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Sunday, November 16, 2014

Aristocratic tiger-riders

In the introduction to the third edition of FA von Hayek's A Tiger by the Tail, Austrian economist Joseph Salerno observes:
Inflating aggregate money expenditure leads to a short-run increase in employment that causes an inappropriate distribution of resources whose inevitable correction ensures another depression. Such a correction can be postponed, but never obviated, only by repeatedly neutralizing relative price changes through accelerating inflation.

Those who deny Hayek’s analysis—as all contemporary mainstream macroeconomists and policymakers do—and promote ever-increasing spending as the panacea for our present crisis live in the simplistic Keynesian fantasy land from which scarcity of real resources has been banished and in which the scarcity of money and credit is the only constraint on economic activity. As Hayek pointed out, such people do not merit the name “economist”:

"I cannot help regarding the increasing concentration on short-run effects—which in this context amounts to the same thing as a concentration on purely monetary factors—not only as a serious and dangerous intellectual error, but as a betrayal of the main duty of the economist and a grave menace to our civilization."
Of course, as we were reminded in 2008, and again in 2014, not only does the postponed correction always eventually arrive, but the nominally palliative measures become increasingly ineffective. The Left is not entirely wrong to focus on the evils of income and financial inequality, because today they are not the result of capitalism and free enterprise, but the neo-feudal largesse distributed by the federal government to the financial aristocracy through the central bank.

I had always wonder why the Ciceronian cycle predicted the rise of aristocracy rather than the conventional expectations of post-democratic dictatorship. But in light of the post-2008 crisis events, it makes a good deal more sense.

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50 Comments:

Blogger IM2L844 November 16, 2014 9:40 AM  

I remember having to look up Ciceronian cycle a couple years ago when you mentioned it and I thought I remembered ochlocracy following democracy in the cycle. We should find out soon enough if the police can be swayed by the mobs in Ferguson. In any event, yes, the government is proactively complicit in stealing wealth from the middle and funneling the bulk of it to the top and a sprinkling few crumbs on the bottom to keep them complacent. The left's animus is misdirected. I can't imagine a scenario where this ends well in the short term.

Blogger Dark Herald November 16, 2014 9:58 AM  

I had always wonder why the Ciceronian cycle predicted the rise of aristocracy rather than the conventional expectations of post-democratic dictatorship.

Rational self-interest?

Regardless. Our would be aristocrats are here already. Eighteen of the Twenty richest counties in the US went for Obama.

After reading that figure, I did a major about face. Not only was I suddenly in favor of taxing the rich, I was also in favor of whipping them naked through the streets.

Anonymous .308 November 16, 2014 10:03 AM  

"The Left is not entirely wrong "

Total bullshit. The Left = globalist elite

Blogger Franz Lionheart November 16, 2014 10:06 AM  

I had always wonder why the Ciceronian cycle predicted the rise of aristocracy rather than the conventional expectations of post-democratic dictatorship.

Could you please expand on this "Ciceronian cycle", or provide a good source/ link of explanation?

Anonymous Different T November 16, 2014 10:23 AM  

@ Vox and other Austrians

"inappropriate distribution of resources"

Does an "appropriate/optimal" distribution of resources exist? Is this "optimum" that which leads to the highest measurable growth over some time frame? If not, what is it?

@ Franz

Seems to be in contrast to Plato's cycle. Regardless, _NEXT is probably more dependent on the relative power of the forces at that time.

Anonymous Sarcophilus November 16, 2014 10:25 AM  

Ask Roy Horn (see Siegrfied &) how playing with tigers works out.

The depression, or malaise, stagnation, etc. ends when the last bad debt is defaulted on, written off, or paid down. That is why no one remembers 1920-1 - it was over in under a year.

Meanwhile, the central bank noise has the same effect on economic calculation as socialism. It is indirect socialism - interest rates are the master price, along with the monetary unit. All other prices derive from those.

Do we have fewer fires by setting smoke alarms to 1500F instead of 200?

