where's the glory, logic, or beauty in that? It's deflating.

If you look at this as equivalent to a massive task of tuning a dumb engine, then yes, it can be somewhat enticing.

Yet to do that, we pretty much have to abandon our cherished myth of intelligent human beings, and look on any population as a Pareto-curve of (80%?) foundation stock, (18%?) mutant innovators and idiot savant, OCD capitalists, and ~2% "stem-humans" (equivalent to stem cells).

That takes all the beauty, mathematical or otherwise, out of social evolution, and relegates it to plodding social engineering.

That gets awfully lonely, real fast.

Your species is not your friend? In fact, at the present time, 98% of them are obsolete? All of the time? Simply because of the way we educate and train ourselves?

I have a feeling that humans, if they survive the next 200 years, will migrate back to more of a sense of species (not just tribal) self awareness. At present, our over-personalized self-awareness limits the very return-on-coordination that beckons to us, and instead grows our Output Gap as fast as our options expand.

This can't go on much further, as is. If we're still around, 500 yrs from now, surely it'll only be because we completely altered the way we run childhood development & training.

Just as gestation period rises as you go up the phylogenetic order, presumably to allow time to polish & tune construction of more complex brains ...
[e.g., Parker ST (1990) "Why big brains are so rare: energy costs of intelligence and brain size in anthropoid primates."
In: Language and Intelligence in Monkeys and Apes,
eds. Parker ST, Gibson KR; Cambridge University Press, pp. 129-156.]
so too might you expect cultural evolution to reflect more care & attention to the "cultural-gestation" [i.e., early education/training] of those developing humans who become able to organize on a bigger scale.

What we're really evolving here is a Group Brain, to support a Group Intelligence. So far, we're just fumbling around, not even aware of what we're doing.

We don't even discuss such things in current policy, so don't hold your breath waiting on progress. We have to tune this massive engine, not just explain to all the components that they have to evolve. That's a trivially obvious lesson bound to be ignored.

We need to either find a way to steer our own cultural evolution a bit better ... or just face facts, like Omar Khayyám, leave our thoughts for posterity, and go get drunk on wine, [significant others] & food (And/or some more modern diversions). 

It's your choice. Be irrelevant to your children's future, or do SOMETHING to help shepherd evolution of Democracy.

Tuesday, February 11, 2014

How Would A Biologist View White Collar Crime And "Control Fraud" ... And Suggest How To Handle Them?

Why ask this question, and many more like it?

Control Fraud and White Collar Crime, as coined by sociologists and criminologists, are useful yet neglected concepts.

What if there are diverse concepts from many other systemic disciplines that are of equal or greater value, yet even more neglected?

If all citizens periodically hear a bit more of what all other citizens know, we'd never have to worry about our democracy?

To get that benefit which history has promised, we first have to condition ourselves to want to know what more of our co-citizens know.

So in case YOU want to know, let's compare some views across disciplines, and see what pops out.

For non-criminologists, what is White Collar Crime ... especially "Control Fraud?"

It's useful to google both terms, and see the variety of illuminating examples illustrating both terms.

"The persons who control a seemingly legitimate entity (private, non-profit, or governmental) can cause unique damage [to the aggregate] if they engage in fraud because the CEO can direct the corporation and cause it to make the firm’s internal and external environment vastly more criminogenic." 
"... the CEO’s interests are frequently contrary to the interests of the corporation" 
"The elegant solution for the fraudulent CEO is not to defeat controls but rather to suborn them and pervert them into the most valuable fraud allies. This explains why sophisticated frauds almost invariably retain top tier auditors to “bless” the financial statements."

These quotes are taken from Bill Black's essay,

75th Anniversary of Edwin Sutherland Naming 'White-Collar Crime'

So, what might all this mean, systemically, to all 315million members of our democracy? Is this cross-discipline sharing of terms and concepts useful for all?

These concept of White Collar and Control Fraud crimes are not only a rehash of ancient tyrant/civil conflict, and not just a review of Marxist/aristocracy conflicts.

To biologists, these concepts are also the real-time noise of host/parasite interactions, where some of the emerging elements in a deeply nested system are always harming rather than helping the system that spawns them. Yes, in the course of spawning their own diversity, biological systems spawn internal parasites, and must constantly invent completely novel methods to regulate and/or cull the mal-adaptive processes, as part of selecting the adaptive fraction.

In short, to any system scientist, "parasitic" members of an internal characteristic-spectrum are those system components NOT YET REGULATED or tuned to adaptive system purpose.

