Why are People Poor? A Response to Bishop Camara

“When I fed the poor, they called me a saint. When I asked why the poor were poor, they called me a communist.” —Dom Hélder Pessoa Câmara, Brazilian Roman Catholic Archbishop, 1909 – 1999

c08pnclw8aapot6In Bishop Camara’s case, they might have been calling him a communist because he was an open socialist who advocated Liberation Theology. But leaving the specific case aside, let’s speak more generally: the problem isn’t that people think it’s inherently communist to wonder why there are poor people; the problem is that you are asking the wrong question.

The state that we now call “poor” was the default condition of the vast, overwhelming majority of humans for the entirety of our existence on this planet. Agriculture has only existed for 10,000 of humanity’s 200,000 years; the vast majority of your ancestors were hunter-gatherers with no more wealth to their names than what they could comfortably carry on their backs or construct in a few hours’ time out of grass and sticks. A modern guy living out of his car has more wealth than our ancestors did.

 

The important question is not why most of the world’s people are still poor. The question is why some of the world’s people (or groups of people) have become fabulously wealthy, and if whatever they did can work for everyone else.

The Dramatic Decline in World Poverty, from CATO https://www.cato.org/blog/dramatic-decline-world-poverty
The Dramatic Decline in World Poverty, from CATO

Why are people poor?

Why shouldn’t they be poor?

You want to be rich? Figure out how the rich did it.

Quality of life and human well-being have increased tremendously around the world in the past 30 years. The number of people suffering starvation has dropped precipitously. Why? Did Ethiopia and China introduce some fabulous new welfare program to provide for their poorest citizens? No. Capitalism and technological advances in food production happened. (Caveat: Russia post-USSR had collapsing well-being due to, AFAIK, terribly managed and opportunistic transition to capitalism. As always, don’t be stupid.)

chart2 cu1ko5cwaaeachw

historical-median-male-height-1 picture-2

b2eyn9-cuaaq5gr picture-1

A tragedy in three acts
A tragedy in three acts

Before you can make solve problems, you have to understand what the problems actually are–and that requires asking the correct questions in the first place.

Second, you have to answer the question properly.

Advertisements

Addendum to Race: The Social Construction of a Biological Reality

Now I am going to try to express a bit of nuance, staking out a position somewhere between “race isn’t real” and “Derbyshire is a race traitor.”

In the “race isn’t real” department, we have Sarah Zhang’ Will the Alt-Right Promote a New Kind of Racist Genetics?:

In the genomic age, it is now easy to compare the DNA of people from around the world. And it has indeed revealed that our racial categories are fuzzy proxies for genetic difference—an African man may be more closely related to an Asian than to another African.

From there, Zhang basically tries to argue that race doesn’t real even though genetics and medical science sure make it look real, that the differences in the distribution of genetic traits in large, historically isolated populations don’t matter because of a few tiny populations that are the genetic equivalent of the Basque language.

Kyle Field
Kyle Field, population 102,700

Remember, the world’s entire population of Bushmen wouldn’t even fill the Texas A&M football stadium. Combine them with a few other tiny populations, like the Khoikhoi and Pygmies, and you’re still looking at <1 million people.  Meanwhile, there are billions of Europeans, west Africans, and east Asians.

Mundane racial categories work just fine for the vast majority of people, including the vast majority of Americans, who are not drawn from a rainbow of racially-mixed groups like Tuaregs or fringe outliers like the Bushmen, but from distinct populations of West Africans, Europeans (primarily NW Euros,) Native Americans, and East Asians. If I say someone is “black” or “white,” not only do you understand what I mean, there is an actually consistent genetic reality underlying my statements–in almost 100% of cases, a genetic test would in fact confirm that the people I call “black” are actually primarily Sub-Saharan African by ancestry and the people I call “white” are primarily European by ancestry. Exceptions like Rachel Dolezal are quite rare.

Zhang is trying to argue that you can’t make a reasonable argument about the average distribution of traits between whites, blacks, and Asians in the US because there is a handful of tiny, genetically isolated populations over in Africa. A does not follow from B.

On the other side of the coin, we have people who believe it’s morally imperative to only marry people from one’s own race.

Most of the time, people fall in love with people from their own culture and ethnic group. This is what we’d expect, because you’re more likely to meet and share values with people from your own group. (Interestingly, most people are more genetically similar to their spouses than they are to the average person in their community, not because they married a close relative, but because similar genes make for similar people.)

But some people, for whatever reasons, marrying within their own group isn’t a real option. (White men who are under 5’5″, for example.) These people are looking out for their own best interests–really, if you’re considering calling Derbyshire a race traitor, you’re probably thinking too much about other people’s business.

Capitalism works because it self-corrects; it allows consumers to pick the best products at the best prices, and companies to hire the most talented workers for the best wages. Unlike socialism, where companies are told what and how much to produce, consumers are told what to buy and how much it will cost, and ultimately people starve in the streets, capitalism actually works. Self-interest is a powerful organizing principle that has radically increased the welfare of billions of people over the past century.

And capitalism doesn’t care about race.

Cj4IdTTXAAAhBax

Where people live in close proximity to people of other races, some of them will fall in love.

That said, don’t date people for status points or because you’re trying to prove how not-racist you are. Like Obama’s parents, most inter-racial couples don’t stay together; the majority of mixed-race children have parents who are not married–according to one study, 92% of biracial children with black fathers are born out of wedlock and 82% end up on government assistance because their fathers do not bother to take care of them.

picture-6And if you are ever tempted to compare your vagina to the UN because of the sheer number of different ethnicities that have been in it, you need to stop and re-evaluate your life for multiple reasons.

 

Ultimately, real-life decisions should be based on real-life concerns.

Entropy, Life, and Welfare (pt. 3/3)

Communism works so well, soldiers had to push Fidel Castro's hearse because the Cuban government couldn't find a working truck
Communism works so well, soldiers had to push Fidel Castro’s hearse because the Cuban government couldn’t find a working truck

This is Part Three of a series on how incentives affect the distribution of energy/resources throughout a society and the destructive effects of social systems like communism. (Part One and Part Two are here)

But before we criticize these programs too much, let’s understand where they came from:

The Industrial Revolution, which began around 1760 in Britain, created mass economic and social dislocation as millions of workers were forced off their farms and flooded into the cities.

Communism: the world's single biggest source of murder in the 20th century
Communism: the world’s single biggest source of murder in the 20th century

The booms and busts of the unregulated (and regulated) industrial economy caused sudden, unpredictable unemployment and, without a social safety net of some kind, starvation. This suffering unleashed Marxism, which soon transformed into an anti-capitalist, anti-Western ideology and tore across the planet, demolishing regimes and killing millions of people.

Reason.com attributes 94 million deaths to communism. The Black Book of Communism places the total between 85 and 100 million people. Historian on the Warpath totals almost 150 million people killed or murdered by communist governments, not including war deaths. (Wikipedia estimates that WWII killed, between battle deaths in Europe and the Pacific, disease, starvation, and genocide, 50-80 million people–and there were communists involved in WWII, also.)

cdchqnbumaaj5sjThe US and Europe, while not explicitly communist, have adopted many of socialism’s suggestions: Social Security, Welfare, Medicaid, etc., many in direct response to the Great Depression.