Anonymous Logo November 16, 2014 10:26 AM  

@Franz Lionheart

Google is your friend:

Cicero on Political Order (III): The Forms of the State and Their Cycle

Anonymous Will Best November 16, 2014 10:47 AM  

It would seem that in a democracy, where votes are purchased, there wouldn't necessarily be enough resources for one person to concentrate power. As such it would need to be a collection of people aligning with the similar goal of pitting the poor against the middle class.

Blogger Emmanuel November 16, 2014 11:15 AM  

Cataline Sergius:

"After reading that figure, I did a major about face. Not only was I suddenly in favor of taxing the rich, I was also in favor of whipping them naked through the streets."

Wow. That's pretty retarded man, I'm not going to lie.

Anonymous Roundtine November 16, 2014 11:34 AM  

Does an "appropriate/optimal" distribution of resources exist? Is this "optimum" that which leads to the highest measurable growth over some time frame? If not, what is it?

Austrians believe in having as little control as possible, so the market decision is the "optimal" one. If you are in a high time preference culture, then devoting more resources to getting high right now is the best policy. If you were in an extremely low time preference culture, the goal might be to maximize growth on a 20-year horizon, or maybe even beyond the life of the individual. It's all subjective. If you go all in on growth as some of the singularity crowd does, then you think an AI building factories to suit its own desires is optimal, even if it means killing off humans by denying them resources.

Anonymous zen0 November 16, 2014 11:53 AM  

Thus would be fulfilled the predictions of the Second Psalm, and probably in the end with more bitterness than can now well be imagined, though it has been partially fulfilled already upon the Head of the body. Acts 4:25-29

The same necessity for restricting liberty on political and social questions will probably be supposed to apply equally to freedom of expression on religious questions, which really lie at the foundation of all liberty. It would not be surprising if a "strong government," a monarchy, would some day replace this present Great Republic; and it is entirely probable that one common standard of religious belief will be deemed expedient and will be promulgated, to teach outside of which will be treated and punished as a political offense. Such a persecution would not only furnish, in the end or harvest of this age, another parallel to the harvest of the Jewish age (Acts 4:10-13,23-30; 5:29-41; 11:19)....


- Studies in the Scriptures Vol. 2 1889

Blogger kurt9 November 16, 2014 12:21 PM  

The Left is not entirely wrong to focus on the evils of income and financial inequality, because today they are not the result of capitalism and free enterprise, but the neo-feudal largesse distributed by the federal government to the financial aristocracy through the central bank.

This is demonstrated in great detail in David Stockman's book "The Great Deformation".

Anonymous VD November 16, 2014 12:43 PM  

After reading that figure, I did a major about face. Not only was I suddenly in favor of taxing the rich, I was also in favor of whipping them naked through the streets.

Only the idiots, the corrupt, and the uninformed can still equate wealth with capitalism in America. It's like claiming that you must be anti-capitalistic if you don't think Genghis Khan, Moammar Qaddafi, and Saddam Hussein came by their wealth honestly and fairly.

Anonymous Different T November 16, 2014 12:54 PM  

@ Roundtine or Austrians

If "it's all subjective," how does the "market decision is the 'optimal' one" follow?

Would "democracy based on the equality of the dollar" be an apt description of how Austrian's view economics?


Blogger Franz Lionheart November 16, 2014 12:59 PM  

Logo - thank you.

Whilst I love Android (and who doesn't?), I'm not so sure of the big G being so friendly. I was hoping for an Ilk-approved link. I'll consider yours as such and broaden my knowledge on the matter.

Anonymous Different T November 16, 2014 1:02 PM  

@Roundtine or Austrians

If "it's all subjective," how does "the market decision is the 'optimal' one" follow?

Would "democracy based on the equality of the property rights" be an apt description of the Austrian view of economics?

Anonymous maniacprovost November 16, 2014 2:17 PM  

Austrian Economics is best defined in terms of its methodology, as employed by Carl menger and explained by Von Mises. It is to create an axiomatic system based on "a priori" facts, and work methodically and logically.

