No Country for Creative Destruction

Imagine a country whose inhabitants reject every unpleasant byproduct of innovation and competition.

This country would be Frédéric Bastiat’s worst nightmare: in order to avoid the slightest maladies expected to emerge from creative destruction, all their advantages would remain unseen forever.

Nevertheless, that impossibility to acknowledge the unintended favourable consequences of competition is not conditioned by any type of censure, but by a sort of self-imposed moral blindness: the metaphysical belief that “being” is good and “becoming” is bad. A whole people inspired by W. B. Yeats, they want to be gathered into the artifice of eternity.

In this imaginary country, which would deserve a place in “The Universal History of Infamy” by J.L. Borges, people cultivate a curious strain of meritocracy, an Orwellian one: they praise stagnation for its stability and derogate growth because of the stubborn and incorruptible conviction that life in society is a zero-sum game.

Since growth is an unintended consequence of creative destruction, they reason additionally, then there must be no moral merit to be recognised in such dumb luck. On the other hand, stagnation is the unequivocal signal of the good deeds to the unlucky, who otherwise could suffer the obvious lost coming from every innovation.

In this fantastic country, Friedrich Nietzsche and his successors are well read: everybody knows that, in the Eternal Return, the whole chance is played at each throw of the dice. So, they conclude, “if John Rawls asked us to choose between growth or stagnation, we would shout at him: Stagnation!!!”

But the majority of the inhabitants of “Stagnantland” are not the only to blame for their devotion to quietness. The few and exceptional proponents of creative destruction who live in Stagnantland are mostly keen on the second term of the concept. That is why some love to say, from time to time, “we all are stagnationist” – the few contrarians are just Kalki’s devotees.

These imaginary people love to spend their vacations abroad, particularly in a legendary island named “Revolution”. Paradoxically, in Revolution Island the Revolutionary government found a way to avoid any kind of counter-revolutionary innovation. It is not necessary to mention that Revolution Island is, by far, Stagnantlanders’ favourite holiday destination.

They show their photos from their last vacation in Revolution Island and proudly stress: “Look: they left the buildings as they were back in 1950!!! Awesome!!!” If you dare to point out that the picture resembles a city in war, that the 1950 buildings lack of any maintenance or refurbishment, they will not get irritated. They will simply smile at you and reply smugly: “but they are happy!”

Actually, for Stagnantlanders, as for many others, ignorance is bliss, but their governments do not need to resort to such rudimentary devices as censure and spying to prevent people from being informed about the innovations and discoveries occurring in other countries, as Revolutionary Island rulers sadly do. Stagnantlanders simply reject any innovation as an article of faith!

Notwithstanding, they allow to themselves some guilty pleasures: they love to use smartphones brought by ant-smuggling and to watch contemporary foreign films which, despite being realistic, show a dystopian future to them.

As everything is deteriorated, progress is always a going back to an ancient and glorious time. In Stagnantland, things are not created, but restored. As with Parmenides, they do not believe in movement, but if there has to be an arrow of time, you had better point it to the past.

Moreover, Stagnantland is an imaginary country because it does not only lack of duration, but of territory as well. As the matter of fact, no man inhabits Stagnantland, but it is indeed stagnation that inhabits the hearts of Stagnantlanders. That is how, from dusk to dawn, any territory could be fully conquered by the said sympathy for the stagnation.

Nevertheless, if we scrutinise the question with due diligence, we will discover that the stagnation is not an ineluctable future, but our common past. Human beings appeared very much earlier than civilisation. So, all those generations must have been doing something before agriculture, commerce, and institutions.

Before the concept of creative destruction had been formulated by Joseph Schumpeter, it was needed a former conception about how people are conditioned by institutions: Bernard Mandeville pointed out how private vices might turn into public benefits, if politicians arranged the correct set of incentives. The main issue, thus, should be the process of discovery of such institutions.

That is why the said aversion to competition and innovation is hardly a problem of a misguided sense of justice, but mostly a matter of what we could coin as “bounded imagination”: the difficultly of reason to deal with complex phenomena. Don’t you think so, Horatio?

