Archive for July 5th, 2009

FLYING THE COFFIN CORNER.

July 5, 2009

A NEW MODEL FOR CATASTROPHES, AND ITS APPLICATION TO THE GREAT REPRESSION.

Abstract: I am proposing, in analogy with aviation, a completely new model for the mathematical nature of many catastrophes. In particular it models the disintegration and fall of many a society and civilization. The model helps understanding the past, present and future of situations which, without this understanding, would be hopeless. (It’s a new way of modeling catastrophes, beyond the seven types of Catastrophe theory.)

By changing the inputs, the essence of the model can be applied both to the entire planetary civilization we have (the singleton case), and to the case of the shredding of the most advanced societies’ social and industrial fabrics in the present “globalization” (the multinational case).

The model illuminates the mathematical nature of the current Great Repression. It’s not just a question of being depressed. This is much more serious. What is being repressed is essentially what supported civilization in the most advanced countries, the human spirit itself.

The model shows that the remedy to the economic crisis is not to reinstitute the (literally) shocking hyperactivity of the financial system. This attempted "remedy" cost 2.5 trillion dollars, so far, in the USA alone, about 50 times what the Obama administration put, so far, in the real economy of the USA (these are fast changing numbers, but that particular imbalance is now a historical fact creating its own initial conditions, in the differential equation meaning of the notion). It has been like treating cancer, by reconstituting the cancer itself. The model below shows precisely why the hyperactivity, that augmentation of velocity, is precisely the problem.

The remedy instead is to put the most creative, most advanced minds back in charge, and morph out of our limited socioeconomic geometry. Otherwise we will fly the coffin corner all the way into the ground.

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COFFIN CORNER ECONOMY?

Is the global financial crisis which exploded in 2008 over? Most government officials, worldwide, led by Summers and Geithner, claim that so it is. When asked about what happened, those worthies evoke "many causes" (the conservative leaders in Europe are a bit more helpful about the plutocratic causes of the disaster, see note T1).

Not all serious people agree that the crisis is over, nor that it is that complicated to understand.

Instead Simon Johnson, MIT professor and ex International Monetary Fund chief economist (2007-2008): "… is rather more skeptical regarding whether we are really out of crisis in any meaningful sense. In this view, the underlying cause of the crisis is much simpler – the economic supersizing of finance in the United States and elsewhere, as manifest particularly in the rise of big banks to positions of extraordinary political and cultural power. If the size, nature, and clout of finance is the problem, then the official view is nothing close to a solution. At best, pumping resources into the financial sector delays the day of reckoning and likely increases its costs. More likely, the Mother of All Bailouts is storing up serious problems for the near-term future." [Simon's "Baseline scenario", June 09].

Presently the ratio Debt/GDP in the USA is going from 41% to 80% (about the same as in France, but without much infrastructure to show up for it in the USA, except for huge military assets, worldwide, which, of course, well, maintains world order, namely a steady flow of fossil fuels and manufactured goods and commodities from developing countries in exchange for pieces of paper called US Treasury bonds).

Paul Krugman, famous anti invasion of Iraq editorialist and Nobel Prize winner, points out the similarity with the depression of the 1930s: world industrial output is collapsing in a similar fashion. Indeed we are actually tracking the first year of the Great Depression of the 1930s quite closely. Here is the comparison between the world industrial production, comparing the ‘30s with 2008/2009:

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BEYOND EXPONENTIAL & PLUTOCRACY, THE COFFIN CORNER:

As I pointed out in the past, the exponential function is at the root of the concentration of capital, hence of the need for progressive taxation and inheritance taxes. In this particular essay, I go well beyond the exponential function, to reveal in the distance a new mathematical phenomenon with vast consequences.

As a philosopher finding a lot of inspiration in history, I have been harping for years on the theme that plutocracy caused the decay of republican Rome starting in 202 BCE because plutocracy got control of the democracy then. In the end, the plutocracy itself lost control to various centrifuge forces, including the usual rebellious soldiers and fanatical religious mobs. Societies tend to cycle through this, opined historical philosophers such as Polybius (who wrote around 130 BCE, just when the Roman plutocracy had acquired control of the Roman republic, as we can retrospectively assert).

In general, as an application of the exponential function, plutocracies tend to acquire fascist control on their subjects. Then they call themselves aristocracies.

The present essay analyzes the very nature of the loss of control, when a society, or an economy collapses. Does the loss of control proceed according to some rules?

