Thursday, April 08, 2010

Change, Liberty and the State

The following is a commentary piece of The Jacksonian Party.

Trendline analysis, particularly in a rapidly changing environment is tricky business as the rate of change makes utilization of past results for predictors of future outcomes a non-linear form of analysis.  This can happen with solutions that get highly saturated at high temperatures and then by slowly lowering the temperature the system becomes 'super-saturated' for its given temperature.  A super-saturated system is one in which the amount in solution is more than would normally be allowed for the given temperature of the material dissolved in solution, yet by having created higher temperature conditions for saturation then lowering it, the amount in solution is unsustainable for the solution at this new temperature.  All outward appearances of the solution remains the same, save for temperature, yet in the super-saturated regime the tiniest of disturbances can cause rapid state change of the system with crystal growth that can be almost instantaneous.  In the physics of a ship on water, it can only be rotated on its main axis along the length of the vessel, before it capsizes, and at that point the slightest swell can either right the vessel or capsize it and the more water that rushes into the hull as it hauls over to one side, the more likely a capsize event becomes.

This is called an 'inflection point': the point in which rapid and asymmetrical change happens that could not be predicted by what came before.  In technology this was the INTEL 4004 chip of the early 1970's that served as the basis for modern desktop computing, and yet no one would have thought it would change all that much in the technology realm.  Yet the conception of using a contract for a single purpose chip (for hand held calculators) to make a general purpose micro-processor that could serve as the basis for other computing devices was a keen insight into how to change entire markets.  Later there would be multiple computer manufacturers that would attempt to establish the PC market and only when IBM put its imprint on the PC, via its Project Chess group in Boca Raton, FL, would the PC market become acceptable to business.  They chose a company that was unknown with a Harvard MBA drop-out as its head: Microsoft.  Bill Gates had a vision of a computer on every desk in the US... running a Microsoft Operating System.  By having a PC/OS that was independent from a manufacturer (unlike, say, Apple and the Mac/OS) and just different enough from the only other competitor for that platform (CPM by Gary Kildall) Microsoft was able to utilize IBM's open architecture that could be built by anyone and provide a cheap OS for it from his own company.  Microsoft didn't make PC's, but they enabled the PC market to flourish and overhaul IBM.  In a few very short years IBM went from King of the PC hill, to a mere competitor in the PC mountain range, and not a good competitor at that.  Gordon Moore, Bill Gates and Bob Metcalf each brought inflection point visions with them to technology, software and networking, and each would demonstrate that a minor technical achievement would have long-lasting and extremely fast moving effects on markets that either didn't exist or were seen as 'niche markets'.

US politics is one of the slowest moving inflection point systems available as it tends to change rarely, but when it does the change is rapid.  From 1776 to 1787 the 13 Colonies would become States in a Confederal system that had to overthrow its Imperial motherland, then founder as a Nation and nearly fall apart, and then reach a general consensus need for a somewhat stronger form of federal government.  The the Declaration of Independence from Great Britain to Articles of Confederation to Constitution all happened in an 11 year timeframe.  That is 3 major forms of governmental systems in that very same timeframe, and the fighting wasn't officially over on the Declaration until 1783.  Once things settled down the next inflection point would take a century to show up.  Here I will steal liberally from another post:


And some of my follow-on verbiage particularly in the second graph:

My initial feeling was that it had been a long time since there was even a 30% turnover in Congress, and I was right. The last times that happened in the post-'Progressive' era were: 1904, 1912-1916, 1922, 1934. As the top graph's red line is percentage, the startling artifact is that all Congresses prior to 1902 had never REACHED a 70% return rate. That era of 1896 to 1902 was the one-way 'ratchet' to modern Incumbistani politics, in which America went from 'throwing the bums out' on a continual basis to 'throwing the bums back in' on a continual basis. That percentage shift is as clear as night and day where the left half never reaches up to 70% turnover and the right half rarely reaches below 70%.

