Happiness: A Tale of Two Surveys

Sunday

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The happy people of Togo.

The World Happiness Report has been published for every year since 2012 (with the exception of there being no WHR for 2014) by the Sustainable Development Solutions Network. A number of influential persons are involved in the report (e.g., the economist Jeffrey Sacks), there is big money behind the effort (e.g., sponsorship from several foundations and companies), and there are several major universities associated with the effort (Columbia, UBC, LSE, Oxford). Of course, the UN is involved also, via the Sustainable Development Solutions Network, and the report itself incorporates extensive discussions of the UN Sustainable Development Goals. Each year when the WHR is published there are predictably celebratory reports in the legacy media, along with the equally predictable hand-wringing and pearl-clutching in regard to the countries that occupy the bottom of the list.

Happy children in Togo.

With so much talent and money and reputation involved, the report not surprisingly has a sophisticated methodology. Indeed, the methodology is so sophisticated that it might be called “opaque”; I had to spend quite a bit of time reading the fine print to figure out how it was that they were coming up with their happiness rankings. Of course, the reports in the media feature the rankings, and only the merest cursory description of the methodology. In this, the WHR is incredibly effective in promoting a narrative of national success and failure without many people looking into the guts of their happiness machinery.

More happy people in Togo.

The WHR each year starts out with an explanation of the Cantril Ladder, which seems prima facie to be a relatively straight-up measure of subject well-being. The Cantril Ladder asks survey participants, “…to value their lives today on a 0 to 10 scale, with the worst possible life as a 0 and the best possible life as a 10.” (2015 WHR, p. 20) The Cantril Ladder, however, is only the beginning of the fun. The number they derive from the Cantril Ladder question is then run through six different equations, each of which brings another factor into the “happiness” calculation. The six additional factors are “GDP per capita, social support, healthy life expectancy, freedom to make life choices, generosity, and freedom from corruption.” (p. 21)

More happy children in Togo.

Of these six factors, two — per capita GDP and healthy life expectancy — are “hard” numbers for economists (in other words, they are relatively hard numbers, but these numbers can be gamed as well). Two factors require additional questions that probe subjective well-being, and these are social support and freedom to make life choices. To assess social support respondents were asked, “If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them, or not?”; to assess freedom to make life choices, respondents were asked, “Are you satisfied or dissatisfied with your freedom to choose what you do with your life?” The remaining two factors are a bit squishy — generosity and freedom from corruption — by which I mean that there are measurements that could be taken for these, but subjective perceptions can also be involved. To measure generosity respondents were asked, “Have you donated money to a charity in the past month?” This strikes me as a good metric. To measure corruption respondents were asked, “Is corruption widespread throughout the government or not?” and “Is corruption widespread within businesses or not?” This strikes me as much less satisfactory, especially since bodies like Transparency International have made an effort to compile corruption indices, but it is a good measure in so far as it is more self-reported well-being data.

Yet more happy people in Togo.

Once the numbers are crunched according to their formulae, the 2015 WHR ranks the following as the ten happiest countries in the world:

1. Switzerland (7.587)
2. Iceland (7.561)
3. Denmark (7.527)
4. Norway (7.522)
5. Canada (7.427)
6. Finland (7.406)
7. Netherlands (7.378)
8. Sweden (7.364)
9. New Zealand (7.286)
10. Australia (7.284)

One cannot but notice that these are all western, industrialized nation-states, mostly European, and indeed mostly northern European.

More happiness in Togo.

In the same 2015 WHR, Togo comes in dead last. Do I believe that the people of Togo are the least happy on Earth? No, I don’t. However, I do believe that well-meaning philanthropic foundations believe that Togo needs to change, and that it especially needs the “help” of these philanthropic foundations to better acquaint them with the UN Sustainable Development Goals, so that they, too, can be made as happy as the northern European countries that top the WHR. I’m certainly not saying that everything in Togo is fine and dandy. There was serious political unrest in the country in 2017-2018 (cf. 2017–2018 Togolese protests), but, given what we delicately call the “social unrest” in the US during the summer of 2020 (also known as riots, vandalism, looting, arson, assault, and murder), I’m not sure that things are worse in Togo than the US, even if Togo is objectively impoverished compared to the US.

“Beer is proof that God loves us and wants us to be happy.”

Now, being myself from northern European stock (Norwegian on my father’s side and Swedish on my mother’s side), I could point with pride to the narrative of national success for Scandinavia that is a common feature of international comparisons of this kind, except that, being culturally Scandinavian, and having traveled in these countries, I know what the people are like. I feel very familiar in this context, and, frankly, I enjoy being in Scandinavia and being among other Scandinavians, with whom I share much in terms of temperament and attitude to life. I have also traveled in southern Europe and experienced the very different pace and temper of life, as well as the different pace and temper of life in South America, where I have traveled extensively. I have not (yet) had the good fortune to travel in Africa, much less to Togo itself, so I cannot speak from personal experience in regard to these peoples, but I do not doubt that they possess a full measure of well-being and life satisfaction such as only could be expressed in terms of their culture, much as well-being and life satisfaction in Scandinavia is expressed in terms of Scandinavian culture. What passes for “happiness” among wealthy, industrialized, Nordic peoples of a stoic disposition is not necessarily what would pass for “happiness” among west Africans.

Good times in Togo.

I have focused on the 2015 WHR report (which is not the most recent) because it provides an interesting contrast to another report from 2015, which is the WIN/Gallup International annual global End of Year survey. WIN/Gallup International collaborated on these annual surveys for ten years, from 2007 to 2017. Both WIN and Gallup International are still in business, but they no longer collaborate on these annual surveys; Gallup International (GIA) is not be confused with Gallup Inc., which two are distinct polling companies. The annual End of Year (EoY) surveys can be on a variety of questions (for 2018 the EoY survey was on political leadership), but happiness has been the focus of polling on several occasions. With these EoY surveys, Gallup International takes a sample of about 1,000 persons each from about 60 countries, always including the G20 plus a sampling of other nation-states that together represent better than half of the global population.

Togolese bananas

The methodology of the WIN/Gallup International EoY 2015 survey on happiness was a lot simpler than than Byzantine methodology of the 2015 WHR. WIN/GIA asked three questions:

● Hope Index: As far as you are concerned, do you think that 2016 will be better, worse or the same than 2015?

● Economic Optimism Index: Compared to this year, in your opinion, will next year be a year of economic prosperity, economic difficulty or remain the same for your country?