When citizens and criminologists discuss fraud & crime in specific industries, they're talking about diverse expression of similar, not-yet-regulated behavioral excesses. Those behavioral excesses are just applied in different segments of our vast, cultural INTERACTOME, precisely because more adaptive tolerance limits are not yet hemmed in by more evolved regulatory interactions.

How are optimal tolerance limits developed sooner rather than later? By practice at sampling all available feedback and getting good at adaptive_signal/system_noise discrimination. We know that no system ever knows best/worst utilization of emerging resources beforehand, since that utilization is always entirely context-specific. So how does a growing human culture figure that out, as it simultaneously spawns new components capable of harnessing new resources?

Not just by totally naive trial and error, but by applying BEST PRACTICES to the timeless methods for parsing adaptive_signal from context_noise.

Best practices are historically shaped by the rule of system extension, i.e., species, culture or national survival. 

That history automatically pre-defines best practice as configuring ourselves to maintain the most degrees of freedom or highest adaptive potential (DOF/HAP) in the existing system or culture, while retaining all that culture's historical momentum and baggage as a foundation stock of diversity to continue using. Short of sterilizing the planet and starting from scratch, we're stuck with extending the biological infrastructure we have, until we prove it as a dead end and get replaced by something else. Basically, we need to do anything to keep triggering a state of mobilization at regular intervals, instead of staying too relaxed for too long.

In species evolution, we call name such self-motivation tricks as "play behavior" among the so-called, more advanced species. Advanced cultures need cultural-play-behavior too, not just personal play behavior.

This train of thought suggests that we can actually confirm Joshua Chamberlain's thesis, and generalize from it. Yes, we cannot predict specific challenges, but we can determine what kind of adaptive rate our culture can spawn when the challenge strikes, by maintaining a high level of play & practice at both spawning diversity and then regulating it upon demand. Chamberlain didn't say how, but we can. By being prepared, through initially playful and then serious practice.

How to be prepared? By being practiced at assessing & optimizing our net adaptive potential (DOF/HAP; degrees of freedom = highest Adaptive Potential).

How to optimize & fine-tune adaptive potential (DOF/HAP)? History mandates optimal quality of distributed decision-making as the key to system extension or survival. That, in turn, mandates optimally distributed degrees of freedom, which mandates optimal distribution of BOTH static and dynamic assets.

Optimal distribution of both static and dynamic assets is rarely discussed, but historically boils down to "force-readiness." Translation: a median living wage AND mandatory requirements for lifelong education, training and industry, including regular practice at system perspective, not just component practice? In the end, culture is a dynamic asset which, like everything else, is something we either use or lose. It cannot be physically hoarded, only maintained through practice.

There are always important portions of system performance which cannot be appreciated through participation alone. Rather, the perspective from the edge or from a distance - as observer, coordinator or coach - is required, to recognize some system patterns which are much more difficult to recognize from within.

In practical terms, this advises us to regularly practice listening to diverse viewpoints, observing our own processes from the outside, and practicing dialectic modeling of everything, to trigger emergence of new regulatory checks & balances. Functionally, dialectic modeling reduces to early practice at examining emerging interdependencies.

What is the fastest way for supra-tribal populations to re-constitute the extreme agility & adaptive rate of tribal pass-through, tribal economies? Simply mandate it. Then practice it's features, by keeping ourselves prepared, by challenging ourselves with a steady spectrum of cultural-play behaviors.  Some of those play behaviors will always transition to serious work options. Self-challenge keeps us on our toes, while waiting for unpredictable outside challenges.

Pursuit of adaptation is a selected conditioning bias, not an inescapable certainty. Every new level of system expansion must not only be spawned, it must start from scratch and thereafter develop yet another set of tools and methods which instil a bias to pursue further adaptation (optimizing DOF/HAP). Such a bias can occur ONLY from the statistics of selection bias! There is no other way to discriminate best/worst resource allocation models.

No wonder systems ONLY advance during crisis, and always decline systemically without systemic selection pressure - reverting to component competition rather than coordinated cooperation.

What does that say about how our electorate orients to our present context?

The quick answer is "horribly" or "barely at all." So let's apply a bandage to our fractured, cultural orientation process.

Making a jump, let's put it this way, and start from scratch.

Tribal systems evolved to the point of running out of room to operate independently, and are still adjusting to all the resulting inter-dependencies. The former, tribal functions, however, maintained a highly selected system of distributed decision-making, which preserved & maximized net degrees of freedom. You can say that a "social" species is one that practices "pass-through" economics to optimize system maneuverability.

Where did "capitalism" come from? One view is that it arose from the onset of supra-tribal politics, where permanent inter-tribal frictions gradually transitioned "temporary" tribal war chiefs into "permanent" aristocracy with the habit of acquiring static assets across formerly tribal boundaries, instead of optimizing tribal capabilities. 