I have suggested a completely new model of the loss of control, which is a close analogy to a phenomenon well known in aviation:

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THE COFFIN CORNER, OR WHY HIGH FLYING SUBSONIC PLANES CAN FALL OFF THE SKY (high flying economies too):

Aircrafts advance fast through the air, and the shape of their wing creates a high pressure below the wing, and a low pressure above, adding one to the other lifts them up. To go faster, planes go higher, because up there the air is less dense, and thus air resistance much less (air resistance was the greatest obstacle to reach 600 km/h in high speed train tests in France).

As planes go higher, though, air supports them ever less (half of the atmosphere is below 5,500 meters). Thus planes are in danger of falling off, the higher they go. But it does not happen smoothly.

As the density of air goes down, so does the speed of sound in that air. Thus part of the airflow on the wings, constricted here, accelerated there, can go supersonic, generating shocks, and losing contact with the aircraft. This causes a high speed stall: the faster the plane goes, the less lift it gets (see Note T2).

The coffin corner is the altitude at or near which an aircraft’s low speed stall equals its high speed stall: the aircraft has nowhere safe to go, and will stall. At this altitude the aircraft becomes nearly impossible to keep in a stable flight.

Since the low speed stall speed is the minimum speed required to maintain support from the air, any reduction in speed will cause the airplane to stall and drop.

Since the high speed stall (also called the critical Mach number, less than one, around .9 Mach) is the maximum speed at which air can travel over the wings without losing lift due to supersonic flow separation, from the wings, and from shock waves, any increase in speed will cause the airplane to lose lift, too

My claim is that the so called “Anglo-Saxon capitalist model” finds itself in an exactly analogous situation; it’s both flying too fast and too slow, and it is stalling. But first a recapitulation of what one should call the first order theories of economic collapse.

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WHEN PLUTOCRATIC IMPLOSIONS COLLAPSE CIVILIZATION:

Krugman, Johnson, many others, and myself observe the obvious: the financial “industry” has become way too big, and way too free to do whatever it wants. The question is what is it used for? It borrows short to lend long. (Government can do that too.)

But, left to its own devices, the “financial industry” is like a crocodile that has been fed too well and too long: now, enormous, instead of producing a pelt, and meat, it has become totally uncontrollable, devouring all that moves. This situation has been seen before, with poor outcomes to the societies concerned.

I have presented a number of reasons explaining why this situation was intolerable, and the mathematics (of capital) explaining why it tends to reoccur.

While it is well known that civilization can collapse from ecological catastrophe (Sumer, Maya, Angkor, countless islands), ecological collapse tends to affect less the large civilizations. Those have enormous resources, by definition, and can afford to modify their environment in a timely manner (Sumerian civilization moved north, actually; European and Japan societies took drastic measures against ecological collapse in the Middle Ages).

Large societies tend to collapse from PLUTOCRATIC and related FASCIST IMPLOSIONS.

The best example of this was the Greco-Roman world: it became ever more fascist, over a period of eight centuries, until German nations reestablished some measure of democracy in the West. But in the Part Orientalis of the Roman empire, the fascism became ever worse. (Culminating with the crazed out fanatical Catholic emperor Justinian who gave orders to his corrupt generals to go out and destroy all those who did not believe as he did. In a way, he was the first Jihadist, and killed far more than any Jihadist ever would.)

Plutocracy leads to fascism (Hitler), but of course fascism can be gained directly (Assyria, the Mongols, Napoleon or Stalin are examples). Plutocratic fascism is more stable when it is made in a religion. That is why Constantinople lasted 1,000 years, inventing little. That is also why the Abbasids reigned more than 500 years before being destroyed by the Mongols: Islam was the heir in errancy of Greco-Roman theocratic fascism. That is also why the Ottoman Caliphate could last so long, while doing everything wrong, and especially progress.

Commanding in the name of God, commands both power and morality. Such was Christianity. Such still is Islam in all too many places.

When plutocracy reigns, many things can go wrong. Ultimately, if nothing else first, the mechanism that kills the civilization will be intellectual fascism, which is any system of thought where only a few ideas reign (often helped by groupthink). Drastic stupidity ensues, followed by lethal civilizational mistakes. Plutocracy loves intellectual fascism, because the more stupid the sheep is, the easier it is to guide. Thus Intellectual fascism is its own value. An example is Rome: under the Antonine emperors, viewed by some (not by me) as the apogee of the Greco-Roman world, there was a clear relaxation of political fascism (hence Gibbons’ admiration), but, nevertheless, intellectual fascism kept increasing.

The quality of the Roman mind kept going down; this soon shows up with the decay of art (cut and paste was invented to create “new” works), and of creativity in philosophy, science and technology (allowing in turn the Parthians and Sassanids to catch up militarily).

