Political Correctness And The Extreme Fragmentation Of Society In Modernity

One of the defining cultural events of the 2016 election season so far has been the overwhelming rejection of the notion of political correctness expressed in the Republican selection of Donald Trump as presidential nominee. Here is Trump expounding his view on political correctness:

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What is the political correctness that the Trump supporters are rejecting?

Trump-supporting website Infowars.com gives the following definition:

In his novel 1984, George Orwell imagined a future world where speech was greatly restricted.

He called that the language that the totalitarian state in his novel created “Newspeak”, and it bears a striking resemblance to the political correctness that we see in America right now.

According to Wikipedia, Newspeak is “a reduced language created by the totalitarian state as a tool to limit free thought, and concepts that pose a threat to the regime such as freedom, self-expression, individuality, peace, etc. Any form of thought alternative to the party’s construct is classified as ‘thoughtcrime.’”

Infowars then lists 19 examples, from “The Missouri State Fair… permanently bann[ing] a rodeo clown from performing because he wore an Obama mask” to “a Florida police officer” losing his job for calling Trayvon Martin a “thug”, to “the governor of California signing a bill to allow transgendered students to use whatever bathroom and gym facilities they would like”.

The overriding concern expressed by the Trumpians appears to be that liberals are trying to enforce their worldview through the use of language. They are trying, in other words, to promote their own worldview through making it difficult to dissent from the “politically correct” version of reality.

I disagree that political correctness is an entirely or even largely liberal phenomenon. To be blunt and upfront with my thesis, this is because what is politically correct is a matter of subjective opinion. We each — as human beings — have our own notion of what is the politically correct way to frame an argument or think about a situation or system. So that which is “politically correct” for one person or group of people is absolutely politically incorrect for another person or group of people. In other words, every side of the argument has its own “politically correct” version of reality.

For example, advocates of transgender rights and particularly the notion that it is possible for a person to be born transgender would likely be outraged at the notion that Caitlyn Jenner was born as a male, and so is still a man in spite of transitioning to living as a woman. The notion that Caitlyn Jenner is a man is politically (and factually) incorrect to this first group. And by contrast, advocates of rigid and unchangeable gender roles would likely be outraged by the notion that Caitlyn Jenner is now a woman, and can use the women’s bathroom. The notion that Caitlyn Jenner is a woman is politically (and factually) incorrect to this second group.

I even disagree that political correctness is a new phenomenon. What was McCarthyism, if not a hardcore form of right-wing political correctness? What was the Bush Administration renaming French Fries as Freedom Fries as protest over the French government’s refusal to participate in the Iraq war if not trying to use language to police reality?

Of course, it is completely possible for someone to believe that X is true and respectfully disagree with the opposing view that X is not true, and vice versa.

But that is hardly the direction that the country is headed. Many metrics show that Americans are becoming more and more politically polarized, as this chart via Pew illustrates:

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Perhaps what people really mean when they say they are frustrated with political correctness is that they are frustrated with just how disengaged they are from the other side.

With that in mind, what the selection of Donald Trump represents is not so much a rejection of political correctness as a scorched-earth rejection of the other side’s version of reality. In other words, the polarization is becoming more extreme and both sides’ versions of what is “politically correct” are becoming more distinct and noticeable.

This all, of course, is an outgrowth of the pluralism of modernity. American society has become increasingly pluralistic as it has become increasingly diverse and tolerant of alternative lifestyles.

This is entirely unsurprising. With more freedom and liberty comes divergence. People are variable and heterogeneous. They are not all motivated by the same things and in pursuit of the same goals. Giving people freedom to pursue their own goals and interests inevitably leads to pluralism, if not to full-blown polarization.

This is why Trump’s policies are necessarily authoritarian. In order to beat back the pluralism of modernity, Trump advocates authoritarian policies that reduce liberty with the design of building a more cohesive society. Banning Muslims from entering the U.S. decreases diversity and pluralism. Deporting undocumented migrants decreases diversity and pluralism. Building a wall at the border is an instrument of reducing diversity and pluralism. And the show of naked authoritarianism itself makes society fearful. The most successful totalitarian states are the ones — such as North Korea — where a sheepish public polices itself.

Trump, of course, would point out that these measures were the norm throughout most of American history and that the status quo is some kind of freakish digression. But to boil it down to its core essence, “Making American Great Again” is about turning back multiculturalism toward monoculture. It is, ultimately, about enforcing an idea — that a more cohesive and less diverse society is a good thing — on everyone else.

Of course, when you have two groups whose understanding of the world fundamentally disagrees, it is very hard to achieve unity and stability. Lots of wars have been fought over this very kind of thing. The notion of a culture war is actually quite prescient as cultural warfare is exactly what is occurring between the Trumpians and the liberals.