These solutions are, at best, a stop-gap measures to deal with the massive changes new technologies are still causing. Remember, humans were hunter-gatherers for 190,000 years. We had a long time to get used to being hunter gatherers. 10,000 years ago, a few of us started farming, and developed whole new cultures. A mere 200 years ago, the Industrial Revolution began spreading through Europe. Today, the “post industrial information economy” (or “robot economy,” as I call it,) is upon us, and we have barely even begun to adapt.

We are in an age that is–out of our 200,000 years of existence–entirely novel and the speed of change is increasing. We have not yet figured out how to cope, how to structure society for the long-term so that we don’t accidentally break it.

We have gotten very good, however, at creative accounting to make it look like we are producing more than we are.

ceumwjhviaiaquiBy the mid-1950s, the Industrial Revolution had brought levels of prosperity never before seen in human history to the US (and soon to Europe, Japan, Korea, etc.) But since the ’70s, things seem to have gone off-track.

People fault outsourcing and trade for the death of the great American job market, but technical progress and automation also deserve much of the blame. As the Daily Caller reports:

McDonald’s has announced plans to roll out automated kiosks and mobile pay options at all of its U.S. locations, raising questions about the future of its 1.5 million employees in the country and around the globe.

Roughly 500 restaurants in Florida, New York and California now have the automated ordering stations, and restaurants in Chicago, Boston, San Francisco, Seattle and Washington, D.C., will be outfitted in 2017, according to CNNMoney.

The locations that are seeing the first automated kiosks closely correlate with the fight for a $15 minimum wage. Gov. Andrew Cuomo signed into law a new $15 minimum wage for New York state in 2016, and the University of California has proposed to pay its low-wage employees $15.

There is an obvious trade-off between robots and employees: where wages are low enough, there is little incentive to invest capital in developing and purchasing robots. Where wages are high, there is more incentive to build robots.

labor_forceThe Robot Economy will continue to replace low-skilled, low-wage jobs blue collar workers and young people used to do. No longer will teenagers get summer jobs at McDonald’s. Many if not most of these workers are simply extraneous in the modern economy and cannot be “retrained” to do more information-dependent work. The expansion of the Welfare State, education (also paid for with tax dollars,) and make-work administrative positions can keep these displaced workers fed and maybe even “employed” for the foreseeable future, but they are not a long-term solution, and it is obvious that people in such degraded positions, unable to work, often lose the will to keep going.

picture-30But people do not appreciate the recommendation that they should just fuck off and die already. That’s how you get communist revolutions in the first place.

Mass immigration of unskilled labor into a market already shrinking due to automation / technological progress is a terrible idea. This is Basic Econ 101: Supply and Demand. If the supply of labor keeps increasing while the demand for labor keeps decreasing, the cost of labor (wages) will plummet. Likewise, corporations quite explicitly state that they want immigrants–including illegal ones–because they can pay them less.

In an economy with more demand than supply for labor, labor can organize (unions) and advocate in behalf of its common interests, demanding a higher share of profits, health insurance, pensions, cigarette breaks, etc. When the supply of labor outstrips demand, labor cannot advocate on its own behalf, because any uppity worker can simply be replaced by some desperate, unemployed person willing to work for less and not make a fuss.

gr2009012802033Note two professions in the US that are essentially protected by union-like organizations: doctors and lawyers. Both professions require years of expensive training at exclusive schools and high scores on difficult tests. Lawyers must also be members of their local Bar Associations, and doctors must endure residency. These requirements keep out the majority of people who would like to join these professions, and ensure high salaries for most who do.

While Residency sounds abjectly awful, the situation for doctors in Britain and Ireland sounds much worse. Slate Star Codex goes into great detail about the problems:

Many of the junior doctors I worked with in Ireland were working a hundred hours a week. It’s hard to describe what working 100 hours a week is like. Saying “it means you work from 7 AM to 9 PM every day including weekends” doesn’t really cut it. Imagine the hobbies you enjoy and the people you love. Now imagine you can’t spend time on any of them, because you are being yelled at as people die all around you for fourteen hours a day, and when you get home you have just enough time to eat dinner, brush your teeth, possibly pay a bill or two, and curl up in a ball before you have to go do it all again, and your next day off is in two weeks.

And this is the best case scenario, where everything is spaced out nice and even. The junior doctors I knew frequently worked thirty-six hour shifts at a time (the European Court of Human Rights has since declined to fine Ireland for this illegal practice). …

The psychological consequences are predictable: after one year, 55% of junior doctors describe themselves as burned out, 30% meet criteria for moderate depression, and 12% report considering suicide.

A lot of American junior doctors are able to bear this by reminding themselves that it’s only temporary. The worst part, internship, is only one year; junior doctorness as a whole only lasts three or four. After that you become a full doctor and a free agent – probably still pretty stressed, but at least making a lot of money and enjoying a modicum of control over your life.

In Britain, this consolation is denied most junior doctors. Everyone works for the government, and the government has a strict hierarchy of ranks, only the top of which – “consultant” – has anything like the freedom and salary that most American doctors enjoy. It can take ten to twenty years for junior doctors in Britain to become consultants, and some never do.

I don’t know about you, but I really don’t want my doctor to be suicidal.

Now, you may notice that Scott doesn’t live in Ireland anymore, and similarly, many British doctors to take their credentials and move abroad as quickly as possible. The British medical system would be forced to reform if not for the influx of foreign doctors willing to put up with hell in exchange for not living in the third world.

From the outside, many of these systems, from underfunded pensions to British medicine, look just fine. Indeed, an underfunded pension will operate just fine until the day it runs out of money. Until that day, everyone who clams the pension is in deep trouble looks like Chicken Little, running around claiming that the sky is falling.

There’s a saying in finance: The market can stay irrational longer than you can stay solvent.

BTW, the entire state of California is in deep trouble, from budget problems to insane property tax laws. They already consume far more water than they receive, (and are set for massive forest fires,) but vote for increased population via immigration with Mexico. California’s economy is being propped up by–among other things–masses of cash flowing into Silicon Valley. This is Dot.Com Bubble 2.0, and like the first, it will pop–the only question is when. As Reuters reported last February:

LinkedIn Corp’s (LNKD.N) shares closed down 43.6 percent on Friday, wiping out nearly $11 billion of market value, after the social network for professionals shocked Wall Street with a revenue forecast that fell far short of expectations. …

As of Thursday, LinkedIn shares were trading at 50 times forward 12-month earnings, making it one of the most expensive stocks in the tech sector.

Twitter Inc (TWTR.N) trades at 29.5 times forward earnings, Facebook Inc (FB.O) at 33.8 times and Alphabet Inc (GOOGL.O) at 20.9 times.

