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We say we want solutions, but we actually want a specific subset of solutions: those that already meet with our approval.

The possibility that none of these pre-approved solutions will actually resolve the problem is rejected because we are wedded to the solutions that we want to work.

The sources of our resistance to admitting that our solution is now the problem are self-evident: holding fast to an ideological certainty gives us inner security, as it provides a simplified, easy-to-grasp frame of reference, an explanation of how the world works and a wellspring of our identity.

Our ideological certainties also serve as our moral compass: we believe what we believe because it is correct and therefore the best guide to solving all problems faced by humanity.

If we frame all problems ideologically (i.e. politically), then there is always an ideological “solution” to every problem.

If we frame all problems as solvable with technology, then there is always a technological “solution” to every problem.

If we frame all problems as solvable with finance, then there is always a financial “solution” to every problem.

In each of these cases, we’re starting with the solution and then framing the problem so it aligns with our solution. This is not actually problem-solving, and so the solutions–all blunt instruments–fail to actually resolve the complex, knotty problems generated by dynamic open systems with interconnected feedback loops.

Self-interest also plays a role, of course, as self-interest is core to human nature, along with an innate desire to serve the best interests of our family, group, tribe, neighborhood, community enterprise, class and nation. That we prefer solutions that maintain or enhance our current financial and social position in the status quo is no surprise.

…click on the above link to read the rest…

Our Financial System Is Optimized for Sociopaths and Exploitation

February 23, 2022

Our Financial System Is Optimized for Sociopaths and Exploitation

Let’s call this financial system what it really is: the MetaPerverse, a conjured world of self-serving cons.

We live in a peculiar juncture of history in which truth has been banished as a threat to the maximization of private gain, i.e. the hyper-pursuit of self-interest. Evidence that supports a causal chain has been replaced by cherry-picked data that supports a self-serving narrative: both the evidence and narrative are manufactured to serve the interests of the few at the expense of the many.

In this juncture of history, evidence is easily disputed because the process of manufacturing self-serving evidence has been perfected. Indeed, self-serving evidence is now a commodity which can be purchased wholesale: rig the sample size, massage the data statistically, conjure up a context that serves to frame the evidence in a slippery self-interested fashion, omit disinterested evidence and contexts, top with arcane math and voila, evidence and narrative are presented as “facts” rather than what they really are, an elaborate, well-staged con designed to maximize the private gains of the few by exploiting the many.

Organizing the entire system to serve the pathological greed of the few is best served by devaluing truth to mere opinion and causal chains to mere narratives. In this juncture of history, truth has been revealed as a chimera; there is only opinion, and all opinions are equal. Opinions are beliefs, and all beliefs are equal. All narratives are equal. All questions boil down to values: values are all equally detached, free-floating and of the same value: zero.

…click on the above link to read the rest of the article…

Markets Rely on Accurate and Honest Information — But Governments Want the Opposite

October 7, 2019

Markets Rely on Accurate and Honest Information — But Governments Want the Opposite

Have you ever worked with people you couldn’t trust to tell you the truth? It isn’t pretty. Without the ability to rely on what you’ve been told (or that you’ve been told everything relevant), effective cooperation at almost every margin of choice is reduced, because its foundation has been undermined. A new episode of To Tell the Truthmust precede every decision.

That problem of effective cooperation is exponentially increased when we expand our horizons to the many margins of choice at which people in society, the vast majority of which do not even know each other, interact. In a modern economy, all of us are dependent on multitudes of strangers not just for our prospering, but our survival.

The reason people don’t always communicate truthfully is that our reason serves our self-interest. Sometimes we perceive a strategic advantage at other people’s expense from intentionally deceiving them. Our words are also often ex post rationalizations to ourselves and others of why whatever we chose or did was a good idea. But that often makes what people say a frail reed to rely upon. And when political power is involved, the incentives for such deception and self-delusion are put on steroids, because the payoffs are far greater when backed by government’s coercive power.