Nightcap

  1. Reflections on totalitarianism’s greatest critic Daniel Mahoney, City Journal
  2. Ralph Nader’s weird novel predicted the future Jeff Greenfield, Politico
  3. Hack gaps and noble lies John Holbo, Crooked Timber
  4. Social noble lies Bill Rein, NOL

Peer pressure writ large

Part I

We fight for and against not men and things as they are, but for and against the caricatures we make of them.

~ Joseph A. Schumpeter

One hurdle to public discourse that is underrecognized and must be addressed is the simple fact that individuals in the broader population don’t really know what they want. There is often no clear center of self-awareness. Instead, the peer and peer-driven media substitute for personal and communal identity. On the one hand, this situation has existed throughout history without imperiling the human species. On the other hand, this is an era of mass media and peer influence. Therefore, examining role of the peer and its media, specifically social media, is important in a time of societal disruption and discontent.

In the FuturamaSimpsons crossover episode from November 2014, Homer Simpson tries to explain freemium games to the Futurama crew:

Okay, it starts free, right? Then you visit your friend’s game, and he’s got this awesome candy mansion. […] And you’re like, “99 cents?!” You bet I’d like one!” And that’s why I owe Clash of Candies $20,000.

The cartoon aptly summarizes the real-life effect the prevalence of the peer can have. Naturally, there is great comic potential in these situations, and the Simpsons creators capitalized appropriately. Though it is worth adding that the ongoing theme of Homer Simpson possessing a weak character not only made the above quote plausible, it might be a portent to the real problem.

Ruth Davidson of the Scottish Conservative Party wrote an article titled “Ctrl + Alt + Del. Conservatives must reboot capitalism,” in which she argued that the current capitalist arrangement has failed. Concerning the collapse of middle society towns and villages, in the face of growing prosperity in the metro areas she wrote:

How does a teenager living in a pit town with no pit, a steel town with no steel or a factory town where the factory closed its doors a decade ago or more, see capitalism working for them? Is the route for social advancement a degree, student debt, moving to London to spend more than half their take home pay on a room in a shared flat in Zone 6 and half of what’s left commuting to their stagnant-wage job every day; knowing there is precisely zero chance of saving enough to ever own their own front door?

Or is it staying put in a community that feels like it’s being hollowed out from the inside; schoolfriends moving away for work, library and post office closures and a high street marked by the repetitive studding of charity shop, pub, bookies and empty lot – all the while watching Rich Kids of Instagram on Channel 4 and footballers being bought and sold for more than the entire economy of a third world nation on Sky Sports News?

Not a single person familiar with this impossible choice should be surprised by the rise of the populist right and left, of Donald Trump and Jeremy Corbyn, with their simple, stick-it-to-the-broken-system narrative. This is what market failure piled upon social failure piled upon political failure looks like.

If the goal of government is to ensure that everyone has a job and paycheck, Davidson made some very good points. In fairness to her, the cultural attitude today, both in the US and the UK, does indeed tip toward the idea that it is the responsibility of government ministers, such as Davidson, to create magically a world of stable, predictable work and money. What Davidson caught but then also missed is that much of the desire of the people isn’t about money, jobs, or stability, it’s about “social advancement,” to use her own words.

Anyone who thinks that the workers of the old, idealized industrial world were spared non-material social concerns, or arriviste inclinations, is deluded about the course of social history. Nor, are such concerns a purely feminine pursuit, as the Victorians liked to think, supported in their belief by the works of authors such as Jane Austen, Elizabeth Gaskell, and George Eliot (nom de plume of Mary Ann Evans); William Faulkner, Sinclair Lewis, F. Scott Fitzgerald, and, to a lesser extent, Ernest Hemmingway all made careers out of chronicling male social climbing. There is probably something significant about the fact that the second set of authors were all between-the-Wars Americans, but that will have to be set aside for now.

As Polly Mackenzie of the UK think tank Demos wrote, weighing in on the concept of the “working class identity crisis,”

If you’re one of those people who gets a bit misty eyed about the jobs of the past, how fantastic they were, and how they’ll never be replaced, I can hear you scoffing at the notion that putting stuff in boxes [discussion centered on Amazon as the major employer for the low-skilled, under-educated] could ever be meaningful. Those who hark back to the pit villages and steel towns that gave working men a sense of pride and identity will tell me that putting stuff in boxes isn’t ‘man’s work.’