● Happiness Index: In general, do you personally feel very happy, happy, neither happy nor unhappy, unhappy or very unhappy about your life?

It is an interesting feature of these questions that the first two are framed in terms of predictions — a better next year and a more prosperous next year — but at bottom all three of these questions are questions that probe the individual’s sense of subjective well-being, albeit well-being sometimes projected into the future. Moreoever, WIN/GIA’s numbers aren’t run through a number of equations that filter these measures of subjective well-being through a variety of other factors.

Home, sweet home, in Togo.

When WIN/GIA crunched their numbers, the top ten rankings of the happiest places on the planet were radically different from those of the WHR, including a significant number of wealthy, industrialized European nation-states ranked in the bottom ten of the hope, optimism, and happiness indices:

1. Colombia (85%)
2. Fiji (82%)
3. Saudi Arabia (82%)
4. Azerbaijan (81%)
5. Vietnam (80%)
6. Argentina (79%)
7. Panama (79%)
8. Mexico (76%)
9. Ecuador (75%)
10. China/Iceland (74%)

We’ve already seen the very different methodologies employed by these two systems of ranking happiness around the world, so we understand how and why they differ, but what exactly does this difference mean? Bluntly, and in brief, it means that if you simply ask people if they are happy, you get results like WIN/GIA; if you run self-reported happiness through a filter of economics, you get results like WHR. Another way to frame this would be to say that the WHR implicitly incorporates Maslovian assumptions built into its rankings, such that a number of physiological and social needs must be met before we can even consider the question of happiness; if we interpret happiness as a form of self-actualization, we can see the relevance of Maslow’s hierarchy of needs to sophisticated rankings of happiness that incorporate many other factors.

How much weight should we give to self-reported well-being? Should we be factoring in metrics other than subjectively reported happiness in attempting to measure happiness? Are individuals not their own best judge of their own happiness? There is a certain irony involved in economists assuming that individuals are not their own best judge of their own happiness, as it is economists who are always telling us that individuals are always the best judge of how their own earnings should be spent, because an individual exercises a close and careful oversight over money he himself has earned, while governments collecting money through taxes are spending money they did not themselves earn, and so are likely to exercise less stringent oversight.

More to the point, should elaborate polling methodologies with a pretense to represent self-reported well-being, but which in fact represent economic measures, drive analysis and policy? If we are to take happiness rankings as the basis of policy prescriptions, as the WHR position their study, but using the WIN/GIA numbers instead, then clearly the nation-states of the world should be emulating Colombia, Saudi Arabia, Vietnam, and Argentina. One might then conclude that the way to national happiness is surviving a 50 year civil war, capital punishment by beheadings in the street, having a one-party communist dictatorship, or having the largest sovereign debt default in history. The economists studying happiness would probably see such policy prescriptions as moral hazards. One suspects that the authors of the first WHR in 2012 saw the raw Cantril Ladder data, knew that it wasn’t going to give them the results that they wanted, and realized that they had their work cut out for them. For someone who knows how to crunch numbers, and who could get the raw data from which the WHR is compiled, it would be an interesting exercise to see exactly how much subjective well-being made any difference at all in the rankings.

If we take only per capita GDP in 2015 this is the top ten ranking:

1. Luxenbourg
2. Switzerland
3. Macao SAR
4. Norway
5. Ireland
6. Qatar
7. Iceland
8. US
9. Singapore
10. Denmark

We can immediately see that this list shares four entries with the WHR list — Switzerland, Iceland, Norway, and Denmark — while it shares only one entry with the WIN/GIA rankings — Iceland ties with China for tenth place in the WIN/GIA happiness index. From this we can see that GDP alone is 40% the same as the WHR rankings. To me this makes the WHR look more like factoring in some sense of subject well-being into economic rankings than it looks like factoring some economic data into self-reported happiness. Why not then simply use per capita GDP as a rough approximation for “happiness”? My speculation: economists already have to deal with ideas like homo economicus and the invisible hand, which are routinely chastised as being a vulgarly reductionist approach to the human condition; if happiness is to be characterized in economic terms, it needs to be done with style, verve, and not a little obfuscation if it is going to be carried off successfully in such a climate.

If one is going to indulge in the pleasant fantasy that public policy can be driven by concerns of individual well-being, one needs to be hard-headed about it if one’s policy proposals are to stand half a chance. The kind of people who formulate UN Sustainable Development Goals are content with the rankings of the WHR as a guide to policy, because it affirms their narrative, but the WIN/GIA rankings are effectively “opposite world” for the same people, and certainly not a guide to policy. If the happiest people in the world are to be found in Saudi Arabia and Azerbaijan, and with the people of Bangladesh and Nigeria topping the Hope Index, then UN measures of what constitutes the good life and hope for the future are more than a little off. And the WHR insists on UN Sustainable Development Goals almost to the point of salesmanship.

While I haven’t here fully showed you how the magic trick is done (I lack the expertise for that), I hope that I’ve showed you enough that the next time you see WHR rankings reported in the media, you will be skeptical of the relationship of these rankings to actual human happiness, which is certainly affected by economics, but is not identical with economics, and, moreover, there can be important outliers such that nearly optimal human happiness may occur with little or no relationship to economic measures that we might be tempted to substitute for happiness. Certainly, again, “well-being” is more than happiness, and economics makes a generous contribution to well-being, but when we use “well-being” as a rough synonym for happiness, and then rightly define well-being (in its other sense, not specifically related to happiness) by economic measures, this is the essence of the magic trick, and such a sleight of hand is not to be believed. I should sooner believe that all the people in Togo are miserable than believe that the contribution of happiness to well-being can be artfully dissimulated.

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The Resentment of the Creative Class

Sunday

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One of the most annoying constructions of contemporary sociology is Richard Florida’s conception of the “creative class.” Florida isn’t necessarily wrong in his claims, and indeed I am sympathetic to some of his arguments, though much of his analysis turns upon taking a naïve conception of creativity and moving the goal posts so that this intuitive conception of creativity comes to be bestowed upon patently uncreative individuals who pad the ranks of the corporate hierarchy. By marginalizing a “Bohemian” creative class and putting at the center of his analysis the suits who congratulate themselves on being creative, he has arguably misconstrued the sources of creativity in society, but that is not what I want to focus on today.