This decay of the mind is all the more striking, since (officially sanctioned) thinkers were the highest paid ever (billionaire philosophers, from their philosophy alone, were common. Many imperators had philosophers by their sides (Pompey the Great, Caesar), some reached the top (Cicero was elected Consul in 63 BCE, the philosopher Marcus Aurelius became emperor). Constantine co-founded Constantinople with a philosopher. There was a similar phenomenon in imperial Germany when it went ever fascist: this was denounced by Nietzsche as loudly as possible, as he observed the situation with his unbelieving eyes. He had to sacrifice his friendship with Wagner, as the later quickly embarked on the fascist bandwagon.

STUPIDITY BREEDS STUPIDITY, BUT THERE IS MORE:

Still there is a second order question: given all the stupidity, given that stupidity breeds stupidity, why so much stagnation?

Why the terminal stagnation that affected Rome after Augustus, and especially after Constantine? Why so much stagnation in China, or Japan, sometimes for centuries, a situation where a civilization cannot progress anymore, and waits like a sheep for the fatal blow from Germans, Arabs, Mongols or Manchus? (Compare with the few generations of a few Athenians!)

Why is it that plutocracies do what they do, and end up misleading societies they lead until they collapse? It cannot be solely caused by selfishness, because, ultimately plutocracies, by persisting in the error of their ways, fight against their own self preservation.

How come, indeed, that the plutocratic leaders of a civilization can persist in their ways, although they, their children, and grandchildren, and their class, and all they know, will perish from them? How come they cannot pull out of their fatal dive? Well, I suggest that they are trapped, and not just by fascism, intellectual fascism, stupidity, ignorance and corruption.

I model a trap those civilizations find themselves in, and of understanding the way out.

I am trying to find out the mathematical nature of their mistake. It shows that as they get active, and augment the activity, the plutocracies make the situation worse. (An example is that. As the Mayas got frantic and exploited other tree species, archeology shows that they ran ever more out of resources.)

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COFFIN CORNER ECONOMY, SINGLETON CASE:

This concerns the case of an isolated civilization (such as the Mayas when they collapsed, or Rome, Japan or China, when they decayed, or today’s global planetary economy viewed as a unit, as it is running out of room to maneuver). Later I present the multi body case, more pertaining to the present quandary the most developed countries find themselves in, and the USA in particular.

To model such a global economy, I imagine a universe which is completely different from anything proposed before: society, or civilization becomes an aircraft, technology (industry, agriculture) supports it, as the air supports an aircraft, the consumption of the society (materials, energy, food) plays the role of gravity, and tends to bring it down, (economic, human) activity pushes it forward.

In the singleton model, height corresponds to technological competence of the economy (it’s not enough to have good science produced, the society needs to have a domestic industry exploiting it). As height is gained, technological know-how is gained by civilization X. indeed the more technologically competent it is, the more productive are its agriculture and industry (industry here covers services, if they are really useful).

In analogy with what we saw above in aviation, not enough speed, not enough activity, and society, or civilization, will stall, too much speed, too much activity, and it will stall too.

What is the interest of this model of mine? Well, it explains very well what happened to the USA, and the world “Anglo-Saxon” capitalist model. It was the object of a HIGH SPEED STALL.

That possibility has completely escaped those who try to understand the frantic “free market”, and its reign of the private bankers, the so called Anglo-Saxon capitalism. I must admit that it is an old lesson: do too much, too fast and you will crash: the turtle and the hare, but here the hare crashes head first, and kills innocent bystanders. (But there is a way out, the way not chosen enough by the West yet.)

For a number of reasons sketched in the notes, the leverage augmented, and so did the feverishness of activity (the velocity of money concentrated on the places in the economy where velocity was easy to gather, on easy targets, superficial tasks such as hamburger or mortgage flipping). Finally the economic activity disconnected from crucial part of the economy, support was lost, and the economy fell.

OK, so how did the cash flow get detached? For the same reason as the airflow gets detached on a plane that is flying too fast. Entire sectors of the economy disconnected from the investing structure of society. For example trains, or the inner cities, or public schools: all these require years to build, and give constant work to the workers, not a constant income to the frantic money changers. So the frantic money changers financed other sectors, where they can keep on frantically transacting

Why did the cash flow get disconnected from the real economy? Because the investing structure of society is mostly created by bankers in a country such as the USA. Those sorts of bankers get a cut from the activity, the velocity of money, the number of transactions . To turn Camus upside down, it is not hard to imagine the financial Sisyphus happy, because he is stealing from everybody else, and the rest of the economy, so, in the end, all that flourishes does so because of its good pleasure, and its good grace, and only because it enjoys its favor.