I doubt that either side will be victorious. The fragmentation of the world that has led to these divergences is probably not the result of a liberal conspiracy or liberal control of government. It is much more likely to be a result of technology. Why? Well, consider the way that technology is fragmenting the media. It is much easier to live in a local monoculture when your main source of global news is a town notice board, or two radio channels, or four TV channels, or even fifty cable channels, than it is when your main source of global news is the huge and varied and exponentiating internet. As technology continues to fragment communication and the spread of ideas, people will continue to pursue their own individual interests with the effect of further cultural divergence. Virtual reality will be a very important technology in developing this, as it will begin to let us not only listen to our own FOX News/MSNBC echo chambers, but live in virtual worlds to suit our own tastes. We are heading toward a world where we can build our own echo chambers and shut off anything we find offensive or unpleasant.

In other words, if you think that cultural fragmentation is bad now — or that the Trump supporters are suggesting extreme measures in order to reimpose a degree of cultural hegemony — you ain’t seen nothing yet. The decentralization of warfare through the adaptation of drone technology and things like 3-D printed guns and bullets means that many skirmishes will likely be fought over this stuff again.

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Ben Bernanke Is Right About Interconnective Innovation

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I’d just like to double down on Ben Bernanke’s comments on why he is optimistic about the future of human economic progress in the long run:

Pessimists may be paying too little attention to the strength of the underlying economic and social forces that generate innovation in the modern world. Invention was once the province of the isolated scientist or tinkerer. The transmission of new ideas and the adaptation of the best new insights to commercial uses were slow and erratic. But all of that is changing radically. We live on a planet that is becoming richer and more populous, and in which not only the most advanced economies but also large emerging market nations like China and India increasingly see their economic futures as tied to technological innovation. In that context, the number of trained scientists and engineers is increasing rapidly, as are the resources for research being provided by universities, governments, and the private sector. Moreover, because of the Internet and other advances in communications, collaboration and the exchange of ideas take place at high speed and with little regard for geographic distance. For example, research papers are now disseminated and critiqued almost instantaneously rather than after publication in a journal several years after they are written. And, importantly, as trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly. In short, both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.

My reasons for optimism for the long run are predominantly technological rather than social. I tend to see the potential for a huge organic growth in the long run resulting from falling energy and manufacturing costs from superabundant alternative energy sources like solar, synthetic petroleum, wind, and nuclear, as well as decentralised manufacturing through 3-D printing and ultimately molecular manufacturing.

But Bernanke’s reasons are pretty good too. I see it every day. Using Twitter, the blogosphere and various other online interfaces, I discuss and refine my views in the company a huge selection of people of various backgrounds. And we all have access to masses of data to backup or challenge our ideas. Intellectual discussions and disputes that might have taken years now take days or weeks — look at the collapse of Reinhart & Rogoff. Ideas, hypotheses, inventions and concepts can spread freely. One innovation shared can feed into ten or twenty new innovations. The internet has built a decentralised open-source platform for collaborative innovation and intellectual development like nothing the world has ever seen.

Of course, as the 2008 financial collapse as well as the more general Too Big To Fail problem shows greater interconnectivity isn’t always good news. Sometimes, greater interconnectivity allows for the transmission of the negative as well as the positive; in the case of 2008 the interconnective global financial system transmitted illiquidity in a default cascade.

But in this case, sharing ideas and information seems entirely beneficial both to the systemic state of human knowledge and innovation, and to individuals like myself who wish to hook into the human network.

So this is another great reason to be optimistic about the long run.

Is Bitcoin A Bubble?

One key hallmark of Bitcoin’s price rise from the beginning of 2013 to now, where it has just crept above $240 a coin — up $100 a coin from the last time I wrote about Bitcoin — has been the oft-repeated mantra that Bitcoin is in a speculative bubble, and its price may be due to imminently collapse. This has spawned article after article after article after article — people were calling Bitcoin a bubble at $30 a coin, at $60 a coin — yet the price keeps climbing (and those who were discouraged from investing at lower prices missed out on spectacular gains). It is certain that at some stage the sellers will outnumber the bidders and the price will fall or crash. But when?

I ended my last article on Bitcoin joking that Bitcoin had a much better chance of being part of the monetary future than Groupon did being part of the future of commerce, and that I wouldn’t be surprised to see Bitcoin at some stage trading at Groupon’s record market cap — enough to price Bitcoin at $2,000 a coin. But this was a joke. Bitcoin and Groupon are fundamentally different investments; Bitcoin is an experimental deflationary crypto-currency instrument and anonymous payments system, while Groupon is the equity in an experimental company. That means Bitcoin is a whole new asset class. And not a fantasy asset class, but one that is rapidly permeating the spheres of human consciousness, an idea that is replicating and multiplying at a rate far beyond its original audience of crypto-anarchists, heterodox monetary theorists, and black marketeers.