Even after the selloff, LinkedIn’s shares may still be overvalued, according to Thomson Reuters StarMine data.

LinkedIn should be trading at $71.79, a 30 percent discount to the stock’s Friday’s low, according to StarMine’s Intrinsic Valuation model, which takes analysts’ five-year estimates and models the growth trajectory over a longer period.

Linked in has since been bought out by Microsoft for $26 billion. As Fortune notes, this is absolutely insane, as there is no way Microsoft can make back that much money off of LinkedIn:

Source Fortune http://fortune.com/2016/06/13/microsoft-linkedin-overpaid/
Source Fortune

“Ebitda” stands for Earnings Before Interest, Tax, Depreciation and Amortisation. There is absolutely no way that LinkedIn, a social network that barely turns a profit, is worth more than Sun, EMC, Compaq, and Time Warner.

Shares normally trade around 20x a company’s previous year’s earnings, though right now the S & P’s P/E ratio is around 25. In 2016, LinkedIn’s P/E ratio has been around 180. (Even crazier, their ratio in 2015 was -1,220, because they lost money.)

Ever wonder where all of that money from QE is going? It’s turning into Ferraris cruising around San Francisco, and LinkedIn is not the only offender.

But these companies will not maintain fantasy valuations forever.

(While we’re at it: Why the AOL-Time Warner Merger Went so Wrong:

When the deal was announced on Jan. 10, 2000, Stephen M. Case, a co-founder of AOL, said, “This is a historic moment in which new media has truly come of age.” His counterpart at Time Warner, the philosopher chief executive Gerald M. Levin, who was fond of quoting the Bible and Camus, said the Internet had begun to “create unprecedented and instantaneous access to every form of media and to unleash immense possibilities for economic growth, human understanding and creative expression.”

The trail of despair in subsequent years included countless job losses, the decimation of retirement accounts, investigations by the Securities and Exchange Commission and the Justice Department, and countless executive upheavals. Today, the combined values of the companies, which have been separated, is about one-seventh of their worth on the day of the merger.)

So, that was a bit of a long diversion into the sheer artificiality of much of our economy, and how sooner or later, the Piper must be paid.

picture-5bWhen I try to talk to liberal friends about the problems of increasing automation and immigration on the incomes of the American working class, their response is that “We just need more regulation.”

In this cheerful fantasy, we can help my friend who cannot afford health insurance by requiring his employer to provide health insurance–when in reality, my friend now cannot find a job that lasts for more than a month because employers just fire him before the health insurance requirement kicks in. In fantasy land, you can protect poor people by making it harder for landlords to evict them, but in the real world, this makes it even harder for the poorest to get long-term housing because no landlord wants to take the chance of getting stuck with them. In fantasy land, immigration doesn’t hurt wages because you can just legislate a higher minimum wage, but the idea that you can legislate a wage that the market does not support is an absurdity worthy only of the USSR. In the real world, your job gets replaced with a robot.

picture-4bThis is not to say that we can’t have some form of welfare or social safety net to deal with the dislocations and difficulties of our new economy. Indeed, some form of social welfare may, in the long run, make the economic system more robust by allowing people to change jobs or weather temporary unemployment without dying. Nor does it mean that any inefficiency is going to break the system. But long-term, using legislation to create a problem and then using more legislation to prevent the market from correcting it increases inefficiency, and you are now spending resources to enforce both laws.

Just like Enron’s “creative accounting,” you cannot keep hiding losses indefinitely.

You can have open-borders capitalism with minimal welfare, in which the most skilled thrive and survive and the least skilled die out. This is more-or-less the system in Singapore (see here for a discussion of how they use personal savings accounts instead of most welfare; a discussion of poverty in Singapore; and Singapore’s migration policies.)

Or you can have a Japanese or Swedish-style welfare state, but no open borders, (because the system will collapse if you let in just anyone who wants free money [hint: everyone.])

But you cannot just smash two different systems together, heap more laws on top of them to try to prevent the market from responding, and expect it to carry on indefinitely producing the same levels of wealth and well-being as it always has.

The laws of thermodynamics are against you.

(Return to Part One and Part Two.)

Entropy, Life, and Welfare (pt 2)

images(This is Part 2. Part 1 and Part 3 are here.)

Complex systems, because they must be homeostatic to exist at all, can absorb and disguise the symptoms of a great deal of internal stress.

The collapse of the Soviet Union remains one of the great mysteries of Political Science, not because it happened (that is easy enough to understand,) but because Political Scientists did not predict it.

The big problem with planned economies is that their incentive structures make self-correction almost impossible. For example, when the law allowed Soviet officials to confiscate unlimited quantities of grain in 1932, about 7 million people died. The people who could see the famine happening were not the ones with the power to change tax laws nor the incentives pressuring officials to confiscate so much grain in the first place. As Wikipedia relates:

Alexander Wienberger, Holodomor
Alexander Wienberger, Holodomor

From the 1932 harvest, Soviet authorities were able to procure only 4.3 million tons as compared with 7.2 million tons obtained from the 1931 harvest.[49] Rations in town were drastically cut back, and in the winter of 1932–33 and spring of 1933 people in many urban areas were starved.[50] The urban workers were supplied by a rationing system (and therefore could occasionally assist their starving relatives of the countryside), but rations were gradually cut; and by the spring of 1933, the urban residents also faced starvation. At the same time, workers were shown agitprop movies, where all peasants were portrayed as counterrevolutionaries hiding grain and potatoes at a time when workers, who were constructing the “bright future” of socialism, were starving.[51]

cybtak1veaaoko9 cygs2gyxgaafqgn

Excuse me. I need a moment.

Say what you will for libertarianism, it has at least the basic ingredients for a self-correcting system. A farmer, left to his own devices, will not sell so much of his own grain that he starves. A factory owner will not order incorrect parts for his own factory because his profits would suffer. But in a planned economy, the person doing the ordering or deciding how much grain to sell does not personally benefit (or suffer) from these transactions, and so has no interest in their efficiency. Their incentives are totally different–they have a boss higher up in the party to please; they are required to increase the efficiency of Sector G; they are supposed to hire more people people from underrepresented groups; etc.

As Wikipedia notes:

Most information in the Soviet economy flowed from the top down. There were several mechanisms in place for producers and consumers to provide input and information that would help in the drafting of economic plans (as detailed below), but the political climate was such that few people ever provided negative input or criticism of the plan. Thus, Soviet planners had very little reliable feedback that they could use to determine the success of their plans. This meant that economic planning was often done based on faulty or outdated information, particularly in sectors with large numbers of consumers. As a result, some goods tended to be underproduced, leading to shortages, while other goods were overproduced and accumulated in storage. Low-level managers often did not report such problems to their superiors, relying instead on each other for support. Some factories developed a system of barter and either exchanged or shared raw materials and parts without the knowledge of the authorities and outside the parameters of the economic plan. …

The cumbersome procedures for bureaucratic administration foreclosed the free communication and flexible response required at the enterprise level for dealing with worker alienation, innovation, customers, and suppliers. During 1975–85, corruption and data fiddling became common practice among bureaucracy to report satisfied targets and quotas thus entrenching the crisis.

cw3bumxusaavkjbCastellano writes in Causes of the Soviet Collapse:

Around 1975, the Soviet Union entered a period of economic stagnation from which it would never emerge. Increasingly, the USSR looked to Europe, primarily West Germany, to provide hard currency financing through massive loans, while the U.S. became a major supplier of grain.[1] Despite moments of anti-Communist grandstanding, the Americans and Western Europeans maintained trade relations with the cash-strapped Soviet Union, which dipped into its Stalin-era gold reserves to increase availability of consumer goods.