Here is how Florida defines his “creative class”:

“I define the core of the Creative Class to include people in science and engineering, architecture and design, education, arts, music, and entertainment whose economic function is to create new ideas, new technology, and new creative content. Around this core, the Creative Class also includes a broader group of creative professionals in business and finance, law, health care, and related fields. These people engage in complex problem solving that involves a great deal of independent judgment and requires high levels of education or human capital. In addition, all members of the Creative Class — whether they are artists or engineers, musicians or computer scientists, writers or entrepreneurs — share a common ethos that values creativity, individuality, difference, and merit.”

Richard Florida, The Rise of the Creative Class, Revisited, second edition, pp. 8-9

Florida’s use of the phrase “high human capital individuals” (employed throughout his book) begs the question as to who exactly are the low human capital individuals. Needless to say, formulations like this are self-congratulatory to the point of delusion, because no one who uses the phrase “high human capital individuals” believes themselves to be anything other than a high human capital individual. Here Nietzsche is relevant, though what he said of philosophers must now be applied to sociology: It has gradually become clear to me what every great social science up till now has consisted of — namely, the personal confession of its originator, and a species of involuntary and unconscious memoir.

We need not employ Florida’s annoying formulations. Let’s consider another approach to essentially the same idea. Take, for example, Marx’s version of the “creative class”:

“Milton, who wrote Paradise Lost, was an unproductive worker. On the other hand, a writer who turns out work for his publisher in factory style is a productive worker. Milton produced Paradise Lost as a silkworm produces silk, as the activation of his own nature. He later sold his product for £5 and thus became a merchant. But the literary proletarian of Leipzig who produces books, such as compendia on political economy, at the behest of a publisher is pretty nearly a productive worker since his production is taken over by capital and only occurs in order to increase it.”

Karl Marx, Capital, Vol. 1, London et al.: Penguin, 1976, p. 1044

Clearly, Marx here evinces no romantic notions of the creative genius in isolation, praising the Leipzig hack over the genius of Milton. And this is Florida’s conception of “creativity” in a nutshell, nearly indistinguishable from “productivity” as used in contemporary economics. One can imagine in one’s mind’s eye Richard Florida reading this passage from Marx and nodding his head with an odd grin on his face.

Suit-and-tie guys who are “knowledge workers” in their own imaginations, but in who are in reality time-servers in a corporate hierarchy, are the members of the “creative class” who are fulfilling the function that Marx assigned to the Leipzig hack. In other words, the same kind of people who, fifty years ago would have been reading the Financial Times and the Wall Street Journal, are the same people who still today are reading the Financial Times and the Wall Street Journal, but now they fancy themselves to be part of the “creative class” and they take micro-doses of LSD when they go to Burning Man each year to “unleash” their creativity.

But this is exactly the kind of “creative class” that the global economy wants and needs; Marx had put his finger on something important when he raised the Leipzig hack over Milton. The less creative you are, and the more you have adapted yourself to be a creature of the institutions you are serving, the more successful you will be (according to conventional measures of success) and the more money you will make.

The pedestrian fact of the matter is that industry — whether something as flashy as the film industry or something as prosaic as the energy industry — advances mediocrities to its top positions. Usually the top people are mediocrities with some redeeming qualities, or a hint of limited talent, but still mediocrities. The truly creative types know that mediocrities are being advanced beyond them and taking the top positions in the industry, and that there is nothing that they can do about this. These truly creative types aren’t living the life of the one percent; indeed, they aren’t living the life the ten percent. Most of them make less than six figures, and there are probably many plumbers, sheet rockers, electricians, and truck drivers who make a lot more than them, and who have no massive college debt hanging over their heads.

The Bohemian creatives, the ones actually creating things, find themselves in the position of performing alienated labor at the behest of their corporate masters, who neither understand nor appreciate them. Having failed to learn one of the simplest lessons in life — that you catch more flies with honey than with vinegar — the lowest strata of the creative class spew their resentment at every opportunity. (The dirtbag left today might be thought of as part of a Bohemian fringe of creative types, though at the political end of the creative spectrum.) They are so convinced of their own virtue that they are unable to see or to comprehend that they themselves have become the bitter, punitive gatekeepers that as “creatives” they presume to despise.

Resentment, it seems, flows uphill. By creating a permanently resentful underclass, which is the basis of the entirety of society (because the underclass have the jobs that keep industrialized civilization functioning), the resentful underclass creates a popular culture derived from this pervasive resentment, and this pervasive popular culture resentment eventually finds its way into the routines of comedians, into television, into films, and ultimately into élite cultural institutions, which imagine themselves setting the cultural and aesthetic agenda, but which in fact respond like reactionaries to the authentic energies of the lower classes.

The phenomenon of resentment flowing uphill manifests itself powerfully among the “creative class.” As we have seen, the most creative members of the creative class experience the appearance of fame but the financial reality of entry-level positions, so that they belong to the permanent underclass and its bitterly resentful view of the world, which is a view of the world from the bottom up. They are well aware of their low financial status, and that they do not share in the rewards of the uncreative members of the “creative class.”

Ultimately, the resentment of the creative class and the bourgeoisie becomes, over time, the resentment of the élites, and this is when we know that society is rotten from top to bottom. When those who have been given every advantage and every preferment in life are bitter and angry about their world, clearly something has gone off the rails. Of course, the resentment of the élites is expressed in a distinctive way, filtered through their thinly-veiled dog whistles and symbols, but not only is it there to be seen, as clear as day, but also pervasively present throughout the institutions that they superintend.

Apparently, it isn’t enough to rule the world and to enjoy a standard of living that is the envy of the masses; more than this, one must have the acquiescence of those masses in their subjection to the rule of élites. Mere compliance and conformity is not enough; there is also to be some formal recognition that the élites deserve their status and are making the best choices for the rest of us. (We live in a meritocracy, right?) When this recognition is not forthcoming, we glimpse the resentment of the élites for those they fancy the low human capital individuals.

It is a fascinating commentary on the resentment of the élites who grow out of a “creative class” that Nietzsche’s analysis of ressentiment crucially turns upon creativity:

“The slave revolt in morality begins when ressentiment itself becomes creative and gives birth to values: the ressentiment of natures that are denied the true reaction, that of deeds, and compensate themselves with an imaginary revenge. While every noble morality develops from a triumphant affirmation of itself, slave morality from the outset says No to what is ‘outside,’ what is ‘different,’ what is ‘not itself’; and this No is its creative deed. This inversion of the value-positing eye — this need to direct one’s view outward instead of back to oneself — is of the essence of ressentiment: in order to exist, slave morality always first needs a hostile external world; it needs, physiologically speaking, external stimuli in order to act at all — its action is fundamentally reaction.”