As a consequence, accurate information about the issues most important to our ability to co-operate with others is often among the scarcest and most valuable of goods. Making it worse, the unknowably vast amount of potentially useful information—the infinite permutations of who, what, when, where, why and how–exceeds any individual or group’s ability to comprehend and integrate it. But voluntary market arrangements based on private property rights provide a powerful mechanism of cutting that problem down to manageable size.

…click on the above link to read the rest of the article…

Truth Is What We Hide, Self-Serving Cover Stories Are What We Sell

December 3, 2018

Truth Is What We Hide, Self-Serving Cover Stories Are What We Sell

The fact that lies and cover stories are now the official norm only makes us love our servitude with greater devotion.

We can summarize the current era in one sentence: truth is what we hide, self-serving cover stories are what we sell. Jean-Claude Juncker’s famous quote captures the essence of the era: “When it becomes serious, you have to lie.”

And when does it become serious? When the hidden facts of the matter might be revealed to the general public. Given the regularity of vast troves of well-hidden data being made public by whistleblowers and white-hat hackers, it’s basically serious all the time now, and hence the official default everywhere is: truth is what we hide, self-serving cover stories are what we sell.

The self-serving cover stories always tout the nobility of the elite issuing the PR: we in the Federal Reserve saved civilization by saving the Too Big To Fail Banks (barf); we in the corporate media do investigative reporting without bias (barf); we in central government only lie to protect you from unpleasant realities–it’s for your own good (barf); we in the NSA, CIA and FBI only lie because it’s our job to lie, and so on.

Three recent essays speak to the degradation of data and factual records in favor of self-serving cover stories and corrosive political correctness.

Why we stopped trusting elites (The Guardian)

“It’s not just that isolated individuals are unmasked as corrupt or self-interested (something that is as old as politics), but that the establishment itself starts to appear deceitful and dubious. The distinctive scandals of the 21st century are a combination of some very basic and timeless moral failings (greed and dishonesty) with technologies of exposure that expose malpractice on an unprecedented scale, and with far more dramatic results.

…click on the above link to read the rest of the article…

Why Bad Economics Makes Such Good Politics

November 4, 2018

Why Bad Economics Makes Such Good Politics

As the election nears, politicians will more and more frantically point out what wonderful favors they’ve done for the voters — or what favors they will do for the voters, if elected.

Of course, they never mean all the voters. They mean groups or individuals within the voting population who believe they benefit from laws, taxes, regulations, and spending programs supported by the politician in question.

Two such examples of these sorts of favors are tariffs and minimum wage laws. Both impose costs on both producers and consumers overall, while benefiting a small sliver of the population that is able to take advantage of the government mandate.

The economics of each of these, or taxation and business regulation in general, have already been addressed numerous times in these pages.

It must suffice to point out that these policies, for which politicians think they deserve accolades, potentially benefit only very specific interest groups. Nevertheless, these policies can prove to be politically popular, and may help a politician get elected.

But why should policies that help so few — and impose many costs on even those they purport to help — be politically popular?

Hazlitt and Mises on the Popularity of Bad Economics

Answering this question was one of the main reasons that Henry Hazlitt wrote his perennially popular bookEconomics in One Lesson.

In the very first chapter, Hazlitt notes that economic science is prone to so many errors because people are motivated to believe an incorrect version of economics that supports their own economic interests. Or as Hazlitt put it, economic errors “are multiplied a thousandfold … by the special pleading of selfish interests.”

Sometimes, these attempts to throw good economics in the garbage are spectacularly successful. After all, for decades, no insignificant number of Americans believed the claim that “what’s good for General Motors is good for America.”1

…click on the above link to read the rest of the article…

Why Governments are Like an Ameba

January 10, 2018

Why Governments are Like an Ameba

QUESTION: Mr. Armstrong; You may be called the legend because of your forecasts on so many levels, but it might also be because you have met with more governments than probably any economist or analyst. My question is simple. From your experience, do you believe you can prevent the economic carnage that is becoming so obvious to everyone except those in government?