This suggests an immediate remedy: slow down the cash-commission flow by putting a tiny tax on every single transaction. In other ways, put the air brakes out.

In some countries, such as France and China, banks were little affected by the crisis: a French banker managing a giant French bank, and making profits, will earn less than 1/20 of what his colleague in the USA managing a bank of the same size saddled with huge losses. Yes, only 5% for the French banker. Absolute money corrupts absolutely, less money corrupts less. Thus French bankers be will less corrupt, by the magic of being less spoiled (something good parents know). So, basically the Anglo-Saxon banking sector is riddled by ever more corruption, the more corrupt it is; activity breeds activity, especially when nefarious.

In France, or Sweden, or China, the enormous size of public sector investing, or decisions taken in the name of the public sector, has prevented the monopoly of investing by the plutocratic class: the People, represented by the government, also invests. And because public projects tend to be enormous and well thought of (being a matter of extended public debate), after they are decided and engaged, it’s the workers and the engineers who are in charge, not the frantic money changers. So nothing happens, but structural work. The cash flow gets reconnected to structures supportive of society.

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COFFIN CORNER, MULTI NATIONAL CASE:

In this related model, we have several economies, and the situation we observe today: a few smaller and richer societies (EU, USA, satellites), and many more numerous, poorer, but very hard working societies (BRIC: Brazil, Russia, India, China, and satellites). The “developed” countries got themselves in a corner, whereas the “developing” countries are all on a steep learning curve. (It is precisely the absurdity of believing that there is such a thing as a “developed” country which connects to the underlying mistake: did any of the semanticists of the word “developed” visit a “developed” world slum, ever? Because there are plenty, let me tell you.)

In that globalized world, countries are exporting to each other, according to their best expertise. This is how the top plutocrats (bankers, industrialists, and their pet politicians, mostly located in the rich countries) failed the system, because they did not allow the rich countries to maintain their technological comparative expertise.

Instead of being baboons overlording the BRIC dogs, as they used to be, rich countries devolved, turning down into dogs themselves. And now these new dogs have to learn to eat dog, as their distant ancestors used to. It is not easy: the BRIC dogs are turning out fiercer, bigger, very motivated and pretty smart.

OK, back to the more detailed mathematical model.

Lift is provided to economy X by exporting enough. Thus X needs to add enough value to the world economy to exchange it against needs it has, themselves extracted from the rest of the world economy. Thus X supports its economic weight, thus it can barter the worth it needs from the world economy, in exchange for its own worth, to keep on going.

The economy exports products to other countries from a combination of low cost and technological competency (see note T2). If X does not export enough, it will fall off. So this model considers, from the outset, that any economy with a huge exterior deficit caused by insufficient exports is falling, and, given enough time will crash (see note T3).

Velocity corresponds to economic activity (part of it, but not all of it is related to the velocity of money, and money volume). A lot of economic activity for a long time is necessary for a lot of achievement.

WHAT IS BEING “PRODUCED”? IS CIVILIZATION WORTHY?

The various theories and practices of modern economics were invented in a small area between England and Tuscany. It was a philosophical switch away from Plato and Aristotle: those two despised money, economic activity, mercantilism. Those parrots known as Christianity and Islam embraced that anti business position. (Why? Because, like Plato and Aristotle, those religions are pro-fascist, that is why they came to reign, and business from individuals is intrinsically anti fascist).

The theoretical switch to “product” theory occurred in France, led by the so called physiocrats (physis-cracy = nature-power). They called themselves the “economists”, and some were super intellectuals: their leaders were Voltaire and Quesnay (France’s top surgeon). Some were naively obsessed by agriculture, some viewed industry and “machines” as the top products.

Adam Smith popularized some of these ideas in the Anglo-Saxon world, and ever since he has been the ultimate reference in Anglo-Saxonia, and places such as the University of Chicago (where Obama taught; see Note T5, “history economics”).

The central problem of economy is: what is product, what is “economic activity”? Is it the energy of the cash flow in and around the society, or is it the support the society is provided with? (For Plato and Aristotle, a good product was a well ordered society.)

Indeed “economic activity” has to be measured carefully. It is a philosophical problem (and it is Plato, Aristotle and colleagues such as Xenophon who conceived of economics).

When French volunteers get together, and rebuild, lovingly and expertly, stone by stone, Europe’s tallest Middle Age castle, the chateau de Coucy (dynamited in 1918 by the retreating imperial army of the second Reich), is that “economic activity”?