Friedrich Nietzsche, On the Genealogy of Morals, First Essay, section 10

This is a dialectic of creativity, in which creativity has nothing to work on, so it works on nothing — ressentiment is the creation of new values from nothing. It is an ex nihilo morality par excellence. Nietzsche once wrote of the finest flower of ressentiment, as related by Walter Kaufmann:

“Among the exceedingly few discoveries made in recent times concerning the origin of moral value judgments, Friedrich Nietzsche’s discovery of ressentiment as the source of such value judgments is the most profound, even if his more specific claim that Christian morality and in particular Christian love are the finest ‘flower of resssentiment’ should turn out to be false.”

From Walter Kaufmann’s introduction to his translation of On the Genealogy of Morals

Today our finest flower of ressentiment is the resentful élite who rule over us with a bad conscience — the creative class, the powerful, the educated, the well connected, the wealthy — and who never tire of reminding us of how deeply we have disappointed them. This is the kind of contempt that is exhibited when urbanites speak of “white trash” or some such similar social construct that expresses the bitter hatred of the privileged for the downtrodden. Both in the US and the UK, the political parties that formerly represented the interests of the working classes have been transformed in the past half century into parties that represent urbanized professionals, and they do not even bother to veil their contempt for the working class, who now appear to them as a distasteful embarrassment at best, a contemptible mass at worse, fit only to be ridiculed and despised.

In a Nietzschean analysis, one would expect that it would be the creative few who would be de facto Übermenschen, and so possessed of the virtues of the Übermensch — or, if you prefer, the virtù of the Übermensch — therefore these few would be among the least resentful elements in society, because the Übermensch expends his energies. If we were a society dominated by a truly creative class, we should be a society and an economy of supermen, creating new values and spontaneously releasing any pent up energies, but it is ressentiment that rules the present. Why?

The artificiality of our institutions, which demands that the ruling élites must bend the knee to democratic forms and make a pretense to upholding the rule of law that, in theory, binds their actions no less than ours, constitutes the hostile external world against which the ruling élites react, the Other that is Outside and Different. The creative deed of the élites of the creative class is its emphatic “No!” directed against the world from which it seeks to distinguish itself. Robbed of triumphant affirmation, they must rule without appearing to rule, and the reality of power coupled with its seeming denial is creating new values even now, though these are values that only can be savored in submerged and secret places — that is to say, in the hearts of the members of the creative class.

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Intermittancy and Energy Infrastructure

Wednesday

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Storage has always been a problem for electricity, as batteries are large and heavy, expensive to manufacture, and limited in the quantity of electricity they can store and for how long they can store it. As a result of the limits of batteries, electricity production, distribution, and supply on an industrial scale has not involved any storage mechanism at all. The vast bulk of electricity is produced and simultaneously consumed, so that the electrical generation infrastructure has been constructed around the awkward requirements of having the start up and shut down entire generating facilities as demand waxes and wanes. This is an unhappy compromise, but it has been made to work for more than a century as the industrialized economy has expanded both quantitatively and qualitatively, and the use of electricity has expanded into sectors previously entirely reliant upon fossil fuels.

Electrical motors were already being developed in the 1820s, and before the first workable prototype diesel engine was operational in 1897, electrical motors had progressed to the level of sophistication of Mikhail Dolivo-Dobrovolsky’s three phase current and asynchronous motor with squirrel-cage rotor. But the twentieth century was to belong to fossil fuels and the internal combustion engine, and it was with these technologies that industrialized civilization grew to the planetary scale we know today.

The father of all diesel engines.

The early and rapid convergence of industrialized civilization on the use of fossil fuels — coal, oil, natural gas — was, at least in part, a function of the ease of storage of fossil fuels. The ease of storage also meant ease of transportation, which made fossil fuels ideal for the transportation industry, and they still are. Coal and oil in particular are easily stored for significant periods of time without loss of energy value and without elaborate technological methods. Natural gas isn’t much more difficult to store, but when liquefied the technology becomes a bit more complex and safety becomes more of an issue.

Fossil fuel storage also meant the possibility of continuous operation. Here we see the origin of the 24/7 always-on world that we know today. This is historically very recent, and the exception rather than the rule. As long as the machinery could be built to tolerances that allowed for continuous operation, a sufficient supply of fuel could power an engine non-stop. Ships and trains could operate for days or weeks if necessary. Nothing needed to be turned off. Industries could operate without regard to the any of the natural circadian and seasonal rhythms that had ruled human life since before we were human. And they did so. Shift work was born, and the dark Satanic mills that offended William Blake and Robert Southey ran night and day.

One of Blake’s dark Satanic mills?

Prior to the industrial revolution, energy infrastructure intermittancy was a fact of life, and the industrial processes of pre-industrial society (paradoxical, yes, but not a contradiction) were constructed around the fact of intermittancy. Everyone accepted (because they had to accept) that the stream that turned the waterwheel at the mill was reduced to a trickle in the summer. The solution was to build a mill pond that would store an amount of water, so that the mill could be put into service, at least on a “surge” basis, even when water flow was at a minimum. Even with a mill pond, the use of a water mill was limited in the summer months in comparison to other seasons. Hence mill production was often seasonal. This has been the case for thousands of years. Recent research into the ruins of the Roman water mill at Barbegal has suggested that this mill operated seasonally (cf. The second century CE Roman watermills of Barbegal: Unraveling the enigma of one of the oldest industrial complexes by Gül Sürmelihindi, Philippe Leveau, Christoph Spötl, Vincent Bernard, and Cees W. Passchier).

Everyone accepted, and accepted with equanimity, that windmills worked only when the wind blew. As a consequence, windmills were constructed at locations with the steadiest winds, but even then there would be becalmed days when the windmill wouldn’t be grinding any grain or pumping any water, and there would be days when the wind was dangerously strong and the vanes of the windmill had to be secured so that it wouldn’t be destroyed.

La Bretagne at Brest harbor, 19th century.

Everyone also accepted that international commerce was dependent upon the wind. The intermittancy of the wind did not prevent a planetary-scale economy emerging after the Columbian Exchange. Much shipping in the Age of Sail was seasonal, but when it absolutely, positively had to be there at the earliest possible time, sailors could beat to windward and make progress whatever the season. On the other hand, when sailing conditions were poor and no particular urgency was felt, sea voyages that usually took weeks could drag on for months at a time. Commerce had to accept a certain flexibility in delivery times, as some shipments would come in a few days earlier than expected, and some would be delayed for days, weeks, or months.