Foreign trade and mild economic reforms were not enough to overcome the inefficiencies of the Soviet command economy, which remained technologically backward and full of corruption. Economic planners were frequently unable to diagnose and remedy problems, since they were given false reports by officials who only pretended to be productive. Soviet living standards remained poor by Western standards. By 1980, only 9 percent of Soviets had automobiles, which was actually a vast improvement under Brezhnev.

Back to Wikipedia:

One of the greatest strengths of Soviet economy was its vast supplies of oil and gas; world oil prices quadrupled in the 1973-74, and rose again in 1979-1981, making the energy sector the chief driver of the Soviet economy, and was used to cover multiple weaknesses. During this period, USSR had the lowest per-capita incomes among the other socialist countries.[49] At one point, Soviet Premier Alexei Kosygin told the head of oil and gas production, “things are bad with bread. Give me 3 million tons [of oil] over the plan.” [50] Former prime minister Yegor Gaidar, an economist looking back three decades, in 2007 wrote:

The hard currency from oil exports stopped the growing food supply crisis, increased the import of equipment and consumer goods, ensured a financial base for the arms race and the achievement of nuclear parity with the United States, and permitted the realization of such risky foreign-policy actions as the war in Afghanistan.[51]

Awareness of the growing crisis arose initially within the KGB which with its extensive network of informants in every region and institution had its finger on the pulse of the nation. Yuri Andropov, director of the KGB, created a secret department during the 1970s within the KGB devoted to economic analysis, and when he succeeded Brezhnev in 1982 sounded the alarm forcefully to the Soviet leadership. Andropov’s remedy of increased discipline, however, proved ineffective. It was only when Andropov’s protege Gorbachev assumed power that a determined, but ultimately unsuccessful, assault on the economic crisis was undertaken.[52]

And back to Castellano:

 By 1988, private ownership was permitted in certain manufacturing industries. Ironically, these reforms actually caused the Soviet economy to deteriorate further, as unprofitable private enterprises were now subsidized by the state, and the lack of state oversight of supply lines resulted in shortages of food and clothing, which were unknown even under Brezhnev.[8]

By the mid-1980s, the Warsaw Pact satellites had ceased to be an economic asset to the Soviet Union, and in fact Gorbachev’s withdrawal had been motivated in part by economic considerations. There was no longer a real danger of war with Western Europe, so the bloc had lost its strategic significance as well.

People atop the Berlin Wall near the Brandenburg Gate on November 9, 1989.
People atop the Berlin Wall near the Brandenburg Gate on November 9, 1989.

You know how this story ends. The Wall comes down, communism crumbles in all but Cuba and North Korea, and Russia is further assaulted by “shock therapy,” which it is in no position to cope with.

And yet, even in the months just before the Wall fell, no one predicted that it was about to happen. It was very easy to see, from an economic position, that the USSR couldn’t just keep limping on–even the KGB knew that. But “Communism is broken” is information we’d had for six decades already, and the USSR looked like it was in no hurry to finally go ahead and kick the bucket.

Socialism fails because it prevents economic feedback from directing the flow of resources to the places where they’re needed, but even a terrible system like the USSR’s can keep limping along like it’s going to last forever right until the day it falls.

There are reports now coming out of socialist Venezuela of people eating pets, rats, and worse, each other (I am not quoting the cannibalism article, you can read it yourself. This is from the one about eating cats, dogs, and garbage):

Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.

Through Twitter, Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger. … People are also reportedly gathering vegetables from the ground and trash to eat as well. … The week before, various regions of the country saw widespread looting of shopping malls, pharmacies, supermarkets and food trucks, all while people chanted “we are hungry.”

Meanwhile, Venezuela’s currency has become so worthless, shopkeepers are weighing piles of notes instead of counting them.

Command economies just don’t work very well.

cw1htkluuaatpa7We Americans have our own reasons why we should be concerned, from the death of manufacturing to the increasing national debt. The Federal Budget is about 20% of total GDP. The government periodically threatens to default on its debts while funding wars against non-enemies like Iraq. Obligations like pensions and Social Security are often ridiculously under-funded (to the tune of billions of dollars that investments simply haven’t produced) or depend on infinite population growth–which, of course, no nation can ever maintain. As CNBC reports:

Weak investment performance and insufficient contributions will cause total unfunded liabilities for U.S. state public pensions to balloon by 40 percent to $1.75 trillion through fiscal 2017, Moody’s Investors Service said in a report on Thursday. …

It has been a tough year for the funds, which earned a median 0.52 percent on investments in fiscal 2016 versus their average assumed return rate of 7.5 percent, Moody’s said.

Assumptions. The sheer gall of it is flabbergasting.

Steve Bannon gave this rather insightful speech about our deteriorating economic situation several years ago:

(But you know, underwear is racist so let’s ignore the economy…)

To be continued: Return to  Part 1 or continue to Part 3.)

Does the Growth of Cities Contribute to Revolutions?

Both Bernie Sanders and Donald Trump are ostensibly “working class” candidates (and draw their support overwhelmingly from white voters,) and yet, Trump and Sanders voters don’t see themselves as allied or their candidates as advocating for the same people.

As usual, I’ve actually been reading about the French Revolution, rather than modern American electoral politics.

To summarize quickly, just in case it’s been a while since you read anything on the subject, much of the revolution was driven by hoards of hungry peasants roaming around the streets of Paris, marching on Versailles, breaking into the democratic assemblies, etc. These hungry, mostly urban peasants are generally credited with helping start the revolution and driving it to the left.

Their most frequent and vocal demand, quite sensibly, was bread. France had some very bad winters/harvests around that time, and liberalization of trade policy with Britain put a lot of textile workers out of business. The result was high grain prices and unemployed people, which leads, of course, to starvation, and if you’re going to die, you might as well do it trying to get food from the king than just succumbing in an alleyway.

The trend in the countryside tended to be the opposite of that in the cities–rural peasants felt the pinch of taxes and bad harvests, but at least they had their own farms to depend on, and rarely had the population density to march on anything, anyway. The peasant revolts in the French countryside during the revolutionary years, like that in the Vendee, tended to be counter-revolutionary and intended to push the country in a more conservative direction.

The counter-revolution in the Vendee was ruthlessly suppressed, unlike uprisings in the city.

Peasants in the city got listened to, at least early in the revolution–perhaps simply because they were in the city; they could both put pressure directly on the government, which happened to be located in the cities, and they had more opportunities to converse with and gain the ears of government officials.