According to American economists of the Chicago school (the ones with nearly all the Nobel prizes in economics), repairing old castles on one’s free time is not “economic activity”. So these American economists command which values we should have. Thus their country looks the way it does, the rich always richer, the poor always poorer, and the whole thing, overall, ever uglier, as it increasingly led by crooks: a question of uneven flow. (Crooks such as Madoff and Sanford and companies of crooks, such as Enron seem to be increasingly the rule, and this dates from the collaboration with Nazism, as early as the early 1920s, an entire layer of artistically buried history.)

But, in a very old country such as France, everybody is penetrated by history. In France everybody knows that repairing old castles is a valuable human activity. Thus the French differ from the Chicagoans. The French live according to the doctrine that there are valuable things money cannot buy, whereas the Chicagoan believes that anything, or anybody valuable can be bought. If it cannot be bought with huge money, it is not valuable: this is the exact argument the plutocrats use urbi et orbi to justify their astronomical incomes.

Those Chicago economists, the justifiers of the plutocracy of the USA, are not from an old civilization. So there is every reason to suspect that they do not know what it takes to run a civilization, long term. France, or China, in spite of many bloody, greedy enemies, have survived millennia. And it was not by accident, it was a question of values.

It is not an accident that China survived the Mongols. It is a telling chapter in the theory of worth. Genghis Khan conquered (North) China. Presented with plans for the total demographic and geophysical annihilation of China, down to the last tree, Genghis Khan blocked them. Genghis Khan thought that China was WORTH saving. The Mongol armies soon integrated Chinese siege and explosive technologies, in the most mobile form. Mongol leaders harnessed Chinese technology, including paper currency, and pushed it all over.

In a striking contrast, Genghis Khan annihilated the (Muslim) Khwarezmid and the (Buddhist) Tangut empires. A successor Khan annihilated the Abbasid Caliphate, with its capital, Baghdad, and the Persian Muslim civilization, with most of its books.

The Mongols had extreme, very explicit contempt for the societies they exterminated with these holocausts. But conversely the Mongols had esteem for the Chinese and the Franks. In the later case, remembering what happened to their ancestors the Huns, the Mongols left Western Europe alone, and even allied with the Franks, both happily conquering together Damascus (the grotesque Pope and the racist Saint Louis squashed further collaboration)… Thus civilizational worth can be life saving, so it’s certainly the ultimate worth, worth integrating in “house management” (= “eco nomy”)..

Those who do not come from a millennial institutional tradition do not understand what human activity really is, in the fullness of time. (I distinguish institutional tradition, what an army and its government believe in, from fake tradition, what the sheep is supposed to believe, the slave religion, Bible style, a distinction Nietzsche accentuated). But of course Chicago style economists are not so well paid to ferret the truth, but to promote illusions (Summers has two such Nobels in his close family).

Indeed, simple “economic activity”, measured in financial transactions, is not sufficient to be a source of value to civilization, or EVEN AS AN EXPORT: how do you export fraud a la Madoff? (OK, another billionaire fraudster from the USA succeeded to do just that, ruining a few islands in the process: Mr. Sanford. But this goes only that far, before other countries rebel.)

How do you export a plutocracy? The USA spent about two trillion dollars saving its plutocracy, so it can keep on being a plutocracy. Is it going to export that now? Is it going to support the economy of the USA? Well, in the past empire was a product, for the USA, and it was profitable, to the USA. Now the empire of the USA has shrunk, and is increasingly restricted to tax heavens, which are only profitable for the plutocracy of the USA (see Note).

So an economy cannot just be active, it has to be going somewhere, not just fly around in circles, it has to achieve something. What is achievement? The physical plant: the industrial infrastructure (bridges, rail, airports, roads, bridges, power plants, schools, hospitals, cities, etc.), and the intellectual infrastructure (universities, educated population, engineers, health care providers, thinkers, etc.). (see note T6, “How to discern real achievement”.)

Total economic activity is like total airflow around a plane: it cannot just be fast and energetic: in a high speed stall, the airflow around a plane is fast and energetic, but the plane gets no support. Energy flow cannot just be strong, it has to be DIRECTED.

What has been going on in the financial oligarchy dominated economy of the USA is that more and more energy has been funneled into economic activity as money flow. The greater the mass of the flow (leverage) and the greater the velocity of the flow (frantic financial transactions), the better the Chicago school believes the economy is going. BUT IN TRUTH THE ECONOMY OF THE USA IS IN A HIGH SPEED STALL: THE FASTER IT GOES, THE MORE IT DROPS.