With a planetary-scale communications network, we no longer rely upon shipping for news and information; shipping, like railroads, is about freight, and freight can wait. Just as the electrical grid will incrementally transform from fossil fuels to renewable fuels, our transportation infrastructure could be transitioned from fossil fueled container ships to a larger number of smaller sailing ships, perhaps robotically piloted, that take longer to get to their destination, but which would take more efficient routes around the globe, reserving powered movement for specific circumstances like getting stuck in the doldrums or getting into port. Our planetary-scale communications network also allows for communication with ships at sea, so that production schedules can be continuously updated on the basis of the known location of materials in transport. We don’t have to wait at the harbor’s edge with a spyglass and then rush to make a deal after a sail has been spotted on the horizon, as was once the case.

The Cousteau Society’s Alcyon employed turbosails — a sailing technology that could be employed in shipping.

It is lazy thinking to raise the problem of intermittancy to a major barrier to the adoption of renewable resources. Energy infrastructure is tightly-coupled with social structures, and social structures are tightly-coupled to energy infrastructures. This coupling of social and energy structures throughout the history of civilization has not been as tight as the coupling between agriculture and civilization. However, if we rightly understand agriculture as a form of energy (food literally being fuel for human beings and for their beasts of burden), then we can see that tightly-coupled energy and social infrastructures have been definitive of civilization since its inception. And both structures admit of flexibility when flexibility is necessary to continue the ordinary business of life; there is some “give” in both society and energy use.

These two structures — energy infrastructure and social structure — roughly coincide with the institutional structure I have used to define civilization: namely, an economic infrastructure joined to an intellectual superstructure by a central project (cf. my previous post, Five Ways to Think about Civilization, for more on this). In the foregoing, what I called “energy infrastructure” roughly corresponds to economic infrastructure, as it also roughly corresponds to what Robert Redfield called the “technical order,” while what I called the “social structure” roughly corresponds to intellectual superstructure, as it also roughly corresponds to what Robert Redfield called the “moral order” (more on this in a future post). While all of these orders and structures can be distinguished in a fine-grained account, our account is undertaken at the scale of civilization, and so we are looking at the big picture, at which scale these different concepts coincide sufficiently closely that we can disregard their differences.

In the same way that individuals who live in very large cities like Tokyo or New York or Paris understand that it is impracticable for all but the wealthiest to drive a car, so that most individuals must use mass transit, on a planet with more than seven billion individuals using the energy infrastructure, individuals will need to adjust their expectations for instantaneous gratification. Industries, too, will need to adjust their expectations in the convergence of the global economy on sustainable practices. And, make no mistake, these adjustments will happen in the fullness of time. How it happens will be a matter of historical process, and many distinct scenarios for the transition of the terrestrial electrical grid to sustainable and renewable fuels are still possible; we are not yet locked in to any particular compromise.

Germany has come in for much criticism for its de-nuclearization program, which has meant that they have had to re-start some coal-fired power plants in order to maintain contemporaneous energy supply expectations. A number of energy experts regard the Germans as deluded, and believe that renewable resources can never meet the demands of an industrialized economy. I cannot wave away the problems of scaling and intermittency with a magic wand, but with adjustments to the industrial infrastructure and improved renewable technologies coming online, the two will eventually meet in the middle. However, those who ridicule renewables as impractical also cannot wave away the problems with their solutions with a magic wand. The most common answer to carbon-free electric generation is to ramp up nuclear power production. This comes with problems of its own. While I strongly support the development of advanced nuclear technologies, I do not delude myself that the public is going to suddenly embrace nuclear power and forget about the dangers. The Germans proved to be overly-optimistic over what can be done today with renewables, but this does not call the transition to renewables into question in the long term.

It is not at all clear that the public would prefer the dangers of nuclear power to the dangers of climate change, and both issues are so emotionally charged that it would be nearly impossible to take an honest poll on the question.

A continental-scale energy grid could greatly mitigate intermittency. If it’s not sunny somewhere on a continent, it is likely to be windy somewhere. However, even at a continental scale there will be becalmed nights when there is neither sunshine nor wind. The larger the surface area of the planet that is covered by an interconnected electricity grid, the more that these low points of intermittency can be minimized, but they cannot be entirely eliminated. For these minimized intermittancy low points, existing hydropower infrastructure could be used with a minimum of modification to store power. During peak periods of intermittent electricity supply, water could be pumped from lower elevations to fill a dam, which can then later be used to generate hydropower during times of peak demand.

A planetary-scale energy grid could eliminate intermittency, since the sun is always shining somewhere in the world. I made this point previously in a blog post from a few years back, A Thought Experiment on Collective Energy Security. As I said in that post, we do not have the technology and the engineering expertise for a planetary-scale electricity grid, and with a planetary electrical grid, the political challenges would probably be greater than the technological problems. However, we also do not have, at present, the technology and engineering expertise for advanced nuclear, and we don’t have the technology and engineering expertise to run an industrial economy on renewables. All of these technologies, however, are on the cusp of fulfilling their intended function, and significant capital investments in any one energy future could accelerate its practical availability.

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Pricing Political Risk

Thursday

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David Cameron wants to keep Britain in the EU, and negotiated a deal with the EU to this end, but the deal undermines the EU, so that the EU is weakened regardless of the referendum outcome.

The inability of the financial sector to price political risk is being made painfully clear by the “Brexit” situation and what it portends for Europe, for the EU, and for global finance. Now, “Brexit” is an unlovely neologism — much like “Grexit,” from which I believe it derives, both being conjunctions of the names of nation-states with the word “exit,” meaning an exit from the Eurozone, and, symbolically, ouster from Europe, the European project, the European idea — but I will employ it anyway, as it has rapidly become the convention.

It is important to observe that there are no good outcomes for the Eurozone in the wake of the British referendum on Brexit. If Cameron gets his way and Britain retains its EU membership, it will maintain this membership under specially negotiated terms, which demonstrates unambiguously that all members of the EU are equal, but some are more equal than others. If the British people vote against the deal and Britain voluntarily secedes from the EU, it will mean that one of the strongest economies in the EU, including the fabled banking center of London, have chosen to leave the EU, like the first rat leaving a sinking ship.