I don’t really see Bitcoin (and its crypto-currency siblings) facilitating trade a great deal in the future (although, its deflationary-nature might make it attractive to merchants who wish to hoard it). During Bitcoin’s recent run (or more accurately, hyper-deflation) Bitcoin’s velocity has actually fallen sharply as its rising value has encouraged hoarding. Gresham’s Law implies that whenever possible Bitcoin’s deflationary nature will subordinate it to fiat currency for transactions. State-backed currencies tend to depreciate year-on-year, encouraging spending and discouraging saving. That is treated by central bankers as an imperative of monetary policy. Yet Bitcoin’s deflationary nature encourages the opposite, implying that Bitcoin is not a threat to state-backed fiat but a complementary currency, an intangible, anonymous, global and infinitely mobile counterpart to tangibles like gold.

Gold remains a part of the global financial system, a savings instrument alongside its tiny role as an industrial metal and its larger role as jewellery. Credit-Suisse estimated that total global financial assets in 2012 were $223 trillion, of which gold makes up 0.6%, translating to a $1.338 trillion market cap for gold as a financial asset, (although a larger amount of gold — around $8 trillion total at current prices — exists in other forms like jewellery).

There are no fundamental ways to estimate the value of assets like gold or bitcoin, and their values are entirely in the eye of the beholder. But we know Bitcoin is presently vastly outperforming gold as a speculative savings vehicle, and in spite of the fundamental differences (particularly that one is tangible, and one is not) this may drive more and more investors — including institutional investors and funds looking to diversify into something slightly futuristic — into Bitcoin. If Bitcoin’s market cap were to rise to equal that of gold’s as a percentage of global GDP today, that would imply a price of $160,650 per Bitcoin, far, far higher than any price target I have yet seen. Even if Bitcoin were only to rise to 10% of gold’s market cap, that would imply a Bitcoin price of $16,065, still far higher than any price target I have seen. Even at 1% of gold’s market cap, Bitcoin would still fetch $1607 per coin, an almost-sevenfold increase over today’s price.

And gold is by no means a widely-held asset in today’s global financial system. If Bitcoin grew to 1% of the global financial system today each each coin would reach $267,600 in price.

These are, of course, fantasy figures based on back-of-an-envelope calculations, and should not be taken seriously. But what they show is that if the idea of Bitcoin continues to flourish — and if fund managers, and institutional investors begin to hunger for a slice of yield — then there is more than enough liquidity out there today to drive Bitcoin far, far higher.

On the other hand, if Bitcoin is outlawed worldwide by governments (perhaps due to concerns over money laundering and tax evasion) then of course any chance of it beginning to attract any such levels of interest are nil.  But the current government approach to Bitcoin so far appears to be one of attempted regulation rather than outright warfare.

At some stage Bitcoin may be supplanted by competitor crypto-currencies, but so far it is by far the most widely-adopted, and cryptography experts agree that its cryptography is sound, so there is no reason to assume that this may occur anytime soon. But judging by the birthrate and deathrate of social networks in recent years, a fast birthrate and deathrate for crypto-currencies is by no means out of the question. Technology is a fast-paced world where yesterday’s prize-pig is today’s turkey, and already there exist currencies built on similar technology to Bitcoin trading at much lower levels — Litecoin, Namecoin, Freicoin, PPCoin, Novacoin, etc. Whether these act as supplements or competitors remains to be seen, but it may be helpful to remember that while social networking sites today remain hugely popular, the early leaders in that field like MySpace and Friendster are nowhere to be seen. Is it possible that Bitcoin is the MySpace of decentralised crypto-currencies, and that the Facebook and Twitter are just around the corner? Yes — perhaps a platform with a more consumer-friendly interface than Bitcoin will come to dominate the field, making up a sizeable chunk of global financial assets, and Bitcoin itself will dwindle.  Certainly, the source code is available to larger organisations (Facebook? Google? Amazon? Banks?) who may wish to experiment with their own decentralised crypto-currency systems.

It is really hard to say what ultimately will occur, but Bitcoin does demonstrate the principle that anonymous, deflationary crypto-currency can be an attractive complementary proposition in a world where inflationary state-backed fiat currency has become the norm. I would caution that holders of Bitcoins — particularly those sitting on large long-term profits — should seek to diversify both into real-world assets like real estate, productive assets like farmland and factories, and index funds, as well as into new crypto-currencies as they emerge, particularly ones built with more consumer-friendly interfaces that may come to dominate the market. Bitcoin could easily end the year below its current price, but as Bitcoin grows in the public awareness this is decreasingly likely. In the long-term, a market cap target of 1% of gold’s market cap (currently, that would yield a price of $1607 per coin) seems viable, especially if larger players including institutions begin to experiment in the strange new world of crypto-currency.