Velocity of money and high leverage favor easy purchases, purchases of the non thinking type. These artifacts increase GDP on the cheap: it’s cheap, because these purchases do not bring any true value. Financial firms can create trillions of transaction creating trillions of GDP, using computers waving to each other, bringing no value whatsoever to the planet, while preventing the rest of the planet to do anything, by blocking their exchanges and communications, and claiming they are not worthy, hence forbidding them to work.

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Conclusion: A NEW MODEL: Einstein explained a lot of Special Relativity by considering a model made of a moving train and the platform along which it moves. This made the baffling slowing down of local time in the moving train readily understandable. Einstein’s model was partly invented by Galileo, and could have been invented by Aristotle (but was not, and so Aristotle invented instead erroneous physics, first denounced and rendered obsolete by Buridan’s genius, see Note T 8, “relativity & modelization”).

The model here is a completely new and behaves as trains on the ir tracks do not: boats and trains a la Galileo-Einstein just move. Planes were invented three centuries after Galileo found inspiration in linearly moving boats. Subsonic planes do not just move, they float, but only at the right speed; if one wants to be able to do away with those limitations, they have to morph appropriately.

Ever augmenting the economic activity, as measured by the flow of money, in the most developed economies, is no solution, quite the opposite. A poorly measured GDP, using a wrong theory of product, is central to the problem.

Cash flow has to be slowed down: money helps to measure some economic activity, but ought not to destroy it (as it has). The invisible hand theory of Mandeville and some French economists, broadcasted by Smith, has reached its limits, in a world where what is big, and not visible, is globally unsafe. It’s true about Grand Ayatollahs’ grand fascism, it’s true also about devouring global bankers, their shadows, and their derivatives.

There is no possibility for an invisible economy and finance, looking forward. Blindly trusting the bad nature of man, as Mandeville preached, and Adam Smith echoed, is obsolete. Blind trust is spelled: A U S C H W I T Z. Some will be outraged that I connect the “Invisible Hand” to Auschwitz. But facts speak for themselves.

Civilization is the accumulation of increasingly intricate and powerful laws, increasingly intricate and clever behaviors, to master increasingly intricate and powerful technology. Technology jumped up recently, and it had to: if our technology does not keep on going up, and our valuable activity does not increase, our consumption will bring us down, because we will be unable to support it. Ecology is breathing down our necks. So we need to go higher with ever more VALUABLE activity.

Subsonic planes flying at mach .85 are prevented to go supersonic, because their geometry is not appropriate to supersonic flow. A supersonic plane such as Concorde could cruise at mach 2.2, because its geometry made it so that supersonic flows and shocks still provided support. Moreover, a testimony to increasing complexity, computers moved fuel to the back of Concorde to keep the center of mass above the center of lift as it went supersonic. In other words, Concorde had a variable geometry, so it could cruise much faster and higher. We also need to create variable geometry society, and civilization, so it can go higher, and really faster. We have no choice.

Verily the low speed stall has to be averted too: societies that do not maintain enough technological expertise are at risk, and are morally culprit of wantonly crashing countries (which had, and will have military consequences: when Weimar republic politicians opted for high inflation rather than satisfying France and Belgium, they collapsed their economy, which was worse than the alternative, as subsequent events confirmed).

When I speak of technology, I mean etymologically: specialized logics. When the German Second Reich madly pushed for making machines while shrinking ever more the rest of mental capability, it detached most of the world of mind from supporting the society, and led to unbridled fascism in Germany. Thus, by technological lift, I mean technology in the largest philosophical sense.

Thus maintaining comparative technological advantage is not just economically advantageous, it’s a question of avoiding death.

All the preceding applies globally too.

So the world economy’s frantic activity has to be slowed down: that means a WORLDWIDE CARBON TAX (including on shipping and aircraft), and a WORLDWIDE TRANSACTION TAX. Too much frantic activity precludes valuable activity.

Thus philosophy, law, science and technology have to be pushed constantly to provide enough lift (all the more since the population is augmenting quickly, and so is global poverty). It is not just an economic opportunity, but a necessity for survival: it’s a question of keeping civilizational order, and avoiding a planetary crash.

Hence nuclear power (fission and fusion) has to be pushed: one cannot just depend upon the 2,000 year old water and wind mill idea. We need genuinely new ideas in energy generation, all the way to the energy of the vacuum (a possibility brought up by Quantum Field Theory, and which will be industrially exploited within decades).