ANSWER: The idealistic belief in intelligence and goodness embedded within human beings is increasingly confronted with the harsh experiences of reality. We all indeed act in our own self-interest or we would take no action (Smith’s Invisible Hand). Even an ameba, which lacks consciousness as we define it being self-aware, still responds to its surrounding and engulfs its prey to survive. It responds due to its hardwired nature. Unfortunately, humans also possess at that inner level this same survival instinct that is hardwired. This makes it increasingly unlikely that willingness to change gains sufficient strength in time before the abyss is reached. Hence, we must crash and burn.

Because the government will respond in the same manner as an ameba, there is no hope that they will spontaneously look in the mirror and reach an OMG moment of realizing that they are causing the demise of our society. Consequently, they will consume our liberty until they push it to the point that society will then act only in its self-interest to survive. Historically, all governments collapse once they have consumed rights, liberty, and privileges in their desire to maintain control and in the end, die by their own greed for power. They lack any consciousness of what they are doing precisely as an ameba. There is no reasoning for there is no one single mind to reason with.

Therefore, neither I nor anyone else, possess the power to prevent the cycle from unfolding. The very best I can hope for is perhaps to influence the reconstruction.

The Public Are All Alone: Understanding How the Enemy of Your Enemy Is Not Your Friend

November 24, 2017

The Public Are All Alone: Understanding How the Enemy of Your Enemy Is Not Your Friend

In political matters, the public are taught to believe that some political Party is ‘good’, and that the others are “bad”; but the reality in recent times, at least in the United States, has instead been that both Parties are rotten to the core (as will be clear from the linked documentation provided here).

Belief in this myth (that the opposition between Parties is between ‘good’ ‘friend’ versus ‘bad’ ‘enemy’) is based upon the common adage that “The enemy of my enemy is my friend.” One side is believed, and ones that contradict it are disbelieved — considered to be lying, distorting: bad. But, maybe, both (or all) Parties are deceiving; maybe all of them are enemies of the public, but just in different ways; maybe each of them is trying to control the country in the interests of (and so to obtain the most financial support from) the aristocracy, while all of them are actually against the public.

Can it really be false that “The enemy of my enemy is my friend?” Not only can be, but often is. And no one is able to vote intelligently without recognizing this fundamental political fact.

It’s true between entire nations, too — not only within nations.

For example: Hitler and Stalin were enemies of each other, but neither of them was a friend of America (except that Stalin did more than anyone else to defeat Hitler, and thereby saved the world, though the U.S. — far less a factor than the U.S.S.R. was in defeating Hitler — still refuses to acknowledge the fact that Stalin did more than anyone else did to prevent the entire world’s becoming dictatorships; so, whatever democracy exists today, is a result of that dictator, Stalin, even more than it’s a result of either FDR or Churchill).

…click on the above link to read the rest of the article…

A 1970s self-help guru’s hint why investors may be duped (again)

August 20, 2017

A 1970s self-help guru’s hint why investors may be duped (again)

America’s top forecasters missed the 2008 market crash, during which stock investors lost half their money. Now with stocks approaching bubble territory it looks they are again ignoring warnings signs. What gives?

The biggest red flag is the S&P 500 index, which groups 500 of America’s largest public companies and is trading near record highs. This despite a sluggish US economy driven by record government spending, borrowing and money printing.

In short, conditions look exactly like those that prevailed just before the 2008 financial crisis, when equities investors lost half their money in a matter of months.

So why haven’t the experts, many of whom are near-genius-level, ivy-league professionals, provided clear warnings about the risks in the system?

The S&P 500 index

Wisdom from a 1970s self-help guru?

One clue might come from consulting creative thinkers from outside the economics profession, like er…Robert Ringer?