It isn’t just Britain and Brexit, of course. There is the lingering aftermath of the financial crisis, which began with the sub-prime mortgage crisis in the US, spread contagion-like to Europe, but was never resolved satisfactorily because of the financial difficulties of southern European nation-states like Italy and Spain, but especially Greece. Decisive and definitive action to reform Europe’s banking sector could not be pushed through under these circumstances, and now these unresolved problems are manifesting in unexpected and unintended ways due to the refugee crisis in Europe.

I am not predicting financial collapse in Europe, nor I am predicting social collapse in Europe; nor I am predicting large scale social turmoil. Europe is a very civilized place; the Europeans, by and large (and after spending hundreds of years killing each other), understand that it is in their interest to maintain economically, politically, and socially stable societies in which as many citizens as possible can live stable and prosperous lives. The approximately 500 million people in the EU are not going to suddenly shutter their shops, close their businesses, and stop buying things. Business as usual will continue, with interruptions and disruptions. Europe is, however, facing an existential crisis every bit as momentous as the Civil War that tested American unity as a nation-state. The basis of unity is distinct, and the test is distinct, but the danger is parallel.

We all know that, in cases of warfare, violent revolution, or even extreme social turmoil, that a financial position can unwind with shocking rapidity, leaving investors (typically, those investors slowest to respond to the crisis) holding the bag. The combination of financial ruin and the suddenness of its occurrence can be too much for some, and this is when we see people jumping out of windows rather than facing life as impoverished has-beens. It is no surprise that financial traumas of this kind, that emerge not from predictable market forces, but from human, all-too-human events, driven by emotion, passion, and and what Keynes called animal spirits, are put behind the market as quickly as possible, as the survivors go about the again-predictable business of picking up the pieces and going on with life.

Investment advisers like to tell potential investors that “market timing” is irrelevant, and that a prudent and long-term investor will consider market spikes and dips as somehow too petty to notice, almost beneath contempt. But if you invest your life’s savings in something as stable as bonds (like the investors in WPPSS, the Washington Public Power Supply System) or even in the very corporation that employs you (as with Enron employees who were actively encouraged to invest everything in Enron stock), and these apparently stable investment vehicles go sour due to reasons that have little to do with investment strategies, there is nothing left over to get back into the market. Yes, of course, the market will recover again, in time. By that time your retirement may be long over and you will have lived your final years in poverty before dying penniless. In the big picture such instances of individual suffering are unimportant and irrelevant, but to the individual who loses everything, it is everything.

This investment advice to disregard market timing is a rationalization and justification of the inability of the financial sector to price political risk. Political risk is a blindspot for finance capital, and as the world becomes more economically and politically integrated, this blindspot is becoming a serious stumbling block both to understanding and to action.

We have good economic models to describe how even complex industrialized economies function. But an economic model of a society is only a partial model of society. Sometimes business as usual continues even as a society is disrupted by political and social unrest (like the growing US economy despite Civil Rights protests in the 1960s and Vietnam war protests in the 1970s), but sometimes political and social unrest can cross a threshold beyond which business as usual ceases and the political and social unrest become the focus of all attention and business as usual does not recommence until the turmoil is resolved and business begins again under changed circumstances, sometimes even under changed institutions (as happened with the collapse of the Soviet Union).

A more complete model of society would include social and political factors in a way that the social sciences have not yet been able to pull off. At the end of this process would be a model of civilization itself, including economic, political, social, religious, and other factors. I have often pointed out that we lack a science of civilization, and the financial blindspot in pricing political risk is a perfect practical example of what it means to be without a model of civilization.

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Peak Labor

Wednesday

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Jean Jacques Boissard, Emblematum Liber (1593)

I have often said that the most expensive commodity in an industrialized economy is human labor. While generally true, this is a claim that admits of many exceptions, and, as I have come to see, these exceptions are likely to increase over time until the exception becomes the rule and our perspective is transformed by changed circumstances. But I am getting ahead of myself.

I have also often said that a civilization can be defined (at least in part) by the particular set of problems that it engenders, and that once a civilization lapses, its problems disappear with in and new problems arise from the changed civilization that supplants the old civilization. Another way to express the same idea would be to say that civilization can be defined by its particular disconnects — i.e., the particular pattern of ellipses that persists in our thought, against all apparent reason — and this in turn suggests an even better formulation, by defining civilization in terms of both its unique set of “connects,” if you will, and its disconnects, i.e., the particular patterns of foci and ellipses that together constitute the conceptual infrastructure of a civilization (or, if you like, the logical geography that defines the epistemic space of a civilization; on logical geography cf. the quote from Donald Davidson in Epistemic Space).

In several posts I have examined some fundamental problems (which I have also called fundamental tensions) in our civilization, as well as major disconnects in our thought. In regard to fundamental tensions, in The Fundamental Tension of Scientific Civilization I wrote that science within scientific civilization will become politicized, but those scientific civilizations most likely to remain viable are those that are best able to resist this inevitable politicization, and I recently returned to this idea in Parsimony in Copernicus and Osiander and suggested that another fundamental tension is that between methodological naturalism and ontological naturalism, i.e., scientific method exists in an uneasy partnership with scientific realism.

In regard to disconnects, in A Philosophical Disconnect I observed a disconnect between political philosophy and philosophy of law, which disciplines ought to be tightly integrated, since in our society law is the practical implementation of political ideals, and in Another Disconnect I observed a disconnect between accounting and economics, which again ought to be tightly integrated as accounting is the practical implementation of economics.

Another important disconnect has only just now occurred to me, and this is a disconnect that we see today in the conceptualization of the labor market. The disconnect is between the theoretical explanation of technological unemployment on the one hand, and on the other hand the increasing employment insecurity (therefore existential precarity in industrial-technological civilization) among many classes of workers today, and the failure to see that the two are linked. In other words, there is a disconnect between the theory and practice of technological unemployment.

In several posts, both on this blog and my other blog, I have examined the question of technological unemployment. These posts include (but are not limited to):

● Automation and the Human Future

● Addendum on Automation and the Human Future

● “…a temporary phase of maladjustment…”

● Autonomous Vehicles and Technological Unemployment in the Transportation Sector

● Technological Unemployment and the Future of Humanity

● Addendum on Technological Unemployment

It would be best, in a discussion of technological unemployment, to avoid the facile question of is-it-or-isn’t-it happening. There is no question that changing technology changes the economy, and changes in the economy result in changes in the labor market. The relevant question is whether technological changes create new jobs elsewhere. But even this is a relatively shallow perspective, that carries with it assumptions about the role of labor in social stability. But social stability is an illusion — an illusion sustained by our perspective on history, which is parochial and relative to the individual’s perception of time.