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Patrice Ayme

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There is a huge background to all this. Various notes:

MODELS ARE HALF OF SCIENCE: Models are used all over science, especially physics. Quantum Mechanics is a model. Special relativity, with its trains, is a model. Mathematics itself benefits from
“Model Theory”. The present author believes that the brain is a modeling machine, using its neuroglial dynamic geometry to physically make such models. The relationship between “model” and “proof” is obscure. From my point of view, if it works, it’s true (basically the “truth”, as used in aviation).

A model comprising seven stages of evolution of societies was already presented by Polybius and others in Antiquity to explain why they decayed. But the subject of this essay was a much more targeted model explaining the mechanics of the loss of control itself.

The model presented here is higher dimensional, and intrinsically more sophisticated than the linear model used by Galileo and Einstein in relativity. Having a model to brandish makes it harder for obscurantists to obtuse.

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MATHEMATICAL NOTE: BETTER THAN GAUSSIANS: People who know some mathematics may object that what we seem to attempt to model some ideal median, the sort of things BELL (Gaussian) curves have long done. That is the conventional mathematics of exponential (- XX). That later function is used all over, often for unclear reasons.

The present model is more sophisticated, though: the function is asymmetric: on its way up it’s cubic, so tamer than an exponential, giving an illusion of safety, but on its way down it’s more non linear than an exponential, and full of shocks.

Thus it may reflect reality better than exp(-XX).

The model presented here is higher dimensional, and intrinsically more complicated (thus sophisticated) than the linear model of linearly moving boats and trains used by Galileo and Einstein in the theory of relativity.

Although the idea is to model a type of very frequent catastrophe, the model is outside of the Catastrophe theory, because there is no well behaved potential giving rise to the catastrophe. The whole idea is to model a common catastrophe, but which is much more catastrophic than anything Rene Thom thought of.

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HOW FAKE MEASURES OF ECONOMY LEADS FINANCE TO DISCONNECT FROM REALITY THROUGH FRANTIC FINANCIAL ACTIVITY: In the present view, human activity corresponds to the velocity of society X going forward. (Assuming a constant money supply, this is equal to the velocity of money and the GDP: at this point the theory is first order.)

Indeed we have: (Total Money) (Velocity) = GDP. This is conventional, erroneous, economics.  To keep GDP going up (because we are not all rich enough, among other things. And there is only that much velocity that can be deployed. Although hedge funds tried their best they reached their limits of selling what they had not bought yet. So they concentrated on new fields such as oil trading: hence the oil bubble.

Another way to augment GDP was to augment the Total Money. In other words to augment LEVERAGE IN THE BANKING SYSTEM. That is what the banks did to the bitter end, to keep the appearance of the augmentation of riches, which justifies the ever bigger grabbing of the pie by the top bankers and their hanger ons.

Now a psychological effect gets grafted on: as GDP forges ahead, everybody wants to get richer, etc… So everybody augmented leverage, personally: subprime, Alt A, and home equity leverage crises.

Meanwhile the banks created CDOs (Credit Default Obligations). It was a way to make tremendous income, but the banks had made totally insufficient reserves to honor their engagements. When mortgages started to default, some banks had to pay hefty sums (50 billion dollars, sometimes) that they did not have.

The mentally challenged Alan Greenspan commented that he had 200 PhDs working below him, and that no one could understand how the banks could hope to honor their CDOs. Well, little Alan, learn: sometimes things cannot be understood, because they are plain wrong (not like theories, which are so sophisticated that they are, intrinsically hard to understand).

In my own system things are significantly different. The equation (Total Money) (Velocity) = GDP corresponds in truth to (Value Activity) (Total Activity) = GDP. (Or more exactly my personal definition of GDP, which I call AWE, Absolute Worth Energy). Technology is how to improve value.

But more of this some other time. we have to improve Value, or activity.

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EMPIRE AS PRODUCT, HEALTH CARE AS STRATEGIC THREAT:

Now, of course, in the past, the American plutocracy and its CIA could afford to keep on the payroll dozens of French journalists who were supposed to have good thoughts, and only good thoughts. And this was done around the world.

At the time, after WWII, a quickly built American empire expanded on the ruins of Nazi-American companies in Nazi occupied Europe (don’t laugh: IBM is an example). The USA made many of its companies into world monopolies (a system tested with the Nazis before, see Wall Street created IG Farben). This was profitable for all and any Americans: little did they see the threat to their own democracy. But people, worldwide saw it, and this is a big component of so called “anti-Americanism”.

Right now the plutocracy is paying its political servants in the USA to legislate in its favor (some of the Senators blocking progress in health care reform are getting more than 1,000 a day from the so called “health care industry”).