Progressive politics represented a conception that the common man was ill-suited to survive in the turmoil of the ongoing industrial age and that those industrialists would run roughshod over the working class.  Those concepts of 'working class' and rapacious capitalism come from the socialist movement that stared with Karl Marx and were then inculcated by Bismarck who sought a way to cement the power of the State by creating 'social guarantees', like retirement.  The Nation State was seen as the fixative to monopolistic and rapacious capitalism, and when the State controlled capitalism it would be able to fight of International Socialism by making people dependent upon the Nation State government system.  This was a response to the First International of Socialism.  The Second International became one to back a reformist approach to capitalism, utilizing the power of the State to enhance women's rights and limit working hours for labor, which was a direct response and concordance with the Bismarckian view of the role of the Nation State in industrial policy although it was a pacifist form that wanted to eschew militarism, until the great organizing power of the modern Nation State at Total War became too enticing a concept to resist post-WWI.

Progressive politics in the US ran in a parallel track to European Socialism, putting forward such things as anti-monopoly laws, labor laws especially restricting child labor, and voting rights for women.  With those things came the centralization of banking power via the Federal Reserve (thus building up an institution torn down in 1832), the income tax that did not have to be assessed by proportion, allowing States to have directly elected Senators, setting the size of the House of Representatives at a non-proportional fixed size, putting into place the first restrictions on drugs like marijuana, and then Prohibition of alcohol.  For all the good things that President Coolidge did during his term in cutting the size of government, he did not much cut its scope of powers added to it from 1900-1918. 

The early Progressive era had established a 'new' relationship of the citizen with the government, in which the government became a major actor in the lives of each citizen... and that was before FDR... by deciding what medications were allowable, controlling the economic system via borrowing and interest rates, and then by changing the income tax directly placed upon individuals to suit the political dictates of whichever party was 'in power'.  In that decade from 1909-1919 we see three Constitutional Amendments, major Public Laws changing the attitude of the government towards personal behavior, the institution of a fixed seat representative system leading to entrenched political parties, and the scope of government going from a very much hands-off and let people exercise their liberty approach to one of restraining liberty via government so as to intercede on behalf of the government to get to certain political ends.  I call those the 10 years that changed the path of America for a reason: they did.

From those beginnings we then get more government power over our lives via Social Security, over our finances via the SEC, over our banking via the FDIC, over our liberty with firearms via the National Firearms Act, a larger IRS, the creation of the FBI ostensibly to go after organized crime but federal laws were now burgeoning as the government grew, and because individuals were retiring right when WWII got started a health care subsidy was proposed as a war-time remedy to entice older workers back to work.  This is 'social democracy' and Progressivism, both, at work, and while Europe in post-WWII systems would move hard over to those types of systems and even greater intrusion, America would steady out its course while having the 'entitlement' society be created by the slow expansion of government into areas that had never been its concern prior to the Progressive era.  Because 'progress'  was ongoing the expansion of government was 'required' to 'help' the common man in this highly complex world.

Then came the multiple inflection points of Moore, Gates and Metcalf.

What happened with high technology is that the asymmetrical ratio of power held by companies in manpower and their ability to execute of economic processes was being whittled away by information dissemination and personal processing power.  Prior to the 1970's having a 'calculator' meant a very expensive piece of electronics or an electromechanical adding machine or cash register.  Computers went from huge, chilled rooms requiring vast spaces to your desktop in just one decade and the amount of power you could get on your desktop was rivaling the mainframes of just 15 years prior to it.  Then in a few years it was 10 years prior, then a bit later 5 years, and that held for a time due to the rate of change hitting mainframes and then super-computers.  The 1970's started the analysis of government programs by corporations, especially in the investment community where the numbers crunched out to where anyone who depended on Social Security as their sole retirement income would be: poor.  Very poor.  Seeing this as an opportunity, investment houses that had mutual funds, where an individual could get fractional shares in a fund investing across a diverse group of investments, was then popularized and spread out to the common man for investment.  One had to choose widely, but the finances of funds and their performance was public knowledge.  And via mass media one could hear from those inside the funds, at analysis firms and from the heads of industry on a weekly basis and get an education on just what the financial market did and why it reacted as it did.

