Philosophy versus Tradition

Many reactionaries complain that capitalism is eo ipso inimical to tradition. I disagree about that: it is liberal or deranged capitalism that is the problem; so that the problem is not with capitalism per se – which is really nothing other than the natural and basic form of human economic coordination, rooted at bottom in the exchange of gifts and favors, in the love we bear for each other as friends, neighbours and relatives, and so is the default to which all societies recur (and must recur, or else falter and dwindle) – but with its derangement. Latter day capitalism is sick, to be sure. But so is our whole society, beset in all her members and organs by the maladies and diseases by which we infect and corrupt her, a wounded animal struggling ever to heal herself, again and again deformed and crippled by our manifold political foolishness and iterated moral and intellectual insanities.

It’s not economics that is intrinsically inimical to tradition, but philosophy. In a traditional society, there would be no such thing. In a traditional society, no one would wonder how to be a good man, or what the meaning and purpose of life might be, or how and by what agencies the world is ordered. In a healthy traditional society, such questions would not even occur to anyone, because from earliest childhood everyone would have understood the ancient answers handed down by their forefathers from the very beginnings of time. No other answers would be even conceivable. Contrary doctrines would be greeted with outrage, horror and disgust.

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An Eye for an Eye Makes the Whole World Cooperative

An eye for an eye makes the whole world circumspect. But, also, an eye for an eye makes the whole world cooperative, as Robert Axelrod showed with his study of tit for tat and competing strategies using iterated rounds of contests among genetic algorithms (described in his book The Evolution of Cooperation). Tit for tat beat all the alternative strategies, again and again; and as rounds of the contest were iterated, with winning strategies favored by the reproductive mechanism of the iteration, it more and more perfused the population of competing algorithms. As tit for tat increased in frequency, so did the total value generated by all competitors in each round: fewer and fewer defections occurred, and responses to defections were more and more often optimal.

That tit for tat wins the evolutionary game does not mean that its superiority is merely adventitious, an artifact of this or that sequence of random events that might have been quite different, and so generated quite a different sort of winner. On the contrary: provided the game goes on long enough, tit for tat wins every time, sooner or later, and no matter how the sequence of outcomes varies. The utile superiority of tit for tat is a truth of game theory, so that like any other mathematical truth it is from before any and all worlds, and holds true in every world. The metaphysical superiority of tit for tat, then, is the source and reason of its practical evolutionary success, and not vice versa (this is true of all perdurant evolutionary success). Tit for tat is the optimal strategy in evolutionary practice because it is the best in metaphysical fact. As metaphysically best it is the most moral policy of all (these are two ways to say the same thing).

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Socialization of Costs is Moral Hazard

It seems that whenever I start thinking about or discussing economics, I soon start going on about moral hazard. I think it tremendously important, and too little talked about or understood.

A recent short post on the facilitation of nihilism’s incipient historical suicide by prosperity and high technology was no exception. It provoked a long exchange of comments on quite a different (albeit related) topic: latter day capitalism versus distributism. As usual, I mentioned moral hazard:

If the moral hazard created by perverse policies – not of this or that administration, but often deep in the guts of the law – were purged, my guess is that … the size of the average enterprise would drop precipitously. Why? If for no other reason, there would be far less incentive to get big so as to be able to take big risks. Eliminating moral hazard means allowing people to suffer in their own bodies the risks of their actions. When the cost of a bad decision about risk on the part of your enterprise redounds immediately to your own personal situation, you are a lot more careful, a lot more circumspect. You dare less, and you want to have really good information about and control over the projects you take on, so as to control your risk. So you are less ambitious. And that means you grow much more slowly, and that your growth (all other things held equal) is healthier.

Which would result in a less volatile economy, greater average wealth, greater overall wealth, greater average prudence, and any number of other pleasant and salutary things, in the process leading society toward a distributist economic order.

In his response, regular commenter Ita Scripta Est said in passing:

And yet capitalism never quite seems to operate this way. The costs are socialized while the profits somehow always remain private.

He is exactly correct, and precisely nails the problem with latter day capitalism – and every other sublunary social order, whatsoever.

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Perfect Equality is Social Death

Equality in the enjoyment of life can be achieved only by taxing society – which is to say, increasing net suffering – by an amount that exceeds the amount of suffering it ameliorates. The economic friction imposed by transaction costs alone ensures this result. To it must be added the friction of search costs – the costs associated with finding the resources you want to tax, and the people whose suffering you want to relieve.[1]

This static cost accounting is relatively straightforward. But there are hidden, dynamic costs, that go much deeper, and are much greater.

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No Flood Needed This Time Around

Birth rates are plummeting globally, so that even in countries where fertility is above replacement, it soon won’t be. In 150 years or so, the only people around will be religious conservatives, because other sorts of people with looser morals aren’t reproducing (thanks to the Pill, and all its knock-on social and economic effects, noticed in this video).