Unfortunately, Austrian Economics has not been developed very far. It needs to be applied to a lot of phenomena and situations that Neo-Keynesian and Chicago School cover, with the understanding that you can't necessarily answer some questions that the other schools claim to answer.

I started developing an Austrian calculus based on set theory, inequalities, and transactions, since basic mathematics doesn't seem to apply well. It's a naive misapplication of algebra and statistics that gave us the Chicago School.

However I think I need to do more work on the nature of economic rationality before a calculus could be developed. And I just don't have time what with Wasteland 2 and all.

Anonymous Jack Amok November 16, 2014 2:22 PM  

It would seem that in a democracy, where votes are purchased, there wouldn't necessarily be enough resources for one person to concentrate power. As such it would need to be a collection of people aligning with the similar goal of pitting the poor against the middle class.

But when things have degenerated to mob rule, money isn't necessarily the critical factor. In fact, mobs tend to be fairly cheap to "rent" - they pay for themselves once a leader emerges who can coordinate them for raids and pillaging.

And actually, different philosophers do have variations on the cycle, of which "good" version follows which degenrate one. The thing all the Kyklos theories agree on is that all good forms degenerate into their bad ones.

Personally, I'm wondering if the real cycle is that it's random which follows - sometimes Aristocracy follows Mob Rule (Ochlocracy), and sometimes Monarchy follows it, simply depending on the cast of characters that emerge from the chaos.

Blogger Unknown November 16, 2014 2:37 PM  

VD,

The Left is not entirely wrong to focus on the evils of income and financial inequality, because today they are not the result of capitalism and free enterprise, but the neo-feudal largesse distributed by the federal government to the financial aristocracy through the central bank.

Historically speaking, was it usually a strong govt that co-opted business or a strong business class that co-opt govt? If a system is being co-opted in part, which is more productive: utilizing the last vestiges of democratic govt or the diminishing returns of capital you can get your hands on?

Anonymous "Search Engines Are Hard" - Barbie November 16, 2014 2:46 PM  

Franz Lionheart
Could you please expand on this "Ciceronian cycle", or provide a good source/ link of explanation?

Let Me Google That For You

Blogger The Anti-Gnostic November 16, 2014 2:49 PM  

"After reading that figure, I did a major about face. Not only was I suddenly in favor of taxing the rich, I was also in favor of whipping them naked through the streets."

Wow. That's pretty retarded man, I'm not going to lie.


No, he's right. There was a real simple covenant in place: you can get as rich as you want and unlike most places, we will let you keep your money no matter how wealthy you get; just don't use your wealth and influence to fuck with constitutional government. Instead, they lobby for immigration, intellectual property, and got the most enormous transfer of wealth in the history of mankind in 2008.

These things go in cycles. The rich need to be taken down a peg.

Anonymous Shibes Meadow November 16, 2014 3:25 PM  

OT: Comedy Gold.

Anonymous Shibes Meadow November 16, 2014 3:29 PM  

Zen0; The same necessity for restricting liberty on political and social questions will probably be supposed to apply equally to freedom of expression on religious questions, which really lie at the foundation of all liberty. It would not be surprising if a "strong government," a monarchy, would some day replace this present Great Republic; and it is entirely probable that one common standard of religious belief will be deemed expedient and will be promulgated, to teach outside of which will be treated and punished as a political offense.

Where do I sign? I'd take that deal right now.

Anonymous Loki Sjalfsainn November 16, 2014 3:56 PM  

Where do I sign? I'd take that deal right now.

Right here...and you may keep the pen. I am feeling generous today.

Anonymous FUBAR Nation Ben November 16, 2014 3:59 PM  

The focus on the federal reserve is misplaced besides for the fact that they are subsidizing the super rich financial elites. Ben Bernanke and Janet Yellen's actions are irrelevant because the amount of money they are printing to buy up mortgage backed securities is tiny compared to the amount of capital flowing around the globe which is the main reason for the various peaks and troughs in the different sectors of the economy. Also, when the Fed prints money to buy treasuries, they are basically exchanging their non-interest bearing money for interest bearing money since treasuries are effectively interest bearing money now. The real emitter of currency is congress which emits over a trillion in debt money (treasuries) that it never intends to pay back.

