romney

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Lao Tzu on Liberty

Regular reader Alister Cyril Blanc reminds me of Roderick Long’s Austro-Libertarian Themes in Early Confucianism, an interesting essay that attempts to find the roots of the modern schools of libertarianism (Rothbard, Boaz, Menger) in Taoism and Confucianism.

Long concludes (as I did on Friday) that Confucianism — while certainly not being entirely the same as modern libertarianism — was built up around the (peculiarly unmodern) concept of spontaneous order, and developed the concept that interventionism can be problematic.

Mencius (also known as Mengzi, and Confucius’ student) wrote:

There was a man from Sung who pulled at his rice plants because he was worried about their failure to grow. Having done so, he went on his way home, not realising what he had done. “I am worn out today,” said he to his family. “I have been helping the rice plants to grow.” His son rushed out to take a look and there the plants were, all shrivelled up. There are few in the world who can resist the urge to help their rice plants grow.

Statue of Lao Tzu (Fujian Province)

While Confucianism has some useful concepts, so too does Taoism. Lao Tzu also developed this theme:

The more prohibitions there are, the more ritual avoidances, the poorer the people will be. The more laws are promulgated, the more thieves and bandits there will be. So long as I do nothing the people will of themselves be transformed. So long as I love quietude, the people will of themselves go straight. So long as I act only by inactivity the people will of themselves become prosperous.

Long’s essay tries to compare Taoism and Confucianism in terms of their concepts of liberty and which is closer to modern libertarianism; I have nothing to say on that matter. I am a magpie; as I have explained before I pick and choose whatever philosophy I fancy from wherever I find it. But if we have to make a real contrast, I would bunch Taoism and Confucianism together, and compare them to the various shades of collectivist imperialism, most recently manifested in China as Maoism.

Joshua Snyder elaborates:

Confucius, Lao Tzu, and Sun Tzu all lived and taught in pre-imperial China. In 221 B.C., Ch’in Shih-huang united the various Chinese states into an empire and set about to burn the Confucian classics and bury their scholars alive. The Legalism of Han Fei Tzu, which centered on the totalitarian power of the ruler, replaced the humanistic teachings of Confucianism and Taoism.

The modern Chinese regime, of course, is a strange muddle of imperialism, Maoism, and Confucianism, and I think all of these instincts are in constant conflict (sometimes within one individual) which is why the Chinese regime is such a self-contradictory creature.

On the other hand (and rather bizarrely) here in the West, imperialism is far and away the dominant establishment instinct. That’s why both sides (Romney & Obama) of the 2012 American Presidential election are running on a platform of extending and expanding authoritarian centralist legislation like the Patriot Act, and the indefinite detention provision of the 2011 NDAA.

Confucius or Lao Tzu would reject such things; the more prohibitions there are, the more ritual avoidances, the poorer the people will be. The more laws are promulgated, the more thieves and bandits there will be.

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There is No Such Thing as a Service Economy

It is often said that prostitution is the oldest profession. This is not true, and I know this with a very high degree of certainty. For a prostitute to subsist, there must be  a medium of exchange, and for a medium of exchange to exist — even in terms of barter — there must be a surplus of production (i.e. a person is producing more than they can consume). Thus, there must be pre-existing productivity, for example food that has been hunted, or gathered or grown, tools that have been created, etc.

The truth is that prostitution (or perhaps soldiery) is probably the oldest service profession.

What is a service profession? Well broadly there are two kinds of professions: goods-producing, and services-producing. Goods-producing professions produce things. Services-producing professions do things without producing any definable goods. Prostitution is a very good example. So is legal work, consulting, lobbying, graphic design, sales work, soldiery, musicianship, acting, etc. And yes — while I feel that writing creates a good — it too is widely considered a service.

At present, the Western economies are dominated by services.

From the World Bank:

Joe Sitglitz’s article in Vanity Fair late last year argued that we need to move even further into a service-led economy:

What we need to do instead is embark on a massive investment program—as we did, virtually by accident, 80 years ago—that will increase our productivity for years to come, and will also increase employment now. This public investment, and the resultant restoration in G.D.P., increases the returns to private investment. Public investments could be directed at improving the quality of life and real productivity—unlike the private-sector investments in financial innovations, which turned out to be more akin to financial weapons of mass destruction.

The private sector by itself won’t, and can’t, undertake structural transformation of the magnitude needed—even if the Fed were to keep interest rates at zero for years to come. The only way it will happen is through a government stimulus designed not to preserve the old economy but to focus instead on creating a new one. We have to transition out of manufacturing and into services that people want—into productive activities that increase living standards, not those that increase risk and inequality.

Now I’m not accusing Stiglitz of anything other than a misplaced zeal for fixing the American economy. His suggestion is merely emblematic of a wider misconception.