Capitalism is inherently the distributed practice of Control Fraud? 

Because of that view, early attempts to regulate White Collar & Control Fraud crime have focused on keeping it's practice distributed within tolerance limits, rather than reconstituting ancient Public Purpose and formally co-optimizing static as well as dynamic assets simultaneously. To optimize cultural Adaptive Potential, we might want to re-explore civic practice and preparation at agile utilization of all civic resources, aka, mobilization skills or force-readiness.

(You could also argue that allowing extreme wealth and income disparity is just another way of returning to a restrictive gold standard, where excessive amounts of access to public fiat is constrained in the hands of a few. That constitutes Central Planning, by any other name. Any method whatsoever of constraining or slowing, rather than more speedily distributing use of public fiat, is a severe, mal-adaptive constraint on both Policy Space and Policy Agility.)

From that perspective, capitalism is simply an off shoot of an arbitrary approach to acquiring static assets ACROSS system boundaries, while newly supra-tribal aggregates try to figure out how to organize dynamic assets on a new scale. For an aggregate, organizing dynamic assets as fast as it acquires static assets is the key to Adaptive Rate. Only by co-organizing static/dynamic assets can aggregates better discriminate best/worst options for aggregate resource allocation.

Capitalists are routinely taught that adaptation is merely static asset allocation, or simply distributed hoarding. Optimal adaptive "use" of resources is considered separately and transiently, if at all. It is typically viewed by most avowed capitalists as too difficult to do, and is therefore considered both presumptuous and something to be neglected. Unless absolutely necessary. The frequency of war indicates how frequently absolute necessity actually occurs.

The worst application of this new practice of "capitalism?" Instilling the habit of NOT practicing optimization of dynamic assets, and instead settling for an obsessive focus on distributed hoarding of static assets. In short, business capitalism is self defeating, by neglecting the return-on-coordination from it's own INTERACTOME, while progressively seeking to uselessly hoard static assets. That constitutes a transient, unstable, net loss of Adaptive Potential (a growing Output Gap), while components reflexively hoard under-utilized static assets. Capitalism is, in short, a group failure to orient to the far higher return-on-coordination.

We're looking at 2 settings for humans, long familiar to ecologists. 

1) Overgrowth of one species, waiting for some new sub-clone to out-compete all the rest ... simply because it can.

2) Climax ecology, where a stable mix of species co-exist, until unpredictable events clear fractions of the environment & allow a cascade of marginally preserved elements to build toward a new climax "cover crop" mix.

Our only challenge is to more quickly determine how prepared we are to respond, to whatever is going to happen next, no matter when it occurs. The only way to assess our national force readiness, is to practice on invented or "cultural-play" processes. Call them Public Works if you will, but whatever you call them, please just practice?

As we ponder this task, it should occur to all that humans may not be suffering from future shock at all. Rather, compared to our ancestors, humans may be suffering only from FutureBoredom, and need to get busy doing something about it, by first playing en mass, and then turning some fraction of competitive play into real evolution. The alternative is to sit around becoming progressively un-practiced, and thereby becoming less rather than more prepared for unpredictable challenges.

Monday, February 10, 2014

The Unexpected Effect of Monnet on Money

Monnet's Brandy and Europe's Fate

For most citizens of the Western Hemisphere, this is a fascinating essay on the legacy of Jean Monnet.

It is certainly curious that the convictions of a person whose personality was set before WWI, would come to dominate European events 2 world wars and 100 years later.

This is all so foreign to US citizens - and various of the many details are both unsettling and enlightening.

Compare Monnet to Marriner Eccles. You have to wonder whether they ever met.

Monnet & Europe saddled with so much baggage?

While Eccles, FDR & the USA were so innocently free to get on with pragmatic responses to changing context?

The bigger issue seems to be how both zones are adapting, at what Adaptive Rate, and why the Adaptive Rates of both zones are fluctuating differently.

For comparison, one can't help but ask how many Australian citizens know much of, or care about, the cultural dynamics on the European mainland?

And, this brings up a question about Aggregate Tempo.

How much do any of us need to know about the spurious history of one another ... versus just learning - and then KEEPING - the habit of QUICKLY seeing how to coordinate new success, in any new, unpredictably varying context?
"Those who govern, having much business on their hands, do not generally like to take the trouble of considering and carrying into execution new projects. The best public measures are therefore SELDOM ADOPTED FROM PREVIOUS WISDOM, but forced by the occasion."  Benjamin Franklin

Maybe FutureShock shows that we tend, in practice, to non-selectively over-weight ALL input from elders, in our currently accelerated cultural settings. Don't we need to be just as selective about which bits of elder-advice to keep, as we are about selecting which inventions to keep?