But those people are wrong about where meaning comes from in the workplace. True, some jobs are meaningful because of the direct impact they have in the world – some people save lives, educate children or create works of art. But there’s no such direct meaning in bashing coal off a rock face. Mining is grueling, physical labour, but if that were enough to create meaning then the warehouse jobs could match it, exhausted limb for exhausted limb.

To borrow the title of Gregg Easterbrook’s book, this is The Progress Paradox: everyone is better off but no one is happier. Mackenzie grasped that societal breakdown isn’t about actual jobs; as she also pointed out, none of the “disenfranchised” workers really want to go back to jobs that cost them health and limbs, and the social respect that they claim they’ve lost never truly existed – name one time in history when a coal miner held equal status to a professor or an artist.

Continuing on the confusing, conflicting perceptions of what people want, Henry Olsen of the Ethics and Public Policy Center in Washington, DC, went to Levittown, PA, and interviewed a wide range of locals in an effort to understand the skeleton of populism.

Greg [a local] put it this way: “Trump is telling them ‘it’s OK to be you.’ The rest of culture is telling them ‘it’s not OK to be you.’”

As Greg told me, whether the message is economic – “you have to go to college to succeed” – or cultural “I like to listen to AC/DC; what’s wrong with that?” – Levittowners and people like them have felt the brunt of elite disdain. In voting for Trump, these blue-collar workers were rebelling against the idea that America is no longer for people like them.

“Levittowners just want a good Christmas for their kids and to go to Jersey Shore for a couple of weeks. They want some acknowledgement that is OK,” Anthony [another local] said. Trump gives them that, and they are willing to overlook nearly everything in exchange.

In conclusion, Olsen wrote:

Rather than viewing global blue-collar discontent through an economic lens, we ought to be looking at populist-backing voters more as people like us, holding similarly cherished identities and hopes. And maybe if we did that, we might all be a bit better off.

It is important to note that according to Olsen, the majority of the local population held Bernie Sanders in equal esteem to Donald Trump. In a broad sense, Olsen’s comments and interviewees echo Davidson and Mackenzie: The good life, rather than simply money, is the fuel behind the average person. The dissonance is that “the good life” varies wildly by perception, not to mention goals.

Consider, for example, the statements uttered by Olsen’s source Greg regarding perceived attitudes on education, economics, and culture. Immediately, it is doubtful that anyone in wider society gives a hoot about any individual’s taste in rock music. In fact, it is more probable that Greg would find the noise issuing from average college dorms and frat houses to be quite recognizable. As a claim for difference and despite, popular culture is a non-starter.

On the success and career side, while the attitude Greg identified certainly exists, it is important to remember that it is the concoction of Americans by and for themselves. The “college-or-nothing” idea is a creation of the peer. The vocational and technical schools which benefited people like Greg didn’t spontaneously close in the decades after World War II; they closed because the market dried up (let’s ignore any correlation to the draft for now) as everyone, flush with post-War prosperity, raced into colleges and universities, regardless of quality or level of preparation. Even now, there are plenty of viable alternatives to obtain skills and commensurate financial independence for the less scholastically inclined. For someone to claim the college-success paradigm as a source of socio-cultural disenfranchisement suggests an ultimate conformity to the pressures of the peer through blind acceptance of a narrow definition of success. The number of fields where it is absolutely true that a person must attend college to succeed are quite few, require specific talents, and are highly specialized. It is not an organic thought for a person with average aspirations and expectations to compare himself to someone in one of these professional areas. Such a comparison only occurs through contact with and shaping of perception by a peer or group of peers.

But, one might argue, how is this possible if the Gregs of the world live their entire lives in circles of people with similar backgrounds and information levels? The answer is through images and the media of imagery. Particularly influential are television and social platforms, such as Instagram, largely because of their capacity to shape perception.