Blogger Danby November 16, 2014 4:22 PM  

@ Meadow, Shibes
"Where do I sign? I'd take that deal right now."

Umm... you already have it. You just didn't recognize it because the officially sponsored religion doesn't call itself a religion.
" it is entirely probable that one common standard of religious belief will be deemed expedient and will be promulgated, to teach outside of which will be treated and punished as a political offense."

What happens to anyone who speaks out against feminist socialism?

Blogger Danby November 16, 2014 4:31 PM  

@Shibes meadow,
That is some classic SJW channelling on the maps website. Thanks for the laugh.

Anonymous The other skeptic November 16, 2014 4:43 PM  

Will the Swiss be able to get their gold back?

Blogger Franz Lionheart November 16, 2014 4:44 PM  

Barbie - Let Me Google That For You

That could have been funny, if you hadn't shot yourself in the foot and been about a dozen comments (including courteous reply!) too late.

Anonymous Shibes Meadow November 16, 2014 4:48 PM  

Danby: My pleasure. Glad you enjoyed it.

Anonymous Nah November 16, 2014 4:55 PM  

Not really right to call them aristocrats. They don't get their privileges by blood or birth. It is purely by political connection. What they are is members of the nomenklatura.

Anonymous A Paradigm Is More Than Twenty Cents November 16, 2014 5:12 PM  

Danby, it's funny how often monarchy fanboys fail to consider what a modern one might look like, for example the Central African Empire comes to mind. Kakistocracy, kleptocracy, etc. are a lot easier to form than a real monarchy. Real monarchies in history have taken generations to form and stabilize. Bogus "king for a year" thugocracy is much easer to create.

My father used to tell me "Be careful what you wish for, you might get it".

Anonymous Jack Amok November 16, 2014 5:35 PM  

Not really right to call them aristocrats. They don't get their privileges by blood or birth. It is purely by political connection. What they are is members of the nomenklatura.

Technically, the Greek form of the word means "rule of the best" and Aristocracy is distinquished in the cycle from it's degenerate form, Oligarchy (rule of the few). There's no requirment an aristocracy be hereditary, that's just the prejudice a democracy tends to have. A Nominklatura is definitely an oligarchy though..

Anonymous Shibes Meadow November 16, 2014 5:41 PM  

I support monarchy because it is the traditional form of government in the West. "Representative" government, in which supreme executive power derives from a mandate from the masses, is an artifice -- an ideological construct, imposed upon a people by a revolutionary elite, and is entirely a Modern and "enlightened" idea.

As a Traditionalist, I support monarchism, an entirely organic form of government which arises naturally from the power relationships that actually exist within a nation. (Note: a nation is a social organization based upon shared ancestry, language, and culture.) In every nation, there are certain people who, by dint of their God-given abilities (primarily in combat), distinguish themselves as leaders. These are aristocrats. Among them exists one such who combines prowess in battle with God-given charisma (the ability to inspire people to obey him out of love rather than fear). This is the King. Together with his peers (fellow warriors personally loyal to him, i.e. knights) and the aristocracy (sworn to fealty), the King wields supreme executive power within the lands he controls. His power is checked naturally by the existence of the peerage and aristocracy, who might combine to overthrow him if need be. His power is controlled by the anointing of the Church, which compels him to swear to rule as the servant of his people, and which may withdraw its blessing of his crown should he abuse them.

Since the realm is the private property of the King, peerage, and aristocracy, they can be counted upon to be good stewards of its resources; since the King, peerage, and aristocracy inherit their power rather than seeking it through election, the system selects for people raised to respect tradition and rule out of a sense of duty, rather than for sociopaths who seek power over others (i.e. elected officials).

I could go on, but I think you get the point: when compared to nose-counting for the purpose of choosing which sociopath gets the power, strange women lying in ponds distributing swords actually is a pretty good basis for government.

Anonymous Jack Amok November 16, 2014 5:56 PM  

Historically speaking, was it usually a strong govt that co-opted business or a strong business class that co-opt govt?