By marketing directly to individuals companies had started the process of removing the middle-man (often lawyer or insurance agent or local investment firm) and supplying information on performance directly to such investors.  When spreadsheets stopped being sheets of paper and became calculating systems on computer, more data began to move from the firms to the individual investor, which by the mid-1980's could be available not only as a direct download but one that was available daily.  The tools for analysis also became more complex, allowing individuals to model their investment portfolio across a number of markets and game out changes to returns based on past circumstances.  This is a fundamental change away from the common man as being 'put upon' by industry and one of empowerment of the common man via technology to deal with industry.  Financial firms, dealing in numbers, led the way on this, and through the 1990's and the proliferation of low cost PCs and cheaper network connections, the utility of the network increased by a factorial of the useful connected nodes (as predicted by Metcalf).  Factorial changes are not logarithmic changes or power of 10 changes (order of magnitude).  A factorial is a number multiplied by each of the preceding numbers before it, save zero.  Thus a !3 = 3x2x1=6 and a !7= 7x6x5x4x3x2x1=5040 .... we had gotten used to this system of change which was logarithmic for processing power and factorial for the power and utility of a computer network... by the end of the 1990's.

The term for removing the middle man, that is companies that serve a purpose of being an intermediary between what you want and getting it, is known as: disintermediation.  Email, an invention of the 1960's for internetworking (it did exist on isolated system previously), changed who you could address information to by flattening out the structure from indirect, via a postal service, to direct or Person to Person (P2P).  P2P relationships are inherently disintermediation as to type and form, as they are directly addressed from one person to another with no intermediaries.  This added to the 1:Many form of communications seen on Bulletin Board Systems and now on websites, meant that one person could contact many and have direct P2P associations with a number of readers from an unlimited geographic area.  With the advent of Hypertext Mark-up Language and advanced PC displays also available in the late 1990's, this entire affair grew visual and utilized the spatial perceptions of end-users to create systems of information and modeling exchange of more than just markets, but products and how one sold them.

Government has not been so swift to adapt to this world.

Working inside the federal government I remember reading about organizations that had information over-load and inability to coordinate their information systems.  The IRS reportedly had all of your financial data on about a 1" piece of reel to reel tape that, if you were lucky, was backed up somewhere with a copy.  That was circa 1999.  The FBI had a minimum of 6 major criminal databases that all operated separately and had tried to integrate them under one unified system.  And failed.  Twice.  Circa 1998.  NASA was losing data from its space probes sent during the 1960's and 1970's because they did not refresh and re-tension their old tapes on a five year schedule.  They didn't have a schedule.  When scientists looked for archival data from Mars, say, from the early Pioneer or Mariner probes, they found corrupted data tapes or tapes that had just lost all magnetic alignment as the iron oxide on them slowly lost its direction due to Brownian motion and exterior fields.  Your billions in advanced technology, a large system, a huge warehouse now yielded no data because no one had thought about archiving it.

No one in NASA had thought about archiving data.  It wasn't rocket science, you know?

The idea that you can centralize knowledge, information and the direction of the economy, itself, seems like a quaint and archaic thought from, say, the Age of the Pharaohs or perhaps Napoleon.  The Marxist concept of a limited economy that would need to appoint and divvy up scarce resources is also one that feels quaintly Amish. 

Or maybe Calvinist given the strong predestination currents of those backing it. 

The idea that without controls on it that modern capitalism would revert to its 'bad old days' of the early industrial revolution ignore that we are no longer living in the era of the early industrial revolution... or the mid-industrial revolution... and looking at the Rust Belt one can ask: 'what industry?'  Detroit has seen such high taxation, such high payouts to non-workers, such harsh industrial regulation that a recent vote to turn much of the city into farmland was nixed because the city is broke and mostly de-industrialized.

The Great Intermediary of Government is trying to figure out how to exist in a fierce world in which disintermediation and more power distributed to a vast population is the order of the day.  This great seismic shift happened over a mere few decades of advancing science and technology, ones that have altered our relationship to all of the old industrial era institutions, and even the pre-industrial era ones.  The right of a free press is that held by the people, and the press is just a means to distribute information... which is how you are reading this, today.  That freedom is not bound up in a handful of elites or great publishing magnates any longer, but is now the cost of a cheap netbook, a low cost network connection, some software (with more of that being free) and your time.

The exercise of your time utilizing your freedom to your own good (be it health, spiritual or monetary) has a term to it: Liberty.