Part II

toffsandtoughs_cropped.jpg

This photo is titled “Toffs and Toughs,” taken by photographer Jimmy Sime in London in 1937, and it shows two English public (private for Americans) schoolboys waiting for their parents to come pick them up. The photo has two stories, the actual story, and the one built around it by malcontents. The day after Sime took the photo, the leftist and class-warfare fomenting News Chronicle, which later merged into the modern tabloid Daily Mail, published it underneath the headline “Every Picture Tells A Story,” but then declined to clarify the photo at all, beyond misidentifying the two boys in morning dress as Etonians attending the Eton-Harrow cricket match. Almost simultaneously, American Life magazine picked up the photo and published it with further misidentifications and lack of clarification. The message was clear: the elites ignore or turn their back on the underprivileged and working-class.

The real story of the two “elite princelings” was very different. Both boys, students at Harrow, came from solidly middle-class backgrounds; the only trait that might be interpreted as “elite” about them was that their fathers were Harrovians. The younger boy Peter Wagner (on the far left) came from a family of immigrant tradesmen who had bootstrapped their way up the ladder. By 1937, the Wagners had settled into being a family of scientists and stockbrokers, comfortable, respectable, conventional. Peter served honorably during World War II and then took over his family’s business. The older boy Timmy Dyson (center) came from a professional military family, great of name but lacking means. Born into decidedly ordinary circumstances, he spent his childhood as an army brat. His parents only afforded Harrow because he was an only child. He died suddenly a few months after Sime took the infamous photograph.

Of the three “poor” boys, their realities were also much different from the one implied by the photo. None of them was a street urchin. Since they were playing hooky from school the day of the photo, one can extrapolate that they came from families with sufficient means to keep teenage boys enrolled in school despite living in Depression-era London. The two smaller boys, flanking the tall one, both became successful businessmen, while the taller boy became a civil servant. The three never forgave the media for casting them in the role of impoverished victims, arguing that they all had much richer lives than the photograph showed. Literally richer in the case of the two small boys, who post-War reportedly lived at a level of luxury unknown to “elite” Timmy Dyson.

“Toffs and Toughs” is an interesting study of imagery and the myths and perceptions that it can create and perpetuate. It is not an accident that Ruth Davidson, when discussing the modern young person’s alienation from capitalism, wrote, “all the while watching Rich Kids of Instagram on Channel 4 and footballers being bought and sold for more than the entire economy of a third world nation on Sky Sports News.” These are highly visual media which are also highly ersatz, shaped into the appearance of a cohesive whole through skillful editing.

Sports stars (and musicians, dancers, and artists) are terrible for comparison because becoming one requires herculean efforts and hours of practice. An extension of the 10,000-hour rule is: if someone isn’t willing to put in 10,000 hours to master a skill, he has no right to engage in envious nattering. Rich Kids of Instagram is a British reality TV show that spun off of an eponymous Tumblr thread wherein the purported Instagram photos of the superrich are collected. If one examines the pictures with a critical eye, it becomes apparent that the majority are staged – anyone standing on a pier can take a selfie with a docked yacht; it doesn’t mean that he owns the boat.

In the fourth episode, “From Cradle to Grave,” of Milton Friedman’s Free to Choose, 1980 original, at 32:27, Helen Bohen O’Brian, then Secretary of Welfare for Pennsylvania, astutely observed that people estimated their quality of life based on the people around them. What visual media has done is to bring people like the exhibitionists of Rich Kids of Instagram into people’s lives and present them as if they are in some manner the viewer’s peers. It is as divisive and dishonest as claiming that “Toffs and Toughs” told a “story.” If one considers that Guardian columnist Marina Hyde outed the TV show by revealing that a “rich kid” was not particularly rich, was a former tenant of Hyde’s family, and the place portrayed as the reality starlet’s house was their own property, into which the TV crew had unknowingly broken and entered, the deception is exactly on par with the 1937 one. It is all a pitiful lie, but one which, as Davidson spotted, the vast majority of people see and envy as truth.