But it can be argued that health care, or lack thereof, has become a strategic threat to the USA. Many companies cannot compete anymore, as they, and their employees, are getting gouged by the health care plutocrats.

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T1:PLUTO’S SHADOWS & (TAX) HEAVENS:

French and German conservative leaders have insisted on the need to strengthen regulations, and crack down on the shadow banking system and tax heavens. Many Europeans know that those have allowed massive, legal tax evasion of individuals and corporations alike: that is why a tiny Channel island is the world’s greatest banana importer (administratively speaking).

The malignant growth of plutocracy uses the shadow banking system and the heavens as its dens and fortresses. Are right wing leaders in Europe are left of the left wing of the USA, or is it just that the later does not exist?

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T2: SPEED OF SOUND, SUPPORT & LIFT:

Sound is about air molecules hitting each other, but doing it in a particular way: a molecule is hit, then travels a bit, and hit another molecule, transmitting to that second molecule its entire supplementary momentum (in the average). If there are not enough molecules to hit, it will take longer to transmit that supplementary momentum, so it will take longer to transmit that supplementary momentum, slowing sound down. Conversely that is why sounds goes fast through a metal, and not at all in space).

Now if an object goes through a medium at higher than the speed of sound, the molecules do not have the time to push themselves away, and they both make a dense layer, and that layer displace itself as a solid object (sort of), creating a shocked layer. That layer will detach itself, because it cannot fill in opening spaces. It is a matter of information not being able to outrun a shock. That is why planes lose support, and, I argue, in analogy, so does the economy. It also has to do with information (but in the case of the plutocracy, the lack of information transmission is by design)..

(Theories have been made to explain the loss of Air France 447 this way, although this is only a theory, in that particular case, large planes have found themselves in the coffin corner before, and have plunged. With the  spy plane, at 70,000 feet, the gap between low and high stall was less than 10 kilometers an hour, so, in a turn, the left wing could find itself in a low speed stall, and plunge, whereas the right wind could be buffeted by supersonic shocks, and lose support because of that too. A plane such as Concorde had no such problems because it was designed to fly at high supersonic speeds (Mach 2.2), without detachments of the airflow from the wing).

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Note T4: To be wanted overseas, products need to occupy a particular region in necessity-competence-cost space.

Exterior deficit in the case of the USA is caused by not exporting enough products that the rest of the world wants.

In rare cases, the deficit can be caused be a lot of investment in the country. According to the model above, the USA should be falling off. How come it did not yet? Well, first there is inertia: the USA still produces wanted products. Besides Argentina, which used to be in a somewhat similar situation, like any other plane stalling, took a while before falling of the sky. The USA is bigger: more inertia. Moreover the USA has powers outside of strict economy, which allow it to stay up: a world reserve currency, giant armed forces.

Note T5: HISTORY ECONOMICS: SMITH IS NOT GOD: First banks became strong in Italy (financing the French monarchy), then mercantilism appeared (out with Aristotle and the Catholic religion, which acted as its poodle), and finally appeared the invisible hand (Mandeville, died 1733, the expression, but not the idea, may be from Smith, born 1723) and “laissez faire” (Marquis d’ Argenson, Vincent de Gournay).

The theoretical switch to “product” theory occurred in France, led by the so called physiocrats (physis-cracy = nature-power). The physiocrats called themselves the “economists”, and some were super intellectuals: their leaders were Voltaire and Quesnay (France’s top surgeon). Some were naively obsessed by agriculture, some correctly viewed industry and “machines” as the top products.

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Note T6: HOW TO DISCERN REAL ACHIEVEMENT: Economic achievement ought to be measured by AWE (not GDP!). it’s the Absolute Worth Energy. it measures the value of a product (it could be a mind) or a service, from how much worthy energy was put into it (a PhD or surgeon’s formation being worth more than that of a grave digger, because to form a surgeon, a lot of teaching is necessary, from a lot of predecessors, who, themselves took a lot of energy to form, etc.).

The AWE of any product is the sum over history of all other products entering its making.

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Note T 8: In truth, Einstein pushed the same example due to Galileo, who used just one boat, demonstrating inertia thus. Einstein used two boats and added the fact the speed of light is always found to be constant. (A discovery in which Galileo was involved, since he tried to measure the speed of light, and found it faster than what he could measure).

The discovery of inertia was actually the work of the great thinker Buridan (14C), in the Middle Ages, who contradicted Aristotle by doing so. Buridan applied his discovery to the Earth’s orbit, discovering what came to be erroneously known as Copernic’s work. Buridan’s model was not linear.

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