As every prospectus always says, “Past Performance is Not Necessarily Indicative of Future Results.” As with investments, so too with the labor market, which has changed radically over time, and, the larger the sample of time we take, the more radical the change. Because of our innate human biases we tend to think of anything persisting throughout our lifetime as permanent, but the contemporary institutions of the labor market did not even exist a hundred years ago, and it is at least arguable that no concept of “labor” as such existed a thousand years ago. Labor as a factor of production, along with land and capital, is a venerable formula, but the formula itself is younger than the industrial revolution.

Rather than be surprised that macroscopic change takes place over macroscopic historical scales, we should expect it, and our experience of industrialization — itself only about two hundred years old — and the ability of industrialization to continually revolutionize production, should suggest to us that we continue to live in the midst of a revolution in which change is the only constant. The labor market will not be exempted from this change. The truly interesting questions are how the labor market will change, and how these changes will interact with the larger social context in which labor occurs.

One macroscopic structure that we are likely to see in the labor market over historical time is something that I will call peak labor. As an industrialized economy develops through its initial stages that drives up the cost of labor that only human beings can perform, but then eventually passes a technological threshold allowing most forms of human labor to be replaced by machine labor, such an economy will pass through a stage of “Peak Labor,” that is to say, a period when human labor is the most expensive commodity in the economy, after which point labor begins to decrease in value. As machine equivalents to human labor tend to zero over the long term (the very long term), human labor as a factor of production will also tend to zero. Human beings will continue to engage in activities that could be called “labor” if we continue to use the term, but the sense of wage labor as a factor of production is a strictly limited historical phenomenon.

Having learned from past experience that, in making any prediction, the assumption will be that some transformation is “right around the corner,” and we had better not blink or we might miss it, I must hasten to add that we are not going to see the value of human labor in the labor market tend to zero tomorrow, next year, in ten years, or even in twenty years. But what we will see are subtle signs in the economy that labor is not what it used to be. We are already seeing this in the gradual phasing out of defined benefit retirement plans, the decrease in lifetime employment, and the increase of temporary employment.

As non-traditional and unconventional forms of labor very slowly grow in their representation in relation to the total labor market, traditional and conventional forms of labor will shrink in relative terms as constituents of the labor market. This process has already begun, but because this process is slow and gradual, and some individuals are not affected in the slightest, with many traditional forms of employment continuing for the foreseeable future, the process is not recognized for what it is. And this is a fundamental disconnect for our industrial-technological civilization, for which, as I have elsewhere observed on many occasions, the problem of employment is one of the central and integral tensions of economic activity.

When wage labor eventually entirely disappears, no one will notice and no one will mourn, because the problem of employment is linked to a particular kind of civilization, and when the problem of employment disappears this will mean that a different form of civilization will have supplanted that in which employment is a fundamental tension intrinsic to that particular form of social organization. The form of social organization that supplants industrialism will not be without fundamental tensions, but it will have different problems and tensions than those which concern us today.

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The Geopolitics of the Greek Financial Crisis

Wednesday

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If the Greek financial crisis were merely a financial crisis, i.e., a financial crisis and nothing else, it would be much less of a crisis than it appears to be today. Many commentators have remarked that Greek GDP represents only a very small portion of the total Eurozone economy, so that the amount of agony expended on the Greek problem is far out of proportion to the size of the problem. But the Greek financial crisis is not merely a financial crisis, it is also a political crisis, and it is a political crisis on many different levels. In so far as the Greek financial crisis is a political crisis, the financial crisis sensu stricto may be viewed as a trigger for larger events. It is this that has magnified the crisis.

Analyses of the crisis sometimes focus on the symbolic importance of a Eurozone nation-state going bankrupt, which is crisis for the idea of Europe, while others focus on the potential fallout and knock-on effects of allowing the Greek financial crisis to run its course without outside assistance (i.e., a bailout and debt forgiveness), which is a financial crisis that ripples outward and grows with its expansion — a trigger event with catastrophic consequences, the textbook case of which is the beginning of the First World War.

A few voices — not many, but a few — have suggested that, implicit in monetary union without banking union was the idea that future crises in the European Monetary Union (EMU) would force a reckoning that would presumptively be resolved by turning to ever closer European integration, so that Europe would gradually, hesitatingly, two-steps-forward-and-one-step-back, lurch its way toward full economic integration, and eventually even to full political integration. This is a more sophisticated analysis that sees the Greek crisis in a larger context, and I will not dismiss it out of hand, but I also cannot bring myself to make the many leaps that this argument requires. When have European crises been resolved by tighter integration? European integration has come about, when it has come about, as the result of peacetime negotiations, and not as a response to crisis.

This scenario has been hinted at (although not made fully explicit — nowhere is this formulation fully explicit) by no less a figure than ECB head Mario Draghi:

“This union is imperfect, and being imperfect is fragile, vulnerable and doesn’t deliver, doesn’t deliver all the benefits that it could if it were to be completed. The future now should see decisive steps on further integration.”

Even more recently, in an article on the front page of the Financial Times, “Italian finance minister says political union needed to ensure euro’s survival” (Monday 27 July 2015), Pier Carlo Padoan is quoted as saying, “The exit and therefore the end of irreversibility is now an option on the table. Let’s not fool ourselves… If we want to take that risk away, then we have to have a different euro — a stronger euro… To have a full-fledged economic and monetary union, you need a fiscal union and you need a fiscal policy… And this fiscal policy must respond to a parliament, and this parliament must be elected. Otherwise there is no accountability.” Here the whole program is laid out with the relentless logic of a domino theory: if you want to have the Euro, you need full-fledged, economic union, and if you want to have a functioning economic union, you need to have a European government with real power. The only thing missing in this account is the expectation that the first formulation of the Eurozone would inevitably result in crises, and the crises would be the trigger for these dominoes to fall.

Those who see the Greek financial crisis in its geopolitical context express concerns of Greek alienation from the Eurozone resulting in closer ties with Putin’s Russia, recalling Cold War fears when Greece was one of the proxy theaters of the Cold War. It is entirely possible that Greece, rebuffed by the Eurozone, may turn to Russia for loans, and the Putin would be ready and willing to provide these loans, despite the desperate condition of the Greek economy (and, for that matter, of the Russian economy as well), for political reasons rather than for economic reasons. (And in a changed political climate Russian loans would likely be paid back even if European loans were not paid off.) This strikes me as a more plausible scenario than the above interpretation involving a purposeful trainwreck.