Yes that Robert Ringer. The self-help guru, who in his 1970s best-seller Looking out for #1, outlined a useful template to use when assessing human behavior.

“All people act in their own interest all the time,” writes Ringer, who believes that people re-define self-interested actions to make themselves look virtuous.

What Ringer calls the “definition game” enables politicians, like recently-retired ex-Conservative Party leader Rona Ambrose who took home nearly $5 million in salaries and pension benefits for just 13 years work, to describe herself as a “public servant.”

Ringer’s “human nature group” theory in many ways explains modern human action better than Hobbes, Nietzsche and even Ayn Rand, yet appears dark when applied to individuals – even to politicians. However it has a strong basis in academic theory.

…click on the above link to read the rest of the article…

Fraud, Fools, and Financial Markets

September 21, 2015

Fraud, Fools, and Financial Markets

Adam Smith famously wrote of the “invisible hand,” by which individuals’ pursuit of self-interest in free, competitive markets advances the interest of society as a whole. And Smith was right: Free markets have generated unprecedented prosperity for individuals and societies alike. But, because we can be manipulated or deceived or even just passively tempted, free markets also persuade us to buy things that are good neither for us nor for society.

This observation represents an important codicil to Smith’s vision. And it is one that George Akerlof and I explore in our new book, Phishing for Phools: The Economics of Manipulation and Deception.

Most of us have suffered “phishing”: unwanted emails and phone calls designed to defraud us. A “phool” is anyone who does not fully comprehend the ubiquity of phishing. A phool sees isolated examples of phishing, but does not appreciate the extent of professionalism devoted to it, nor how deeply this professionalism affects lives. Sadly, a lot of us have been phools – including Akerlof and me, which is why we wrote this book.

Routine phishing can affect any market, but our most important observations concern financial markets – timely enough, given the massive boom in the equity and real-estate markets since 2009, and the turmoil in global asset markets since last month.

As too many optimists have learned to their detriment, asset prices are highly volatile, and a whole ocean of phishes is involved. Borrowers are lured into unsuitable mortgages; firms are stripped of their assets; accountants mislead investors; financial advisers spin narratives of riches from nowhere; and the media promote extravagant claims.

Read more at https://www.project-syndicate.org/commentary/government-intervention-financial-crises-by-robert-j–shiller-2015-09#1pbaxOEsUVWLuRvm.99

Our Crazy-Making Economy’s Endgame: Festering Frustration Seeking an Outlet

May 23, 2015

Our Crazy-Making Economy’s Endgame: Festering Frustration Seeking an Outlet

The consequence of policies that exacerbate injustice, inequality and double-bind demands is a madness that will find a social and economic outlet somewhere, sometime.

We all know crazy-makers: people who make contradictory claims about reality, who say one thing and do another, who change their stories constantly to justify their own pursuit of self-interest, who demand the impossible of others while giving themselves unlimited excuses.

When they can’t change reality to suit their purposes, they change their accounts of reality, and stick with the revised stories even when they are contradictory.

This describes the entire financial structure of the U.S.: crazy-making.

We all know the U.S. economy is diseased, and the Powers That Be are attempting to mask the sickness with contradictory accounts of reality.

To get ahead, you need a 4-year college diploma. But oops, the student debt you’ll need to shoulder acts as a brake on getting ahead. And it turns out many of those who became debt-serfs to get a diploma actually end up in jobs that don’t require a college education.

One reality–soaring student loan debt and diminishing value of the product, a college diploma–and two contradictory stories.

Systems theorist/anthropologist Gregory Bateson developed (with others) the concept of double bind, a psychological and social conflict in which contradictory demands generate a form of schizophrenia:

Unlike the usual no-win situation, the subject has difficulty in defining the exact nature of the paradoxical situation in which he or she is caught. The contradiction may be unexpressed in its immediate context and therefore invisible to external observers, only becoming evident when a prior communication is considered.

…click on the above link to read the rest of the article…

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