Business class? I think the government prefers chartered jets these days...

But to answer your question, private commerical interests can almost never achieve an exploitive position without government assistance. That's using the definition of "government" as "those with a monopoly on the legal use of force."

No business could exploit an entire society without the threat of force behind them, for the simple reason that no business is large enough to stand up to violent reprisals from people who felt exploited. Also because - without legal restrictions on competitors - they couldn't keep less-exploitative competitors from running them out of the market.

I don't think it's particularly useful to think in terms of "business" vs "government" anyway. The right distinction is "voluntary" vs "mandatory." Whatever the people agitating to make more things mandatory call themselves, they're the ones to be skeptical of.

Anonymous Stilicho November 16, 2014 7:35 PM  

@shibes: watery tarts tossing around cutlery is no way to form the basis of a lasting political system!

Anonymous Anonymous November 16, 2014 8:14 PM  

Stilicho: shut up! Will you shut up!

Anonymous Stilicho November 16, 2014 11:06 PM  

Oh, what a giveaway! Did you hear that? Did you hear that, eh? That's what I'm on about! Did you see him repressing me? You saw him, didn't you?
...
If I went around sayin' I was an emperor just because some moistened bint had lobbed a scimitar at me, they'd put me away!

Anonymous Stilicho November 16, 2014 11:11 PM  

That just doesn't get old.

More to the Point, Shibes, your trouble would arise in ensuring that it was your king ruling over you and that the official religion was your religion. I suspect you would not enjoy either Jamie Dimon or Barack Obama as king.

The aristocracy can work as long as it is a moral aristocracy, but a republic will also work well as long as it arises from a moral people. The pattern seems to be that a people tend to get the gov't a majority of them deserve.

Anonymous Titus Didius Tacitus November 16, 2014 11:53 PM  

Stilicho: "The pattern seems to be that a people tend to get the gov't a majority of them deserve."

Only in the long run and excepting war - especially higher types of war unrecognized by those whose minds run in OODA loops.

When talented kleptoparasites infiltrate, seduce the elite, and turn it against its base, "deserve's got nothing to do with it".

Anonymous Titus Didius Tacitus November 17, 2014 12:33 AM  

When kleptoparasites seduce the elite and turn it against its base, "deserve's got nothing to do with it".

Cycles innate to the colonized population have nothing to do with it. Anacyclosis's got nothing to do with it.

Anonymous Jack Amok November 17, 2014 12:39 AM  

The pattern seems to be that a people tend to get the gov't a majority of them deserve.

The theory is that power corrupts, so whatever basic form of government you have (rule by one, rule by the few, rule by the many), the "rulers" will eventually abuse their power for personal gain and run things into the ground. The only real antitode is to mix forms and set them against one another.

For example, the English sytem with a Monarch constrained by both an Aristocracy (the House of Lords) and a Democracy (House of Commons). But even that will eventually break down, as happened in England where the Democracy has shoved the other two forms aside and siezed all power for itself.

Anonymous William Tell November 17, 2014 12:45 AM  

I support monarchy because it is the traditional form of government in the West.

The Helvetican Confederation is not a country of the West? When did this happen? Was it decided in the same way that Pluto became an unplanet? Or is this merely a unilateral decision of Emperor Shibes I?

Anonymous Shibes Meadow November 17, 2014 1:04 AM  

Bloody peasant!

The aristocracy can work as long as it is a moral aristocracy

Well, any system can work. The USSR "worked" for 75 years. The question is, which form of social order works best, which is most enduring, and which best safeguards the national patrimony -- that is, the DNA, language, and culture handed down from earlier generations?

I'd argue that an organic system that springs naturally from the real-world power and fealty relationships between actual human beings works best, endures best, and safeguards the nation best.

In any human society, an aristocracy arises naturally, because some people really are better than others in terms of ability.The only question is: how does this elite arise? In an organic society, it arises naturally, typically from the class that proves itself superior in battle and in inspiring the people. In an Enlightenment republic, by contrast, it arises from that class of person with the greatest desire for power -- the political class.