Service jobs come into existence as there are bigger surpluses of production. In an isolated national economy, the services sector will only grow if the productive sector grows in proportion. But in a global economy, with flows of trade and goods, illusions are possible.

The truth is that there is no such thing as a service economy. Our economy today (other than in places like, say, North Korea) is truly global. All of those service workers — and every cent of “services” GDP — is supported by real-world productivity, much of which takes place outside the West — the productivity of the transport system, the productivity of manufacturers, the productivity of agriculture.

The continued prosperity of the West is dependent on the continued flow of goods and services into the West.

This is an intentionally zany example (but certainly no less zany than Krugman’s babysitting co-op) of how moving to a “service-based” (pun-intended, you’ll see) economy can prove detrimental:

Imagine the centrally-planned society of War-is-Peace-Land, occupying one half of a large island, and led by an absolute King. The kingdom is very successful in warfare, and maintains a great advantage over its sole neighbour. 50% of its working subjects are conscripted into the military, in various roles — soldiery, tactics, smithing, horsemanship, etc. Of the other half of the population 30% work in collective agriculture, 10% work in light industry (e.g. making candles) and 10% are personal servants to the King (or in the case of females part of his large harem). Now, the King does not like the fact that his harem is not as large as it could be; he does not like that there are women and girls toiling the fields when they could be in his harem. Nor does he like that there are men toiling in the fields when they could instead be conscripted into the military.

Fortunately in the neighbouring kingdom of Productivity Land, they have huge surpluses of agriculture and productivity, as only 30% of their population is conscripted into the military, while 40% work in agriculture, and 20% in light industry. As they make such huge surpluses, they are willing to make up for any shortfall in War-is-Peace-Land. As a result of this, more and more workers in War-is-Peace-Land can be moved from agriculture to serving the King, either as a manservant (carrying his Royal chair, beating up anyone who insults him, tending to his elaborate gardens) or as a member of his harem. In return for this, the King sends promissory notes — which are often promptly lent back —  from Productivity Land to pay for their products. Productivity Land uses this money to acquire natural resources from other islands.

Eventually, the King decides that his pleasure gardens need to be greatly expanded, and so he moves the entire non-military workforce out of agriculture, and into manufacture terra cotta and bronze statues, to decorate his pleasure gardens. Of course, War-is-Peace Land has built up a humungous debt over the years, and Productivity Land feels short-changed in sending its productive output across to the other half of the island in exchange for increasingly-devalued pieces of fiat paper that buy increasingly less and less resources. But the King of Productivity Land is very smart. He recognises that winning a military confrontation with War-is-Peace Land will still be difficult, so he agrees to continue this arrangement so as to make War-is-Peace Land even more deeply dependent upon the produce of Productivity Land. 

One day, the King of War-is-Peace Land was out frolicking gaily in his pleasure gardens, smoking his pipe and contemplating a lazy afternoon molesting his harem. Alas, no. A messenger from Productivity Land arrived at the Palace to inform him that Productivity Land was sick of his devalued fiat currency, and so would no longer send agricultural products or other produce. That was it — War-is-Peace Land had no intent to pay back their debt, so they were out in the cold.

“Nonsense!” cried the King, and promptly had the messenger arrested, tortured and killed. He rallied his generals, and declared war against Productivity Land. Alas, they did not get very far. It took three days for the army to be rallied together into a fighting force, and by that time War-is-Peace Land was running low on food and fuel. Armies — no matter how well-equipped — cannot march on an empty stomach. The tired and weary soldiers of War-is-Peace Land were more numerous and better equipped, but their hunger and subsequent tiredness got the better of them and they were massacred and beaten back. The King tried to escape, but was captured by Productivity Land’s forces and promptly executed.

Readers can read whatever they like into the above story; it is purely fictitious, and of course massively simplified. But I think it captures the essence of the problem of  outsourcing your productivity to foreign lands who might not always be as friendly as they appear to be today.

The bottom line here is that any proposals regarding transitioning to an economy even more dependent on services assumes that goods and productivity will keep flowing into the West, even though there is no guarantee of such a thing.

Governments in the West would do better to worry about the West’s (lack of) energy and resource independence.

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Newspaper Calls for Obama Assassination

Readers will be aware that I will go out of my way to attack Obama. I believe he has failed on most of his key promises. He promised change and brought continuity. He promised civil liberties and signed the PATRIOT Act, and the 2011 NDAA, assailing the 4th Amendment. He brought more Goldman Sachs insiders into his administration than any previous President. He continued George Bush’s destructive bailout programs that created zombie banks and huge moral hazard, and thus ruined American capitalism. He expanded the wars in the middle east into Pakistan and Yemen. He rejected a public option and instead concentrated on bringing Romneycare — a corporatist compromise — to the Federal level. He promised hope, but by the end of his third year in office Americans had to hope they wouldn’t be indefinitely detained without due process.