Since methods drive results, which methods might allow us to enter every new context with a fresh, unbiased approach to sampling both our emerging options plus the optional feedback/analysis/test methods we may use to achieve our next desired outcome?

Although it might seem harsh, perhaps Europe, and the whole world, would have been far better off if Monnet had retired earlier, or had been more quickly forgotten? :) Or are efforts such as Monnet's the historical norm, rather than the exception?

Or is Monnet simply unfairly remembered?  For example, was his regret of the unfair reparations against Germany following WWI mistakenly repressed? If Monnet were still here, would he be insisting that the MiddleClass be treated more fairly, across all of Europe, and especially in southern Europe?

There is no way to tell for sure? Yet it doesn't hurt to ask those questions.

It seems that Monnet's "Action Committee for the United States of Europe" and the later European Parliament reconstituted everything about USA democracy except Ben Franklin's famous "Table talks" - i.e., the crucial method which actually delivered the beneficial function, not just the constraining form.
"When a broad table is to be made, and the edges of planks do not fit, the artist takes a little from both, and makes a good joint. In like manner here, BOTH sides must part with some of their demands."
So far, most people in southern Europe feel that only one side, the Middle Class, is parting with anything. There will be no progress without fairness, regardless of which methods are employed?

Have we merely distracted ourselves with the topic of "money," while failing to adopt adequate responses to the demands of an occasion that is still ongoing, largely unchanged, since Monnet's youth?

Thursday, February 6, 2014

Steering Aggregate Adjustments To Distributed Change: Developing A Faster/Leaner/Better Aggregate OODA Loop

For aggregates to persist, every distributed component process must change?

That is always obvious once said, so why does so much distributed friction persist, over the seemingly obvious?

In his most recent review of the historical negotiations leading up to launch of the European common currency, Bill Mitchell has dredged up a statement which, in hindsight, reveals amazing levels of mal-adaptive reasoning.

The avowed purpose of the euro currency was to "reduce the level of unemployment by fighting inflation."

It is truly amazing to see how that perspective has turned out, in our existing context. The implication, then and now, is that a slight majority of Central European Policymakers were and are STILL fixated on the mythical benefits of a gold-like, static currency standard. The entire monetary policy for the common currency has been one grand effort to peg their currency value to a contentiously derived figure which they presume is static, but which must in reality, dynamically float.

As a truly deranged consequence, Europe has embarked on a mad effort to stabilize an incidental metric, inflation, which is at heart, an indicator of the dynamic flow of adaptive value between the necessarily diverse forms of capital.

Think for a moment about the lunacy of Europe's grand strategy.

Do we bother stabilizing the net flow of water between oceans, rivers, lakes and tidal basins? Or do we simply navigate on all of them, as and when needed?

Do nations regulate, across their aggregate population, how many bodily resources flow between specific sub-classes of muscles, fat deposits, organs or other body tissue types?

And does the biological cell regulate the intrinsic "value" of a given ATP-molecule? Or does every cell only the adaptive impact of ATP, when used "wherever & whenever needed" in the cell?

Answer to all 3 questions: Surviving aggregates do NOT pursue maladaptive strategies for long.

They certainly do NOT do so during those spurts when we actually adapt and evolve. As an adaptive, aggregate response to aggregate context, we let the relative ratio of all instances of net resources "float." Independently, we then regulate, through our collective, distributed efforts, ONLY those net resources which can be commandeered and leveraged by citizens within each nation state.

In short, we act and survive as an aggregate of inter-dependent members, not as isolated individuals. The entire ideology of capitalism for the sake of capital is merely a method searching for a purpose.

By their own admission, the European founders embarked on their common currency to improve the AGGREGATE or general welfare of all citizens in all member countries. Yet their operations have been functionally orthogonal to their stated mission.  As a result, they have clearly degraded rather than improved general welfare, for tens of millions of their own citizens.

Are they only slow on the uptake, or is this a guaranteed consequence of the still divergent views of rentiers and coordinators?

It has been perennially argued and so far proven - since the first fiat currency unleashed quantum jumps in fiat policy space and policy agility - that there is no obligatory relation between unemployment and inflation.

The entire argument depends on the very definitions of both inflation and unemployment, which are rarely precisely defined in given arguments as context-dependent terms.

The presumed link between unemployment and inflation is only a straw man smokescreen raised by rentiers opposed to the very policy maneuverability that generates the higher return-on-coordination in the 1st place!

We can't see "our" aggregate causality for our distributed views!