We have to step back and realize that what is happening to man right now is a pervasive and radical winnowing, comparable almost to the Flood. It’s natural selection at work, weeding out liberalism from the gene pool, and via co-evolution from the meme pool.  Put another way, liberalism is a lethal intellectual mutation. Whether it takes 50 years, or 1,000, liberalism is doomed, because it is at war with reality. Not only is it not nice to fool Mother Nature, it can never, ever be done in the first place. The Logos of the world is not mocked, no matter how amusing our petty pranks at his expense seem to us.

Fortunately for those who are deleting their own ilk from the world’s future, this winnowing may not involve catastrophic war, plague, or economic collapse. The autophagy of liberalism need not destroy civilization in the process. Civilization, even the West, might just squeak through and prevail in the end, preserving some of the best bits of what it has so far achieved. We might get through this winnowing with very little pain and suffering: no mass death, just a series of successively smaller, successively more traditional generations, as liberals die off after long, entertaining, meaningless lives.

Re-Post: The Vinland Voyages in Context

[Note: This article originally appeared at The Brussels Journal under the title "The Vinland Voyages, the Market, and Morality."]

Scholarship places the composition of the two Vinland Sagas in the Twelfth Century, in the case of The Greenlanders’ Saga, and in the Fourteenth Century in the case of Eirik’s Saga. But like most of the saga-literature the two narratives reflect a non-mythic oral tradition, linked with the settlement and early chronology of Iceland and Greenland, the general (if not the minutely detailed) trustworthiness of which much research both literary and archeological over the last century has attested. Quite apart from scholarly and technical arguments, even the ordinary reader must take the wealth of circumstantial detail and the laconic matter-of-factness of the storytelling as signs of an essential veracity. The two Vinland Sagas reflect the Nordic people at a particular epoch: The transformational moment, namely, at the end of the Tenth Century, when the old warrior-ethos began yielding to the new Gospel ethos and when success in the market began replacing notches on a sword haft as the paramount sign of masculine status. Both The Greenlanders’ Saga and Eirik’s Saga represent this change in the generational differences that distinguish Eirik the Red on the one hand from his male children, especially his son Leif, on the other.

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Dow 16K: Fake or Real?

Speaking as an investment professional of three decades – not, NB, as a prognosticator (we ought all to heed the OT condemnations of sorcery and divination) – the 16K DJI does not seem to me to be quite wholly a case of irrational exuberance, in that I can see a reasonable argument for it. As Proph recently wrote to me:

So maybe the best we could say is that the [financial markets are] completely rational given the complete irrationality of the prejudices of the age?

Yes. Included in the information processing system of the species – of which the financial markets are an important organ – are all the defects thereof.

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The Unz strategy

If nothing else, Ron Unz would win my admiration for his innovative and carefully argued treatises on anti-Gentile discrimination in college admissions and IQ-related topics.  For a long time now, he’s also been making the case for a large increase in the minimum wage (to $12/hour in his state of California).  A short summary of his argument is here.  An even shorter summary is

  1. Having wages so low that workers rely on welfare to survive means the taxpayers are effectively paying business’s labor costs for them.  If one is going to have welfare programs, there needs to be a minimum wage that keeps businesses from unfairly socializing their costs like this.
  2. Illegal immigration is largely driven by the allure of jobs at such low wages that only desperate third-worlders would take them.  Raise wages, and there won’t be jobs “Americans won’t do”, and businesses would have strong incentives to choose the now-available workers that they can legally hire.  Unz originally proposed his plan as the best way to dramatically reduce illegal immigration.

My own interest in the minimum wage stems from my commitment to the core principle of Catholic social teaching in industrial economies, namely that a man should be able to work for a high enough wage that his wife can be home with the kids.  (Even having the men away from home is not the Catholic ideal enunciated by Pope Leo, but it is the ideal compromise with industrialism.)  In a family wage regime, wages would be higher, and the labor pool would be smaller, because the only married women working (family businesses aside) would be those with some special career talent or ambition.  (And remember, we should not be designing economic policies exclusively for that minority of people with a passion for some sort of career.)

The question is, does raising the minimum wage automatically lead to the family wage regime, as most families choose the now available option of a father-only income?  Or does it just increase full family unemployment, with some families getting two incomes and some moving onto the dole?  Surely this depends somewhat on the cultural and legal environment (e.g. demands for proportional representation) and is a matter for careful thought.

Still, I am pleased that, for once, there is an idea on the table that conceivably might lead us toward a more Christian social order.  If you don’t think it would work, can you think of anything that would work better?

Dives in Hell

19 “There was a rich man who was dressed in purple and fine linen and lived in luxury every day. 20 At his gate was laid a beggar named Lazarus, covered with sores 21 and longing to eat what fell from the rich man’s table. Even the dogs came and licked his sores.