Revolutionary changes that made life better for peasants in the city often made life worse for peasants in the country (whence the counter-revolutions in the countryside.) City peasants chiefly desire lower grain prices; country peasants chiefly desire higher grain prices.

In both the French and Russian Revolutions, the urban poor became convinced that high grain prices were some sort of rural conspiracy–perhaps an anti-revolution urban conspiracy–with rural peasants supposedly hording grain instead of selling it in order to drive up the price and, perhaps, destroy the revolution.

In both cases, the revolutionary governments responded by forcibly confiscating grain from the peasants (in Russia, this led to mass starvation in the countryside, as the peasants truly had not been hoarding grain!) and introduced price controls.

Communism (or more mildly, socialism,) is supposed to be about all of the poor, but in practice it often pits the needs of one group of peasants against those of another group. The growth of cities themselves may contribute to the tendency toward instability by creating a new group of people who do not have their own farms to fall back on when food prices rise and whose income is dependent on economic cycles/factors outside their own control, leading to hungry times in the city whenever a factory has to lay off workers due to a slowdown in production.

 

Bernie Sanders’s supporters basically see themselves as supporters of the urban poor; Donald Trump’s supporters basically see themselves as supporters of the rural poor.

On a related note, from the NY Times, 2/13/16 (h/t Steve Sailer)

“If we broke up the big banks tomorrow,” Mrs. Clinton asked the audience of black, white and Hispanic union members, “would that end racism? Would that end sexism? Would that end discrimination against the L.G.B.T. community?,” she said, using an abbreviation for lesbian, gay, bisexual and transgender. “Would that make people feel more welcoming to immigrants overnight?”

At each question, the crowd called back with a resounding no.

Short thoughts on French and Russian Revolutions

The French Revolution was caused, primarily, by a confluence of three factors:

  1. Bad harvests=> to starving peasants. Starving peasants will risk death for food.
  2. The gov’t went deep into debt to fund expensive wars and could extract no more taxes from the starving peasants.
  3. The legal system was crusty and inefficient, due to old age.

The Russian Revolution was primarily caused by WWI:

  1. It was far more expensive than Russia could afford,
  2. Unarmed peasants ordered to fling themselves in front of German machine guns react a lot like starving peasants told to go eat cake
  3. Probably a lot of starving peasants.

I don’t know if the Russian legal system was as crusty as the French one, but the whole thing was run by Nicholas, which is not a good sign.

In both cases, the immediate priority for the revolutionary gov’t ought to be halting the deaths of the peasants. Things like standardizing weights and measures or executing the monarch, whether you like those ideas or not, far fall, fall below “getting people bread” and “getting rid of the machine guns.”

Unfortunately, at least in the Russian case, instead of replacing their old, peasant-starving gov’t with a gov’t sensitive to the caloric needs of its people, they replaced it with a gov’t that was massively better at not getting overthrown by starving peasants.

Leading promptly to the starvation of millions of people.

Consanguinity and Socialism

So I’ve been thinking about the connection between consanguinity and socialism.

In one account I read recently, a young man, attempting to better his lot in life, took out a loan, produced 30 loaves of bread, and began selling them along the side of the road. He managed to sell ten loaves before his father came along, spotted the bread, and took the remaining 20 loaves to feed his hungry children–the young man’s siblings and half siblings, of which there were well over a dozen.

Obviously the young man could not pay back his loan, and the business failed.

In Kabloona, de Poncins describes the extreme communality of the Eskimo lifestyle (including, it seems, some form of communal wife-sharing.) One man builds up a cache of fish and seals, and another family comes upon it and eats it all–it cannot be helped, says the author. No one was mad or even irritated. Life in the arctic is so precarious, the food supply so unsteady, that everyone would likely die if they could not depend on their neighbors’ catches in such a way.

He describes another case of a mentally retarded couple who were kept alive primarily through the generosity of their kin-folk.

Toward the end of Frederick and Josephine’s adventure through the Congo, they describe conversations with, IIRC, a white person living in the Congo. He noted that although he had lived there for many years, he had not become friends with the natives–that such was impossible, in fact, because friendship carries with it obligations, and those obligations would quickly bankrupt him.

In The Harmless People, anthropologist Elizabeth Thomas describes the distribution networks that determine exactly how a killed animal is distributed among everyone in the tribe. Obviously it makes sense to distribute a giraffe–no one can eat an entire giraffe, and the Bushmen (aka San) don’t have refrigerators. But even when people are hungry and there isn’t enough to go around, the rules still apply: you must share.

In another account (the name of which, forgive me, has slipped my mind over the intervening decade and a half since I read it,) the author discussed the difficulties of getting the Bushmen started on agriculture/animal husbandry. The crux of the matter was that people would give the Bushmen goats to raise, and then a while later some other Bushmen would come visiting, and the goats would get slaughtered to feed their guests. Pretty soon, the goats were gone and the Bushmen had nothing left to eat, until the outsiders donated some more goats and the round of visiting and goat-eating began again.

Apparently they solved this problem by giving the Bushmen cows. Because a cow has far more meat on it than a visiting family can eat in a week–even a large family–the social obligation to slaughter one’s livestock for visiting relatives didn’t apply to cows.

In The Continuum Concept, Liedloff describes life in an isolated Amazonian village. She relates a story about a young man who, after being raised in the hustle and bustle of the city, came back to his ancestral village (he’d been adopted.) He proceeded to sit on his butt for several years, supported by the rest of the village. He was not entirely idle–he managed to get marry and have children during those years. Eventually he got bored and began raising a garden of his own (it was a horticultural society.)

It took me a long time to figure out why people engage in ritual gift-giving, but one enlightening study on the subject found that Chinese folks with gift-giving networks that extended outside their own villages were less likely to starve during the famines–these folks, it appeared, had been able to call upon their networks when the local crops failed. People whose networks were limited to their own villages had no one to call upon when the village’s crops failed.

I recall someone–I think it was HBD Chick–claiming that Russia traditionally had a somewhat communal style of land inheritance/distribution among its serfs, but I can’t find it, now.

This “socialistic” gift-giving/distribution of wealth and catches is the essence of tribalism, and stands in contrast to capitalism. Westerners tend to either gush glowingly about the wonderful primitives who, in their Edenic state, know nothing of greed but share everything with their neighbors, or confusedly attempt to mush capitalism onto this tribal system and then wonder why it doesn’t work. The socialists tend to advocate that we should become more like the tribesfolk, while capitalists look for ways to get people to act more individually.

Of course, noble savages are a myth and people do not share because they’re morally pure; one glance at the homicide rates for tribal peoples dispels that notion. These systems exist (or existed) because they helped the people in them survive–or at least their DNA. You and your brother share quite a bit of DNA, so sharing your food with him can result in more copies of your DNA wandering around (via your brother’s children,) even if it doesn’t befit you, personally.