Europeans, as well as we here in the USA are left with a simpler, stark proposition. We have no need for active "monetary policy" whatsoever?

Rather, we need an agile, automatic-stabilizer monetary policy, backed by agile fiscal policy?

Curiously, the latter view has been consistently espoused in evolving forms, from early colonialists, to Ben Franklin and Alexander Hamilton, and on to Abraham Lincoln's Greenback and eventually to our current fiat currency regime, crafted largely under the guidance of Marriner Eccles and FDR.

Why is anyone surprised? That has always been the way in which all "social" aggregates have maneuvered to survive and thrive, throughout the entire history of all aggregates, not just biological ones.

The logic of social species simply expresses the timeless logic of aggregates. What we call social aggregates are merely those which display seemingly greater LOCAL degrees of freedom (at least on planet Earth, where we're still confined).

The constant, aggregate logic is to guarantee that the aggregate survives in a Natural Selection Market, by allowing all of the aggregate's component members to seek aggregate benefit .... by freely trading SOME local degrees of freedom, in return for net-adaptive access to SOME aggregate degrees of freedom.

Aggregate success obviously tracks the QUALITY of distributed decision-making.

In evolutionary terms, it is quite easy to maintain net profitability in that pool of trades - but only when people actually use ALL of their heads, not just some, and not just their weapons.

Our dominant social friction seems to be over fair - i.e., adaptive - distribution of (or access to) our aggregate benefits. Every time we generate more new resources than anyone previously imagined ... we stop and fight over dividing up the spoils.

Instead of absorbing the biggest lesson. That we generate more than we can imagine ... again ... if we'd only not pause to fight over past successes!

In practice, we're in a constant fight over whether to actively waste new assets by uselessly hoarding them, or to adaptively leverage any and all assets, while exploring our newly emerging aggregate options. It's a question of stopping in the middle of an evolutionary path, or never stopping, and to instead always keep going.

Managing that friction is where the demand for real thinking comes in. In practice, our kids always go on, as we slowly stop. The real question is whether we're going to try to limit the options our offspring have access to.

This is actually astounding. It tells us a lot about our actual context, and our own impact on our own outcomes. Humans have come this far, and yet we cannot mediate juvenile frictions that arise among our own citizens, who are members of our own country? Ancient tribal customs worked these methods out perfectly, tens of thousands of years ago. Are we only confused, distracted and self-conquered by our own, growing numbers? So that we're not even leveraging what we've ALWAYS known?

Yes. Emphatically yes. As always, we have met the enemy, and they is us.

The only question is what we're going to do about it. 

What new methods will we invent to redirect emerging resources away from the next emerging battle with ourselves?

Our current primary social friction seems to be largely between just two of our arbitrarily defined, sociological "personality-types" - rentiers and laborers - which are analogous to biological cell types. To further our embarrassment, rentiers and laborers are clearly mutual symbionts, neither able to exist without the other. They are only virtually defined as different, yet act too stupidly to intelligently leverage their own return-on-coordination. Go figure!

With only cursory examination, the perennially under-regulated rentier outlook is exposed for what it is. A intellectually lazy, parasitic approach that mindlessly seeks to HAVE it's culture, and EAT MOST OF IT too (or at least hoard it).

Rent seeking is simply a non-adaptive approach not yet adequately regulated by the diverse co-owners within the same aggregate. The best & most common defense for the rentier fraud is "Why didn't you stop me?"

Meanwhile, with similarly cursory examination, the perennially under-organized laborer outlook is simultaneously exposed for what it is as well - the same intellectual laziness, expressed only slightly differently. A overly passive approach that works harder at avoiding rather than fulfilling the responsibilities of co-owning it's own aggregate.

By both methods, an intellectually lazy aggregate and it's options remain parted!

You could NOT make this up, or anticipate such an outcome for such a large culture of the supposedly most intelligent species ever to walk this planet. Certainly not after 10,000 years of rapidly evolving, human cultural history.

Our reality is that laborers are always trying to give away their aggregate ownership responsibilities, and rentiers are always trying to minimize the intellectual work they must perform in order to accept all those aggregate benefits, and keep them coming. As John Boyd famously said, their default goal of the rentiers is to just "don’t interrupt the money flow, add to it."

Is it any surprise that many people conclude that democracy won't work, even though it obviously can, has, and will again, in fits and spurts? Democracy is just another word for an agile aggregate, capable of maneuver context management. Democracy, when it does work, depends on an adequate quality of distributed decision-making, rather than the fallbac, of lazily TRYING to rely upon the transient crutch of Central Planning. No matter what the form, Central Planning always fails, since it can never scale planning as fast as aggregate options expand. It's only a matter of when, not if.