22 “The time came when the beggar died and the angels carried him to Abraham’s side. The rich man also died and was buried. 23 In Hades, where he was in torment, he looked up and saw Abraham far away, with Lazarus by his side. 24 So he called to him, ‘Father Abraham, have pity on me and send Lazarus to dip the tip of his finger in water and cool my tongue, because I am in agony in this fire.’

25 “But Abraham replied, ‘Son, remember that in your lifetime you received your good things, while Lazarus received bad things, but now he is comforted here and you are in agony. 26 And besides all this, between us and you a great chasm has been set in place, so that those who want to go from here to you cannot, nor can anyone cross over from there to us.’

27 “He answered, ‘Then I beg you, father, send Lazarus to my family, 28 for I have five brothers. Let him warn them, so that they will not also come to this place of torment.’

29 “Abraham replied, ‘They have Moses and the Prophets; let them listen to them.’

30 “‘No, father Abraham,’ he said, ‘but if someone from the dead goes to them, they will repent.’

31 “He said to him, ‘If they do not listen to Moses and the Prophets, they will not be convinced even if someone rises from the dead.’”

Every commentator on this story I’ve read or heard seemed determined to avoid the point Jesus is trying to make.  Many are troubled by that fact that Dives in hell pleads for his family.  He’s not all bad.  It just seems wrong that he’s in hell.  Often I’ll hear priests tell us to ignore that last part.  Dives didn’t really care about keeping his brothers out of hell; we all know there can’t be charity among the damned.  In reading the parable, we should just stick to the main point Jesus is making and ignore (for theological purposes) those little details He adds that make the characters seem to come alive.  Perhaps this is true, but the question is whether in ignoring these details we really are preserving the main point.  The main point is supposed to be that Dives is condemned to Hell because he was rich, Lazarus was poor, and Dives failed to help Lazarus when he could.  In fact, even this is a softening of what Jesus said:  the most straightforward reading of the parable is that Dives is in hell simply for being rich when Lazarus was poor; a philanthropic sin of omission is not explicitly mentioned.  Now, if Dives were indeed a totally heartless man with no concern for anyone but himself, he would have much worse sins on his conscience than failing to help Lazarus.  His damnation would have nothing to do with Lazarus at all, but rather be a consequence of being a complete moral monster.

I once heard a priest say that, according to Thomas Aquinas, Dives is actually in purgatory, because he displays charity, which cannot exist in hell.  This is an interesting argument.  Charity is a supernatural virtue, and the damned are by definition not in a state of grace.  However, could Dives’ plea not be one of natural love and benevolence?  I suppose one could say that even natural virtues are blotted out of the souls in hell.  To me this sounds plausible, but hardly obvious.

The really important point, though, is that we must not alter the parable by making Dives completely wicked during life.  This destroys the point.  Let me therefore add my own embellishments, consistent with the story Jesus tells.

There was once a rich man who lived his whole life in luxury.  He was a pious and patriotic Jew, a loving brother and uncle, a fair and hard-working employer, a generous master, an active and public-minded citizen.  Reverence for God and love of his family guided his life.  He loved children, and many thought it sad that he never knew the joys of fatherhood himself, for his beloved wife having died years ago in a plague, and he could never bring himself to consider remarriage.  There were at his gate poor beggars, faceless shadow beings always on the periphery of his consciousness.  Always there were more important things to attend to.  “Should I toss them a coin?  Perhaps, but not now; let me now attend to my own household.  Perhaps, but not now; let me rest a little.”  And he never got around to them.  When death came, his brothers travelled far to be at his side.  The rich man blessed them all, saying “Do not mourn for me, dear brothers.  I go to the God of Abraham.”  With that, he drifted from consciousness.  He awoke to eternal torment.

Do you like my story?

“Good God, no!  You’ve totally warped the story by making Dives a good man who just does one bad thing.  It wouldn’t be fair for him to go to hell, when so much of his life was good.  You’re making God out to be a monster!”

Ah, but where did you get the idea that “mostly good” people go to heaven, that wide is the gate and broad is the path that leads to eternal life?  Not from the Gospel, I assure you!  We many be damned just for sins of omission to the poor, no matter how good we otherwise are.

“But this is terrifying!”

Indeed.  If you’re scared, you’re starting to get Jesus’ point.

Falsehood in Word is Evil in Deed

Noisy artificial limits of any kind ipso facto engender moral hazard. The classic example is the limited liability corporation, which encourages investors and managers to take risks over and above what they would undertake if their personal liability was not limited. FDIC insurance is another.

But this nomological principle applies everywhere. Wherever a limit is set by men that does not correspond to the limits set by nature and reality, agents are prompted to act as if the artificial limits were the real, natural, true limits: i.e., to lie, even if only to themselves, about what it is prudent or good to do, or else to lend credence to such a lie, and so do wrong, or ill, even if only unwittingly.

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