In the exercise of your Liberty you are liberated from pre-existing modes of thought, so long as you respect the society around you, harm none and seek to inflict harm on no one utilizing their liberty to their own benefit, then your Liberty is a benefit to all of society.  The only part government plays is in protecting you from the harmful exercise of liberty by others against society and you individually.  That is the greatest good government can do, and it is not in the realm of taxes, finance, health care, your retirement, nor in regulating all aspects of your life.  It is by simply punishing criminal behavior which has direct effects upon individuals and deprive them of their Liberty, Freedom or Life.  You exercise your Liberty to look after your health, finances, retirement and so on... but you do not give up that right to any person nor any government as they are your positive uses of Liberty for your own welfare. 

Government does not govern your welfare, you do.  Any government that tries to interfere with your welfare and your Liberty to lead your own life when you harm none is called: Tyrannical.

It would be bad enough just for that slow erosion of personal liberty and becoming dependent upon government, becoming in thrall to government and an object of government, this Tyranny business.  That is horrific.  But in trying to do 'good' by standing in-between you and the object of your liberty, no matter what part it is, government demands a cost to do so.  That Intermediary has a monetary cost above and beyond the cost to one's Liberty and Freedom and it is not low.  The overhead, or burdening, of dollars is the cost to run the organization necessary to deliver any good or service, and for the federal government that can run, at best, at approximately 35% and that is within one of the best agencies in the government, with the typical burdening being 45%-55%.  That rate is not just the workplace efficiency percentage (how many productive hours a typical employee has in a given time period) but also such things as health care costs, facility costs, maintenance cost for equipment, layers of accountable management staff and so on.  These are the numbers that are given for budget and outlay, burdened numbers, and that burdening is higher in government as there is no incentive for efficiency and a high requirement for accountability. 

For things like a $350 hammer for DoD there is outrage, for denied payments for benefits for something like Medicare or working hard to find any excuse to deny anyone entrance for disability benefits from SSA, there is little or no uproar as it is a personal affront from officious government and not readily tangible.  If you were told, instead, that government would work very hard to deny you basic payments on anything, and that you would have to justify each expenditure for these 'good' programs to get what they are supposed to give you for anything, there would be an uproar.  Yet the wall of officiousness put up by any bureaucracy is the armor they deploy against the citizenry as the layers of bosses, appeals, and so on are meant to wear you out.  Those increased levels of 'oversight' via the command structure and appeals process are a means to diffuse responsibility for any action taken by anyone in the entire organization: cost accounting then means that your needs on the system are a burden to the system and the system then reacts in a manner to make you want to stop being a burden to the system by ending your process of holding it accountable.

The one place where we expect and desire accountability to the citizenry, that is to say government, becomes the place where you can't get it and it will not modernize itself as it enjoys being held unaccountable for its actions to anyone.

Big business stopped being a threat when the citizenry could get its hands on information and execute it as fast or faster than the big business.  That day dawned somewhere in the mid-1990's and big businesses had to cope with their crumbling models being swept away by the expectations of the empowered citizenry.  Now they must have a presence, must be accountable and must compete... unless they can get a government bail out for their old and failed ways.

Now it is government that is opaque and becoming ardently so and pushing that as a 'good thing' to hide the deals and squandering of the common resources entrusted to it.  Such things as 'back room deals' and 'closed meetings' should only be for the highest security items in the budget, not for ordinary expenditures.  Yet that is where the Progressive form of government has wound up... becoming a replica of the thing it was supposedly despising.

That has a tipping point in the population at large.  No single slight will cause the electorate to shift, but the build up of them and the increasing opacity of government then makes any minor change or increase in government power an additional load into the saturated solution.  At some point the solution, itself, carries a load that it cannot contain and the electorate shifts away from the past solution state into a crystallized form.

A shift away from government is what the change in state portends, and while it may take a decade or so to fully feel the effects of the shift now underway, they are happening and are changing, yet again, the relationship of the citizen with our government.  Some changes can happen quickly, such as defunding parts of government, others will take time, such as repealing officious legislation, and some must be done as they are impossible to fund via the mechanism of government and taxation.  What comes after that will look very little like the preceding century and have few pieces left from this last change in the relationship.  For change cannot be stopped, there is no end of it until there is an end of mankind, and any static view of technology, society and government, such as the Progressive, Socialist, Communist or Fascist view will fail due to change as they can't allow it to keep their doctrine ongoing, and they can't reject the things change offers because they are too enticing.  In hoping to establish a permanent role for government in the life of man, the life of man changed and continues to change in ways that no government can stop as it then becomes the impediment to Liberty, to Freedom, not the answer to helping it.

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