You also couldn't make up this escalation of useless parlour talk about whether democracy works, but you can predict it's inevitability, unless we better educate and better train our own personnel. Aggregates ARE what aggregates practice, no matter how smart their members are before they initiate "team" or aggregate practice.

Evolving methods drive evolving results. Until our evolving education and training methods more closely chase our evolving demand for faster/leaner/better coordination, we won't maintain an evolving democracy. We won't be able to explore, or controllably manage, our continually expanding options.

What part of Duh! are we NOT teaching our children? All of the details, and NONE of the context?

There is a better way. If we focus on coordination skills first, we'll ALWAYS be able to muster whatever adaptive rate, form and direction we need, when the hour strikes.

Things won't improve until labor, in aggregate, calmly and purposefully acts more like an aggregate owner, and until rentiers simultaneously, in aggregate, calmly and gracefully accept the overwhelming return-on-coordination among all co-owners. Until then, our Aggregate Adaptive Rate will continue to lag and our Output Gap will only increase. This is an aggregate organizational task, not a conflict to be won. To make things easier on everyone, we need "a more perfect union" - NOT disorganized squabbling.

One example conclusion follows from this expose.

The concept of keeping a "land-use-tax" obligation in balance with a "labor-tax" is only a crude beginning to a more general social-organization method. The range of so-called "Intellectual Properties" has now extended far beyond mere land itself, and the divisive rentier-vs-laborer competition now rages over every new niche that citizens invade via coordination.

To balance labor-taxes, a more general "Intellectual-Property-Use Tax" is clearly called for, to provide measured incentives for both random invention AND aggregate leverage (redistribution) of aggregate skills AND actual production. It always boils down to aggregate agility in regulating adaptive tolerance limits on all new methods employed of, for and by the host aggregate. Call it social responsibility or whatever you want, just get on with it quickly, so that our culture can move on, just as quickly. Aggregate tempo and maneuverability always matters, more than anything else.

Many other adaptive conclusions will soon be obvious to rentier/laborer enclaves, once they start working together, not just negotiating periodically.

Our next, adequate, and distributed solution this week ...... is always better than a supposedly perfect, Centrally Planned one, in some fanciful future.

Clearly, to guarantee that an organized citizenry can always QUICKLY consume all new resources and leverage every new option that it collectively produces, there has to be fiat or on-demand equivalency between labor and all other forms of capital. The ultimate logic of any social species is to provide rapid translation between all local forms of intrinsic capital, so that all capital translations are SPEEDILY valued and denominated per a FLOATING, aggregate-adaptive-rate scale.

The immediate benefit for us is to NOT impair the quality of our distributed decision-making, by judging decisions according to any subjugate, distracting and overly narrow metric which is too divorced from aggregate context.

In other words, just avoid any and all instances of Central Planning, where decisions for many are attempted BY too few, wielding a fraction of the aggregate feedback and knowledge which is too small.

Our constantly emerging aggregate benefit?

Just adjust more aggregate decisions, sooner. That's how all aggregates stay closer to their unpredictable, aggregate adaptive paths.

How do aggregates do that? By ever more frequent and continuous substitution of inexpensive prevention for the overwhelming cost of expensive repairs.

In practice, that means constantly inventing new social instrumentation methods, so that quicker, distributed decision-making benefit from earlier feedback from MORE of our aggregate. The alternative is slow, less distributed decision-making, more divorced from early & full aggregate feedback.

In this way, the aggregate adaptive value of all "markets" is entirely tied to them being equally open to real-time feedback from all citizens. If not fully open to all, in real-time, then market operations instantly veer towards more random purposes which are, by statistical definition, less adaptive for the aggregate. Again, it is only a question of when, not if.

May be state this in even more general, and therefore even more adaptive terms?

In our present tax system, EVERY form of capital transfer should be regulated by the entire range of aggregate feedback, through one, constant "Capital-Use-Tax" rate. That one tax rate should hold for all definable forms of capital leased from the aggregate.

How could this help? First, we could get rid of our currently arbitrary hodge-podge of labor-use taxes and/or land-use taxes and/or other IP-use taxes. Second, unless every voice is heard and valued, the aggregate impact of unpredictably emerging inter-dependencies cannot be detected and managed through cheap, early prevention. Instead, management is less successfully attempted through late and more costly repair alone.

Finally, any transient deviance from a uniform, "Capital-Use" tax rate would also be more clearly seen by all as an interim expression of flexible, not permanent, policy.

Now we're back to a simple, parlour-talk issue. Why is democracy always superior in the long run? 