But there’s nothing like an insane neocon Obama-bashing diatribe to reassure me that if the choice is between Gingrich, Romney, Santorum and Obama, Obama is probably the lesser evil. Why? Obama, Panetta and Clinton seem the least hell-bent on attacking Iran and triggering a larger conflagration.

From Gawker:

Andrew Adler, the owner and publisher of the Atlanta Jewish Times, a weekly newspaper serving Atlanta’s Jewish community, devoted his January 13, 2012 column to the thorny problem of the U.S. and Israel’s diverging views on the threat posed by Iran. Basically Israel has three options, he wrote: Strike Hezbollah and Hamas, strike Iran, or “order a hit” on Barack Obama. Either way, problem solved!

Here’s how Adler laid out “option three” in his list of scenarios facing Israeli president Benjamin Netanyahu:

“Three, give the go-ahead for U.S.-based Mossad agents to take out a president deemed unfriendly to Israel in order for the current vice president to take his place, and forcefully dictate that the United States’ policy includes its helping the Jewish state obliterate its enemies.”

Wow. Given that by my estimation Obama has been pretty friendly to Israel — increasing aid, failing to condemn Israel’s onslaught on Gaza, and even including an ex-IDF soldier, Rahm Emanuel, as his chief of staff — I wonder just how far he would have to go to earn Adler’s approval.

Unfortunately for Adler, I’m not entirely sure that encouraging the assassination of the Commander-in-Chief is a good idea when the President just signed a bill that allows for indefinite detention without due process.

Perhaps he thinks that that law is just for dirty Arabs?

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The New Cold War

The United States is turning our attention to the vast potential of the Asia-Pacific region.

— Barack H. Obama

From al-Jazeera:

When it comes to China policy, is the Obama administration leaping from the frying pan directly into the fire? In an attempt to turn the page on two disastrous wars in the greater Middle East, it may have just launched a new Cold War in Asia – once again, viewing oil as the key to global supremacy.

The new policy was signalled by President Obama himself on November 17 in an address to the Australian Parliament in which he laid out an audacious – and extremely dangerous – geopolitical vision. Instead of focusing on the greater Middle East, as has been the case for the last decade, the United States will now concentrate its power in Asia and the Pacific.

“My guidance is clear,” he declared in Canberra. “As we plan and budget for the future, we will allocate the resources necessary to maintain our strong military presence in this region.”

Given that a proliferation of American military hardware and components — including crucial semiconductors — are now made in China, the notion of America truly asserting itself on the Asia-Pacific region is absurd. If relations with China breaks down then trade with China breaks down, and America loses the ability to manufacture and import certain military hardware. Furthermore, it loses the free lunch of Chinese goods that furnish the heartland of American consumerism, and placate an American people whose real incomes and purchasing power have consistently fallen since the 1980s. Worst of all, it jeopardises the global energy infrastructure upon which America’s agribusiness and infrastructure depends. While America is moving closer to being able to exploit “tough oil” hotspots in North Dakota, Alaska and the Gulf of Mexico, those oil production capacities cannot be brought online overnight.

Not only this, but America funds her military adventurism through unsustainable debt acquisition (a huge part of which is Chinese-held) rather than productive output. The strange reality is that American assertiveness against China can be cut off by China refusing to buy America’s increasingly debased debt. Unsurprisingly, China is already reducing her American debt holdings.

Simply, American attempts to assert itself on China risks alienating a nation upon which America is totally and inexorably dependent. While this is difficult to recognise for blustering “national security” neo-conservatives like Mitt Romney — the archangel of American imperial decline — or Obama, it is as inescapable and undeniable as the sunrise.

The remedy is not more American imperialism. It is not more debt. It is not more bravado or self-aggrandizement. It is an open and honest commitment to the truth — America’s imperial strategy, based on oil supremacy and the petrodollar — is an anachronism. Its time has come and gone. To get over this hump America needs to commit to a greater degree of energy, and manufacturing independence. American imperial policy acts as a humungous subsidy on the price of oil. Ending such a subsidy will allow the free market to do its work, and make all kinds of alternative energy — from solar, to hydro-electric, to synthetic oil, to thorium – far more competitive.

Only by accepting the changing realities of geopolitics can America prepare herself for the coming realities of the 21st Century.

Further Reading:

The Only Chinese Hard Landing will be on America’s Head 

America’s Eurasian Endgame

Huntsman Cable: China and US Trade War Heating Up

Team America: World Police

The Problem with Military Keynesianism