A republican elite, such as he crew that runs the system these days, is obviously not a natural aristocracy. It is an artifice created according to the rules of the Constitution Game. This game selects not for ability in governing and inspiring, but rather for skill in conniving and self-promotion.

A republic will also work well as long as it arises from a moral people. The pattern seems to be that a people tend to get the gov't a majority of them deserve

Fair point, but any system of government will work as long as the individual member of society is moral and honest, the laws are few and simple, and the people are united by ancestry, language, and culture. Mussolini ruled Italy quite well prior to his idiotic alliance with the Nazis. (Many people fail to grasp that Mussolini came to power a full decade prior to the Third Reich, and that he was widely admired around the world, including in the United States.) Let's look at Japan. Japan doesn't need much governing, at least not on an everyday level: most everyone shares the same ancestry, speaks the same language, and shares a common culture. Add in a strong awareness of the Natural Law (which the average Japanese would not admit to, at least under that term) and you have a society governed more by custom and manners than by legislation, where the Carrot of gracious living, rather than the Stick of punishment, compels obedience. As a result, Japan has existed as a continuous polity for 1000 to 1,300 years, depending on how one defines things.

Of course, Japan is an Empire, not a republic.

However, in countries where morality has become subject to individual whim, where corruption is de rigeur, and where there is lots of vibrance and diversity and multiculturalism, the imposition of social control by the natural elite must and does come through the Stick. Absent the well-formed consciences that permit the individual to recognize and obey the Natural Law, morality becomes a matter of who has the biggest Stick

I think the American experiment in representative government was a noble effort. Unfortunately, it is based upon flawed premises: that maximized individual liberty is the greatest good, that all men are created equal, and that America would remain a nation of brothers united by English blood, the English language, and the Christian culture of England. It was doomed to fail, because, as with all such forms of post-Enlightenment government, it ignores the realities of human nature: the fealty is owed, that hierarchies exist, and that the only true "brotherhood" (outside of the Christian faith) is blood brotherhood -- that is, a shared ancestry.

Thank you for your interesting and well thought-out post.

Anonymous Shibes Meadow November 17, 2014 1:06 AM  

Shouldn't you be somewhere shooting an apple off of somebody's head, William Tell?

Seriously: I never claimed that monarchy was ubiquitous in the West. I merely said it is the West's traditional form of government -- which it is.

Thanks for the question.

Anonymous Titus Didius Tacitus November 17, 2014 1:38 AM  

We've had half a century of the best people ceding their power to hostile rule, and actively supporting mass immigration and other forms of obviously nation-ending and race-ending treachery, while the masses were never for it.

If it had been the other way around, I might be for aristocracy or monarchy. As it is: no.

Anonymous Shibes Meadow November 17, 2014 3:01 AM  

Let me make it clear that I do not support a monarchy in the United States. Monarchy works only in the context of what might be called "ethnostates" -- in other words, nations. (Recall my definition of "nation" as "an organic and integral social order emerging from a group of people united by ancestry, language, and culture".)

The sad fact is that the United States can no longer be effectively governed by any system; there is no just and equitable way to rule a continental empire of 300M+ racially, ethnically, and culturally diverse people. The only way to even keep order in such a state is top-down tyranny -- a surveillance state, where unofficial thought police identify the troublemakers, and official militarized internal security troops take them out. And once the State can no longer keep the lid on... "No Tito = No Yugoslavia."

Anonymous Titus Didius Tacitus November 17, 2014 3:06 AM  

I like your definiton of "nation".

Blogger CarpeOro November 17, 2014 1:20 PM  

A good read that points in this direction is "Oath of Fealty" by Jerry Pournelle. The only problem is to few of this new aristocracy have the sense of self preservation needed to provide followers a reason to be loyal to them. They simply do their best to steal from all, including their supporters.

Anonymous Shibes Meadow November 17, 2014 8:53 PM  

Titus: I appreciate the compliment, but it's not really my definition. It's simply the traditional definition of nation, reworded a bit for modern ears (for example, "ancestry"; pre-1960s writers would have said "blood" or "race" instead.)

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