Simply because all the rights and responsibilities implied by citizenship act as highly agile, distributed checks and balances. That's how we KEEP the cardinal rule of social species, that all national assets are in reality leased from the aggregate, and not owned independent from it, in opposition to aggregate Adaptive Rate.
One immediate consequence is the need to regulate inter-aggregate trade. Clearly, the currently promoted definition of "free" trade is a myth and oxymoron. Today's perversion of "free trade" only means that non-labor forms of capital movement are NOT taxed, while labor-capital is selectively taxed. The illogical reason for that aggregate policy is self-evident, as well as self-defeating for for both labor and rentiers alike.

Every form of trade, foreign or domestic, can be allowed ONLY after it's current and emerging adaptive value is evaluated by the full range of democratic feedback. For aggregate agility, however, no single, isolated action should be instantaneously prohibited in practice. Rather, to guarantee aggregate survival, the growth or expansion of all volume trades and/or trade agreements must soon be vetted and constantly reviewed through aggregate feedback.

Without constant deference to democratic feedback as our most reliable assessment method, we cannot claim to be pursuing aggregate adaptive rate as our Adaptive Path.

And if we as a people are not going to continuously pursue our best estimated adaptive path for the USA, why bother with any other charade whatsoever?

If we're going to pursue democracy for the return-on-coordination, surely we should pursue rapid coordination everywhere, or not bother doing so anywhere at all?

To continue co-organizing our own aggregate growth and distributed capabilities, we need that principle of Adaptive Fairness as our constant, orienting reference, while using it as the Desired Outcome which we are always chasing.

Lacking such a reference, we're left without a map, wondering which way our growing aggregate should go.

Wednesday, February 5, 2014

"Urban Planning" is NOT Cultural Planning - Which Deserves A Far Richer Toolkit If We Are To Steer Our Cultural Growth More Productively

London street growth from 1786 to 2010.

From a study of physical infrastructure growth patterns.

This is an interesting map, of course, yet it misses the more important question of Cultural Planning, not just Urban Planning.

To steer our own, zooming growth of both population and citizen capabilities, it would sure be nice to have some visual maps of Cultural Organization. Not physical infrastructure maps, but maps of all the emerging inter-dependencies between all of our truly novel, emerging inventions.

Such "regulatory" maps or "Interactomes" are everywhere in the life sciences, but seem, perversely, to be largely banned from most policy and political practices (except where they are misused). With better, and more widely distributed Cultural Organization maps, our MiddleClass electorate might be less confused, distracted, divided and conquered by their own bevy of cultural parasites.

An interactome, with genes represented by text in boxes and interactions noted by lines between the genes.
We certainly need many more maps of Cultural Infrastructure, as a visual assessment tool.


Street growth & other changes in physical infrastructure represent the incidental noise broadcast by a growing culture, and do not map the inner infrastructure of the culture itself - at all.

In the 1830's, de Tocqueville supposedly noted with surprise - during his American travels - that US towns everywhere averaged ~6 civic organizations that literally everyone belonged to one or the other of (Farming networks weren't far behind, with their granges, co-ops, fellowships and various church-based and other initiatives). Participation in multiple such organizations served to bind the affinity & coordination, of communities, and both preserve and grow the agility and maneuverability of American populations.

European populations of the day had long since gotten used to remote, aristocrat "authorities" doing their thinking for them. Early American populations had to think for themselves, and thrived because of it. Not any more?

Many citizens have a vague sense that much of our Cultural Infrastructure declines as physical infrastructure grows - yet we lack visual feedback tools such as maps, to graphically convey that degradation of inter-dependency management so that we're more easily motivated to develop needed checks & balances. Without rapid, pervasive feedback and assessment methods, it becomes increasingly difficult to manage a culture that is both growing and diversifying rapidly.

As self-governance methods tends towards leaner, more brittle & less distributed "Central Planning," it is our quality of distributed decision-making that declines. In the process, the very nature of lean, Central Planning defeats it's avowed purpose, and steadily degrades the maneuverability of a democracy, and the agility of electorates.

We need culture maps and other assessment tools, to monitor and manage Cultural Infrastructure, not just physical infrastructure.

Surely some fledgling examples already exist? Are there any Cultural Infrastructure maps, similar to the street maps and bio-regulatory maps above?

Has anyone already visualized our Cultural Interactome? Or has that been banned by the Koch Brothers?

Sunday, February 2, 2014

Why Do Management Consultants (& electorates) End Up Teaching (& accepting) The Opposite Of What They Practice?