No man is an island; we all depend on each other for food and other resources. Where resources are few and times are tough, others become especially critical. Then the “rules” in these societies are often just as strict as ours–the young man with his loaves can no more resist his father’s claim than I can resist paying my taxes. And for the Inuit, the rules are even harsher: if you don’t share now, there will be no one left to share with you when you need them–and you will die.

Do such systems only work where people are closely related? Sharing wealth with my brother may be annoying, but that doesn’t mtter so long as my DNA gets passed on. My brother can be a total lout who takes advantage of me right and left and it doesn’t matter so long as my DNA gets passed on. But it is much more difficult to get people to cooperate with non-family–helping strangers does not lead directly to more of my DNA in the world, and if the helping harms me while helping them, then they may well increase the number of copies of their DNA at my expense.

This does not necessarily mean that cooperation with strangers is a bad idea–or that defecting on strangers is a good idea. Obviously if you’re caught out in a blizzard, it’s in your interest to cooperate with anyone around. And many, many groups have merged over the centuries of human history (and not just through warfare.) Groups can indeed merge, to their mutual benefit.

The question is whether some groups are genetically biased toward–or will reproduce better–under socialism or capitalism, and if consanguinity has any effect on this.

You see, not all brothers are created equal. If you and your brother are identical twins, then you share virtually 100% of your DNA, and giving your brother a cow is as good as giving you a cow; your brother having a kid is genetically as good as you having a kid.

Under normal conditions (as you tend to think of them, my reader), you and your brother share about 50% of your DNA–in this case, your brother has to have two kids to make up for the cost of you losing one.

If you and your brother are actually half-brothers, that % goes down to 25. Now your brother needs to have 4 kids to make up for the loss of one of yours.

But if you’re full siblings and your parents were first cousins–a pretty normal state of affairs throughout most of the world and most of history–then the DNA you share with your brother goes up. And if your grandparents and great grandparents were also cousins, well, you and your brother will start looking pretty similar to each other.

Let’s suppose that a gene for generosity pops up randomly among humans. These generous folks love cooperating. If they are closely related to their family, chances are their relatives also have this gene, and that they will all cooperate together. The less closely they are related to the folks they’re cooperating with, the less chance of those folks sharing the cooperating genes and thus, simultaneously, more chance of defection and fewer genetic gains from cooperating.

So it seems likely that the strongest norms for cooperating will exist within groups that are closely related. (Note that even Sweden-style socialism is quite weak compared to Inuit-style socialism.)

But most folks are, at best, neutral toward their out-group, and often highly antagonistic. (The few groups that are not antagonistic seem to mostly be folks who don’t have much experience with out-groups, due to geographic isolation.) But cooperation across groups may be possible if strong civic institutions / social norms exist to prevent defection.

Frida Kahlo and the Library

So I was researching the Mexican Revolution the other day–because hey, revolution–and you know, 1910-1920 really was a high point for socialism.

You know, this aesthetic would look great in a movie
Pancho Villa, Mexican Revolution

We had the Mexican Revolution, the Russian Revolution, that election when instead of Dems vs. Repubs we had the International Socialist (Wilson) vs. the Nationalistic Socialist (Teddy Roosevelt) vs. whatever Taft was, normal conservatism or something. Wilson won and gave us the income tax (so we could tax the rich to give to the poor, and also a massive standing army,) the League of Nations, and the Federal Reserve.

Anyway, so I was researching the Mexican Revolution, and happened across Diego Rivera–you know him, he’s famous for being married to Frida Kahlo, who’s famous for being one of the twentieth century’s most over rated artists.

Frida Kahlo and Diego Rivera
Frida Kahlo and Diego Rivera
Frida Kahlo, self portrait
Frida Kahlo, self portrait

No, wait, Frida Kahlo is famous for having been married to Rivera, who’s famous for being an actually pretty good artist who painted a bunch of pictures of Marx and Lenin and the like inside the Mexican capital building. Which I suppose explains why Trotsky died in Mexico.

Detail of Man at the Crossroads, fresco at Palacio de Bellas Artes
Detail of Man at the Crossroads, fresco at Palacio de Bellas Artes
Detail of Man at the Crossroads, fresco at Palacio de Bellas Artes
Detail of Man at the Crossroads, fresco at Palacio de Bellas Artes
Detail of The History of Mexico showing betrayed revolution in the Mexican capital building
Detail of The History of Mexico showing betrayed revolution, located in the Mexican capital building (note Marx)

Anyway, yes, so Diego and Frida were hipsters. But I got to thinking–how is it that I know the name of Diego Rivera, (and even Frida Kahlo!) the guy who painted at least part of the Mexican capitol building, but I don’t even know the name of the guy who painted the US Capitol building?

I got 11 months of white history a year in school, and I don’t even know Diego Rivera’s opposite number?

Yes, there were probably multiple guys involved in painting the US Capitol building (and the Mexican Capitol.) But can you name any of them?

Neither can I, and I actually posted one of his paintings about a month and a half ago on this blog:

Apotheosis of George Washington, painted by Greek-Italian (naturalized US citizen) artist Constantino Brumidi in 1865
Apotheosis of George Washington, painted by Greek-Italian (naturalized US citizen) Constantino Brumidi in 1865

Brumidi also painted this lovely lady on the White House:

Liberty, by Constantino Brumidi, 1869
Liberty, by Constantino Brumidi, 1869

But Brumidi is clearly a nobody whose work is not worth remembering, whereas Frida Kahlo is so important, she gets a two-page spread in National Geographic’s Little Kids First Big Book of Who. (The book is actually more serious than it sounds.)

From Amazon’s description of the book:

“Introduce young readers to some of the world’s most interesting and important people in this bold and lively first biography book. More than 100 colorful photos are paired with age-appropriate text featuring profiles of each person, along with fascinating facts about their accomplishments and contributions. This book inspires kids about a world of possibilities and taps into their natural curiosity about fascinating role models from education advocate Malala Yousafzai to astronaut Neil Armstrong.”

The book awards Albert Einstein one entire paragraph, but Isabella Bird (who?) Jackie Robinson, and Amelia Earhart all get two-page spreads.

You know, can we please stop using Amelia Earhart as some sort of symbol of female accomplishment and empowerment, considering that Amelia is most famous for having failed spectacularly to fly across the Pacific and probably died horrible in a plane crash? If we have to scrounge around for female role models, can’t we find one who didn’t die hideously while failing at the thing she was supposedly paving the way for women to do? I mean, a woman recently won the Fields Medal, isn’t that some sort of accomplishment? Or do we only talk about math when whining?

Of course, Brumidi doesn’t even make it into the book.

I happened to be at the library because I was looking for a picture book about Teddy Roosevelt, because the kids wanted to know why teddy bears are called teddy bears. Roosevelt is generally acknowledged to be one of our greatest presidents–he once got shot in the shoulder by a would-be assassin, got up, and gave his campaign speech anyway. He won a Nobel Prize (I know, I know,) and folks even bothered to carve a mountain into the shape of his face to make sure that we all remember just how awesome he was.