In closing, there is one last example to consider. Marc Stuart Dreier, currently in prison for fraud, is an ex-lawyer whose scams were eclipsed only by those of Bernie Madoff. In an interview for the BBC documentary Unraveled, Dreier explained that he wasn’t motivated by greed or desire for the “rich life,” no, he wanted to be someone who socialized with golf and football stars. At the start, he was the embodiment of the American dream – son of an immigrant goes to Yale and Harvard Law – but then he discovered that law was not his métier. He neither enjoyed it, nor was he good at it. Unable to succeed through honest means, he turned to fraud. He wanted to be successful, not for its own sake but for the peer group he hoped to join. The documentary shows repeatedly snippets of Dreier in the guise of lawyer-philanthropist glad-handing footballers and playing with famous golfers, always with cameras there to catch every move. The goal was the visuals, not the reality.

In a battle of the mythic caricatures of Joseph A. Schumpeter, the victim is going to be liberty and responsibility. Today, Schumpeter’s words are truer than ever. Everyone has caricatured everyone else. And at the same time, everyone imagines himself on stage with his peers as the audience. There is no doubt that social media and technology have exacerbated the problem of imagery and the peer – fictional Homer Simpson and his candy mansion and Rich Kids of Instagram – but it is delusional to pretend that it didn’t exist before apps and smart phones. Blaming capitalism for the discontent caused by voyeurism and false expectations is both a logical non sequitur and a very serious peril for liberty. For the sake of preserving freedom, it is important to ask, to demand even, by what metric are the disaffected judging their lives. If it is by the peer, as Bohan O’Brian argued, then it is not a valid metric and should be treated as such.

Eye Candy: The HDI of BRICS

Phew, that’s a lot of acronyms. But this is a great map:

NOL map BRICS subunits
Click here to zoom

Orange and yellow is bad, green and blue is good. HDI stands for “Human Development Index,” which is a measurement that’s not nearly as good, in my opinion, for understanding how wealthy and happy a population is. Nevertheless, HDI is still one of the better measurements (Top 5, again in my opinion) out there. Here’s the wiki on HDI.

The maps are colored according to “subunits,” or provinces (which are like American states, such as Nebraska).

Brazil, India, and South Africa are multi-party democracies, while the other two are not. So what do all five have in common?

Nightcap

  1. African soldiers (excellent film review) Jeremy Harding, London Review of Books
  2. Not born in the USA Irfan Khawaja, Policy of Truth
  3. Iraq’s Kurds versus Turkey’s Kurds Mahmut Bozarslan, Al-Monitor
  4. Branko Milanovic’s confusion on inequality David Henderson, EconLog

A Brazilian view on the French Protests

Paris has been taken by a great number of protesters complaining about (yet another) tax, this time on fuel and with the justification of “combating climate change”.

Five years ago, in 2013, several cities in Brazil (Rio de Janeiro among them) were taken by protesters. They were initially complaining about a rise in the bus tariffs. A small rise, if examined by itself, but apparently the last drop among a number of reasons to be discontent.

The Brazilian protests of 2013 were very ironic. Lula da Silva, a socialist, was elected president in 2002. He was reelected four years later, despite major indications that he was involved in corruption scandals. Lula left office very popular, actually, so popular that he was able to make a successor, Dilma Rousseff, elected president in 2012. It was during Dilma’s presidency that the protests took place. They were initially led by far-left groups who demanded free public transportation. So here is the irony: a far-left group, with a far-left demand (free public transportation), was protesting against a (not so far) left government. The situation became even more ironic because millions of Brazilians, who didn’t identify as socialists, also went to the protests, not because they wanted free public transportation (most people are intelligent enough to understand, even if instinctively, that such a thing cannot exist), but because they were fed up with the socialists government at one point or another.

The lesson is: “The problem with socialism is that you eventually run out of other people’s money.” The 2013 protests culminated this year, with Bolsonaro’s election. Mises observed very acutely that socialism simply cannot work. What he observed on paper, reality has confirmed again and again. France is just the latest example.

Nightcap

  1. Hannah Arendt On Why It’s Urgent To Break Your Bubble Siobhan Kattago, IAI
  2. Does the right to self-defense apply against agents of the state? Jason Brennan, Reason
  3. Amazon (the company) and the Department of Defense Melanie Sisson, War on the Rocks
  4. ‘I have noticed a difference between older EDM stars and younger ones’ Cory Arcangel, Are.na