As Walter Shewhart noted, 88 years ago, management consultants most often fail because they are hired BY executives, to help executives succeed, not BY aggregates, to make aggregates succeed. Walter formally touted the inherent advantage of controlling NET cultural process through dialectic or "context" modeling, rather than only the systemically unproductive ramblings of embarrassingly superficial "capitalist" ideologies. Walter Shewhart coined the phrase "process control" to define the ancient concept he advised us to spend far more time practicing and refining.

Not enough people listened to Shewhart. W.E. Deming spent most of his life simply trying to promote Shewhart's straightforward insights. Others from Toyota Corp to John Boyd applied Shewhart's concepts to specific industries and disciplines. Even today, however, not enough people listen to Shewhart's basic message.

As a result, simply to get paid, the typical management (executive) consultant ends up being dragged into over-training the ambition, grasp and ambition of a "leader" to think FOR their aggregate ... 
instead of ... 
getting transient_context delegates practice at the aggregate's greatest need and a delegated_leader's greatest value: constantly getting an aggregate more practice at running on auto-pilot, and not systemically failing the instant a supposed "leader" has a day of downtime (and isn't there to try to think FOR the aggregate).

And all the while, all of us - even (most) capitalists - admit that none of us is as smart as all of us.

You really couldn't make this up. It's all a cosmic joke on the entire Group-Intelligence of homo sapiens.

How do even supposed experts end up trapped in this way, teaching by default the very inverse of what they were forced, kicking and screaming, to practice, just in order to survive? In effect, we all make little compromises, accept lying to ourselves, and slowly become little Benedict Arnold's, just to avoid being cast aside, as aggregates lurch between continuous firefighting. As a consequence of endless firefighting mode, we tend to accept the myth that delegating management of EVERY succeeding context to a presumed "context-expert" or "process-owner" actually helps. It is NEVER that simple. If it were, the entire paradigm of social species would not work. Instead, we'd be dissociable machines, instead of incredibly densely_engineered works of social art.

Why do we persist in misunderstanding ourselves? Largely because we tend to over-focus on immediate (quarterly?) context, while missing the overwhelming truth, that ongoing reality transects multiple, transient contexts? We are all victims of our own, bad habit, distributed across individuals and aggregate. Is the Fallacy of Scale (or composition) always the chief failure that prevents aggregates of intelligent people from coalescing into a Group Intelligence greater than the sum of it's parts? Is sure seems to be, at least for now.

Yet simultaneously, we all readily admit that even war is too important to be left to the Generals!

In reality, every process is too important to be left to the presumed process owners. Again, you really couldn't make this up. We're playing a stupid joke on ourselves, and it never gets funny to the recipients. It's a chicken-and-egghead joke. Don't bother trying to explain it right now. Let's just leave it behind?

Once we accept lying about and ignoring the drifting conflict between local & aggregate habits - then the bad habit of over-delegating continuous control to presumed process owners (i.e., executives and managers) continues, decade after decade. All because "leaders" fail to practice discriminating the context from the local details? And all because aggregates ALLOW their "leaders" to fail them repeatedly, and simply carry on, voluntarily ceding ownership of their own context management to an endless string of "leaders," following an obsolete process.

And we STILL say that humans are intelligent?

The real heart of personnel system quandaries? Individuals always feel the conflict between personal ambitions and group ambitions.

The solution? Democracy methods.

Yes, I am NOT joking. We've formally known that for over 2300 years, and always knew it, because distributed democracy was always the human condition since the dawn of time. We only pretend to keep dabbling in the lie of delegated contingency management as a permanent solution, as the scale of our contingencies continue to grow.

To anyone familiar with biology, that cycle in social species translates to a quite familiar, ongoing transition in a balance between evolving physiological instincts and emerging cultural instincts. If you look for it, the transition is visible as a gradually changing, aggregate balance between individual and cultural habits.
1) unchecked expression of individual methods for hoarding static assets,

2) unleashed expression of distributed methods for hoarding of aggregate dynamic assets - namely coordination skills.

Our aggregate task, if we're going to maintain a viable nation-state, rather than simply a large, predatory mob? It's simple, really. Just do what James Madison advised. Keep re-developing faster/leaner/newer methods for dealing with constantly emerging factional frictions, FASTER than those unique factions and their unique frictions emerge in every new context (including the context of our own expanding numbers and/or capabilities).

Madison would undoubtedly be appalled that it's even necessary to re-invent this discussion today, 200+ years after he admonished us to never forget the lesson, and even wrote the lesson indelibly into the US Constitution!

If we don't have active methods for discovering, acknowledging, monitoring and ASSESSING every sort of faction and friction that arises, unpredictably, in our diversifying aggregate ... then we cannot even pretend to be exploring our options, or continuing to "make a more perfect union."