Of course, there were no picture books about Teddy Roosevelt. I wasn’t surprised. I did find picture books about black female civil rights leaders (besides Rosa Parks;) a picture book about how poor Frida Kahlo was lonely and doubted herself when she moved too the US, but then she did ART and so it was all okay; a picture book about how slaves built the White House; a picture book about Loving v. Virginia; etc.

I did find a book by Newt Gingrich’s wife about how much elephants love America, and one by a Biden relation about a little girl who prays for god to bless our troops. It was shelved next to the children’s picture books about gay parents.

I did manage to find some decent-looking history books, but sadly, nothing on Teddy Roosevelt. I mean, who was he? Some guy who didn’t even make it into the Big Book of Who?

 

Different interest groups don’t bargain over the budget, they just add to it

Source: Forbes
Source: Forbes

(Note that I am a little cautious of any graph labeled total gov’t spending, due to it being a pain in the butt to add up the budgets of every city, county, and other municipality in the entire country over many years, but I think the graph may be accurate.)

So this graph came from a Forbes article, “Lessons From the Decades Long Upward March of Government Spending,” which notes that:

For me, the most notable fact about this chart is that the growth of government spending has been remarkably steady. The trend over the last 83 years has been for government spending to rise by 0.24 percent of GDP per year, and the correlation is strong: a linear regression on this trend has an R-squared value of 0.72, meaning that time explains most of the movement in government spending.

In other words, mission creep. If you’re clever, you might start to wonder what will happen if this trend keeps going. If you’re really clever, you might figure out that in 1847, the US must have had negative government spending.

Or maybe there’s more than just mission creep going on.
Here’s a graph of federal spending vs. GDP since 1791:

outlays-GDP

Wow. Spending pre-WWI looks radically different than spending post-WWII, and I don’t think it’s just the difference between GNP and GDP.

The graph ends at 2011, but 2015’s total gov’t spending is estimated at 6.2 trillion dollars, or 35% of GDP. (Though I’m wondering if that shouldn’t be 39%; someone take a look and tell me why they aren’t adding the 3% for debt. For that matter, they don’t seem to have Social Security listed, and SS is like 24% of the budget so that’s kind of huge if they left it out.) Federal spending seems to be at 21 or 24% of GDP. Obviously these are all estimates.

Prior to WWI, non-wartime government spending was practically flat. Spending as percent of GDP did remain elevated after the Civil war and even after the small bump of the War of 1812, but in both cases it gradually fell back toward pre-war levels, perhaps as much due to gradual economic recovery/growth as budget cuts. Immediately after WWI, it looks like the same process has begun, but then it doesn’t.

Let’s explore some possible reasons why:

1. Cold War Spending

Maintaining a nuclear arsenal plus a lot of aircraft carriers, fighter jets, and tanks costs a lot more than just trusting your citizens to bring their own guns to the next skirmish.

(“A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”)

Defense spending is about 13% of the Federal budget, and 5% of total GDP, which is a bigger % than the entire Federal budget for the entire 1800s except for the Civil War.

The Cold War acts a lot like previous wars, but takes a lot longer.

 

2. The Income Tax

While there were some, shall we say, mini-income taxes proposed or passed to fund wars in the 1800s, the system really got going with the passage of the 16th Amendment in 1913. Look back at the graph; other than the effects of wars ending, (including the Cold War,) spending as % of GDP has been steadily on the increase ever since.

Prior to 1913, the Federal government got most of its money from tariffs, customs, and certain sales taxes. The Income Tax obviously made it much, much easier to increase tax revenues, regardless of the reason. One may wonder about the wisdom behind such a move:

During the two decades following the expiration of the Civil War income tax, the Greenback movement, the Labor Reform Party, the Populist Party, the Democratic Party and many others called for a graduated income tax.[6]

The Socialist Labor Party advocated a graduated income tax in 1887.[7] The Populist Party “demand[ed] a graduated income tax” in its 1892 platform.[8] The Democratic Party, led by William Jennings Bryan, advocated the income tax law passed in 1894,[9] and proposed an income tax in its 1908 platform.[10]

“The federal income tax was strongly favored in the South, and it was moderately supported in the eastern North Central states, but it was strongly opposed in the Far West and the Northeastern States (with the exception of New Jersey).[14] The tax was derided as “un-Democratic, inquisitorial, and wrong in principle.”[15]” source: Wikipedia 

Looks like poor farmers and laborers wanted to increase taxes on the wealthy and get rid of taxes that fell on themselves. The government decided to go along with the scheme because hey, free money. So you I guess you have the socialists to thank for your nukes.

Interestingly, William Jennings Bryan, one of the populist popularizers of the idea of the income tax as a means of freeing the people from the shackles of the gold standard, (“You shall not crucify mankind upon a cross of gold!“) was an anti-Darwinist who lobbied for (and got) state laws banning the teaching of evolution in public schools and represented the prosecution in the Scopes Trial in 1925. According to the Wikipedia, he opposed evolution not only on the regular religious grounds, but also because he feared its use as an weapon of war, ie the Social Darwinism being promoted by the Germans.

The US officially switched to fiat money in 1976, well into our long rise.

Anyway, here’s a graph showing the prominent role of income taxes in the Federal Budget:

Revenue pie

If the Federal government were still limited to customs and excise taxes, this would be a much smaller pie.

 

3. The Federal Reserve

Like the Income Tax, the Federal Reserve Bank of the US was founded in 1913–boy was Woodrow Wilson busy. It purpose was to stabilize the banking industry and prevent bank runs from wrecking the economy, and I believe it serves as one of the major lenders to the US government, letting them spend more than they take in.

I am basically  ambivalent on questions like, “Is the Fed a good thing?” or “Should we allow fractional reserve banking?” until I know more, but I am a little sympathetic toward the Fed just because QE is one of the few things anyone in government has actually done to try to fix the economy.

Here’s a graph for you, showing the growth of deficit spending:

federal-spending-percent-2

 

4. Suffrage

The percent of Americans who are legally allowed to vote and actually do so has increased from <5% in the late 1700s to almost 45% today. (Wikipedia)

U.S._Vote_for_President_as_Population_Share

Back in the 1700s/early 1800s, only free adult males who owned property were allowed to vote; the laws were set by state and so varied a bit–in some places property owning women could vote, for example; ethnicity was probably a concern here and there.

The first major expansion of the franchise occurred between 1792 and 1856, as the property requirements were repealed state-by-state. Looks like several states abolished theirs around 1820, including NY and AL. (Actually, looks like Alabama entered the Union around them with no property requirement to start with.)

I’m guessing the 1866 dip is due to disenfranchisement of Southerners due to the Civil War.

Racial restrictions on voting were removed in 1869. The black vote does not represent a very large expansion in suffrage just because black men were a relatively small % of the overall population at the time and the KKK and other groups were effectively preventing them, especially by the early 1900s, from voting.

The biggest single jump in the graph begins around 1920, when women were allowed to vote–an expansion that more than doubled the size of the voting population.

Since then, there have been a few small expansions–the elimination of poll taxes and other impediments to voting; the voting age switched from 21 to 18, etc.

Overall, I don’t think I’m going out on a limb to say that women seem to prefer spending on social welfare projects, and men prefer spending on armies.

You might think that different interest groups would argue over the budget until they come to a reasonable compromise, or that one year Democrats would pass all of their ideas, and then a Republican administration would come along, repeal it all, and pass their own agenda.

But this doesn’t happen; it’s been over 40 years since Roe vs. Wade, and Republicans still haven’t gotten rid of it.

Once one side passes a spending program, it’s virtually guaranteed to stay.

 

5. Modern Mass-Media

As I have discussed before, recent (ie, in the past 100 or so years) technological advances have created a completely novel memetic environment. For almost the entirety of human history, people got almost all of the information about the world around them from the people around them, principally their parents, grandparents, and tribal/village elders. Information passed vertically in this way I refer to as “meme mitochondria,” due to their similarity to the mitochondrial DNA passed down from mother to child.

Since the invention of the printing press, and increasingly since radio, TV, and the internet, people have gotten more and more of their information about the world from these sources. Information thus passed horizontally I call “meme viruses,” due to the similarity with the horizontal spread of conventional viruses. (I’d call them “viral memes,” but that name’s taken.)

I theorize that evolution selects for meme mitochondria that maximize the chances of their own reproduction, that is, since they are passed largely from parent to child, they are ideas that encourage high natality, personal survival, and loyalty to family and tribe. Meme mitochondria do not need to encourage any kind of loyalty to people outside one’s tribe or protect their lives in any way.

Meme viruses, being spread horizontally, succeed by promoting the common good of the group, but do not need to promote the welfare of the individual, nor natality.

Modern mass communication technologies, therefore, have created a completely evolutionarily novel selective environment in which horizontal meme transmission has become dominant over vertical transmission for the first time in all of human history, which may in turn cause people to demand radically different things of their governments, like social welfare spending or legalized gay marriage.

 

6. Longer Life Expectancies

The single biggest expense in the government budget is old people:

total-spending-2015

At the state and local level, pensions become a big deal.

Here’s a different graph:

Source: Policy Basics "Where tax dollars go"
Source: Policy Basics “Where tax dollars go

Anyway, Social Security is the single largest item in the Federal budget at 24%, and pensions and Medicare add quite a bit more–overall, I wouldn’t be surprised if old people received a full half of government budget dollars.

“But wait,” I hear you saying, “Social Security is totally special and not a real government expenditure because I paid into it and therefore it’s something I’m entitled to but totally not an entitlement.”

Well, no. Not really. Sorry, but Social Security is a ponzi scheme. You don’t pay into it and then get your own money back out. The money you put in now goes to pay retirees right now. When you retire in the future, future workers will pay for you.

The whole system was thought up during a time of expanding population growth, when there were plenty of new workers around to pay for old workers to retire. As growth has tapered off, this system has become less viable.

There was actually a Supreme Court case in which the court decided that Social Security is not, in fact, an entitlement.

By the way, “not an entitlement” means “there is no guarantee you will get this because you are not entitled to it.” If the government decides that it just can’t afford to fund Social Security anymore, well, then you just won’t get Social Security anymore.

(Yes, I have had some very annoying discussions with people who complain about the evils of “entitlements” while defending their right to never, ever have their Social Security cheques cut.)

Medicine and hygiene being what they were back in the 1800s, there were just fewer old people around. Even if they’d had Social Security back then, it would have been a much smaller program.

 

Changes in the composition of the budget over the past 50 years:

4_things_to_look_for_in_obama_budget_wessel_figure-_2_investing

Of course, there was a war going on in 1964, but it still shows just how much Social Security and related programs have expanded over the decades.

I have a two more graphs that might be of interest:

percent-of-GDP-federal-spending

Grey bars mark recessions

u.S. Spending And Revenue In Relation To GDP

Interesting how local spending crashed between 1933 and 1945 as Federal spending took off.

 

I always look at people funny when they complain that proposed government program X or Y is socialist. “We’re already socialist,” I tell them. When government spending is 25% of the entire nation’s GDP (and I’m not sure if that even includes Social Security,) you are already living in a socialist country. If the theory that politics is really just people arguing over the budget is correct, then as the budget becomes an increasingly large percent of GDP, then I expect the political discourse to only become more heated and nastier as people’s entire livelihoods become increasingly dependent on whether or not they qualify for a government handout or program of some sort.

Finally, the Forbes article also notes:

Most importantly, trends on entitlements look a lot more unfavorable than they did in 1992. Baby boom retirements will continue to push Social Security spending upward, by about a percentage point of GDP over the next 25 years. Medicare costs actually aren’t growing as fast as they did in the early 1990s, but they are starting off a larger base, making medical inflation a more significant fiscal problem than it used to be.

I don’t think the upward trend can continue forever.

 

The Spoils

Someone else’s theory, with my own reflections:

Let’s assume most of politics is actually people arguing over political spoils–who gets to eat the gov’t pie.

When Gov’t is small, there’s not a lot of pie to argue over. It might be corrupt pie, with all of the pieces going to the family of whoever’s in charge, but there’s just not much to fight over.

When gov’t is big, there’s a lot more pie to fight over. The bigger the pie, the more fighting we should get.

With gov’t spending somewhere around 40% of GDP, that’s a fucking HUGE pie. No wonder people fight so much over politics. It doesn’t really matter if you think “privilege” is a dumb or brilliant word; it does matter if you get free healthcare, a job building drones, or food stamps, and as a result, you will probably fight pretty hard to keep whatever part of the gov’t pie you are and fight pretty hard against people you don’t like getting more of the pie.

At 40%, it’s not even meaningful anymore to talk about the benefits of socialism vs. libertarianism; our system is socialist and it’s going to stay that way for the foreseeable future. Most likely, it will only become more socialist (and btw, it’s the Republicans who actually do the most to push us in the socialist direction by increasing the % of GDP that’s gov’t spending–they just like to spend it all on bombs.)

At its most extreme, the problem with socialist systems is that if one group of people effectively captures the political system, they can just decide that they don’t want to give any resources anymore to those guys they don’t like, and the result us Holodomor, because 0% of 100% is death.

At its most extreme, the problem with libertarian systems is also death, though in a much less organized way–see the Great Depression, or whatever example you’d like to supply.

We might for amusement try to calculate which kind of system kills more people, fail, and argue endlessly. (I charge you with doing this for me, so I can skip straight to discussion.) We’re not at a point where we really need to worry about the extremes of either system, but I do think we are at a point where we should worry that the size of the gov’t pie is simply too big for a peaceful society.

Should we, as a society, attempt to scale back the size of the gov’t pie simply for the sake of a more peaceful society where growth is driven more by innovation and economic activity? Or should we embrace the robot economy and head even further down the socialist path, just keeping in mind the importance of getting everything comfortably divided now, rather than later, when it will be much harder?

Your thoughts and opinions?