It was a great Cold War coup that NATO was able to persuade rivals Greece and Turkey both to join NATO in 1952, when Greece was the only Balkan nation-state to be part of the western military alliance. Now other Balkan nation-states are NATO members, and Greece is not isolated in the region as a consequence of its NATO membership, but it would be a source of particularly acute tension to have a leftist Syriza government courting closer ties with Putin’s Russia at a time of European unease over Russian actions in Ukraine.

The attempt to unify Europe economically dates even to before NATO, and began as a geopolitical project to forestall European wars on the scale of the mid-twentieth century, and now that Eurozone is facing its greatest challenge since the implementation of the EMU, the unification of Europe will continue, if at all, as a geopolitical project.

The economic rationale for European economic union seems to be present — i.e., the economic union of Europe seems to make sense, but just because something seems to make sense doesn’t mean that it is practicable. In the particular case of Greece, accession to the Eurozone was highly impractical. Greece entered into the European Monetary Union (EMU) with a wink and a nod. There was a sotto voce acknowledgement that Greece did not meet the macroeconomic requirements of joining the EMU, but everyone looked the other way anyway because it was thought that Greece was hitching its wagon to a star; the EMU and the European wide common market was going to be such a grand success that the problem was going to be keeping the “wrong sort” out (like Turkey, which repeatedly expressed its interest in joining the Eurozone, but excuses were always found to exclude the Turks). Here the political rationale trumps the economic rationale.

When a large and diverse geographical area is contained within the borders of a single nation-state — as with the United States, Russia, China, India, or Brazil — this geographical diversity is often expressed in economic diversity, with wealthy regions and cities contrasted with impoverished regions and cities. Within a single nation-state wealth transfers will sometimes be undertaken to offset these extremes in the form of state institutions and mechanisms. These wealth transfers can range from generous to nearly non-existent depending on the nation-state in question. We see this in a much more limited way in the international system, when wealthy nation-states will sometimes give aid and assistance to impoverished regions of the world, but this kind of aid never reaches the level of wealth transfers seen within a single nation-state.

The unification of a nation-state from multiple territories, and the subsequent imposition of a unified system of banking and taxation, constitutes a microcosm reflecting the opportunities and risks that face larger-scale attempts at economic and political unification, as in the case of the Eurozone. The unification of Italy from 1815 to 1871 — a process requiring more than a half century, but roughly corresponding to the span of time of post-war Europe — and the unification of Germany in 1871, both contain detailed lessons for a unified Europe. The unification of Germany has, of course, been a fraught matter. Libraries of books have been devoted to the topic. The unification of Italy has sometimes been cited as one cause of the economic backwardness of southern Italy in comparison to the dynamic north of the country; coupling these diverse norther and southern regions into one national state with a single set of national institutions has not come without consequences.

The reader who has made it thus far may find themselves expecting me to make a case for the rescue of the Greek economy at any cost in order to salvage the geopolitical project of the Eurozone, which was, after all, never conceived primarily as an economic project. It is an economic project secondarily, but a geopolitical project primarily. I am not going to make this argument, which has been made many times, and which is fatally flawed. Europe remains a continent of nation-states (like every continent except Antarctica). Power lies in the sovereign legislatures of each nation-state, in their economic capacity, and in their respective militaries (or the lack thereof). If Europe is salvaged as a geopolitical project, it will be because some European nation-state, or combination of nation-states, determines that it is in their sovereign interest to salvage the Eurozone, and not because some abstract entity like “Europe” commands the loyalty of any population or its military forces.

In Armed Prophets of Revolution I cited Machiavelli’s distinction between armed and unarmed prophets. Here is the passage in question:

It is necessary, therefore, if we desire to discuss this matter thoroughly, to inquire whether these innovators can rely on themselves or have to depend on others: that is to say, whether, to consummate their enterprise, have they to use prayers or can they use force? In the first instance they always succeed badly, and never compass anything; but when they can rely on themselves and use force, then they are rarely endangered. Hence it is that all armed prophets have conquered, and the unarmed ones have been destroyed. Besides the reasons mentioned, the nature of the people is variable, and whilst it is easy to persuade them, it is difficult to fix them in that persuasion. And thus it is necessary to take such measures that, when they believe no longer, it may be possible to make them believe by force.

Machiavelli, The Prince, Chapter VI

While it is no longer the custom in Europe to offer up prayers for ideological programs, the secular equivalents of prayers are daily being published in the organs of mainstream thought in Europe. The Eurozone (and its advocates among Europe’s elite opinion) are unarmed prophets of transnational political unification. As unarmed prophets, we would expect them, following Machiavelli, to be destroyed. But Europe exists under the security umbrella provided by the United States, so that while the Eurozone itself may be an unarmed prophet, it is an unarmed prophet with an armed faction prepared to defend it.

What will the US, as the security guarantor of Europe, see as its geopolitical interest in European unification? Will the US provide the muscle to allow the great European experiment to continue, or will it accept European fragmentation, as long as that fragmentation does not follow the pattern of the Balkan wars following the breakup of Yugoslavia (that other great European experiment in the political unification of the South Slavs, whose earlier fragmentation provided us with the term “Balkanization” and triggered the First World War)? At present, the US is making only cautionary statements and is not actively involved in what is, in effect, the re-negotiation of the Eurozone. With an upcoming US election, one would not expect any new political initiatives from the US in regard to the Eurozone. With the US deeply mired in crises in other parts of the globe, Europe is not high on the agenda.

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During the initial iteration of the Eurozone Crisis I blogged extensively on the problem, and have occasionally returned to the problem in subsequent pieces, including the following posts:

● The Dubious Benefits of the Eurozone

● Shorting the Euro

● Will the Eurozone enact a Greek tragedy?

● A Return to the Good Old Days

● Can collective economic security work?

● Poor Cousins

● What would a rump Eurozone look like?

● An Alternative to the Euro

● The Old World in Turmoil

● Gibbon, Sartre, and the Eurozone

● Europe and its Radicals

● Default in the Eurozone

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Default in the Eurozone

Saturday

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An introduction to brinkmanship

The emerging consensus in the financial press is that Greece must default on its debt obligations. No longer is the question, “Will Greece default?” but rather then question is, “When will Greece default?” After a pause, another question comes up: “How exactly will Greece default?” Will a Greek default mean Greece leaves the Eurozone (or, rather, the EMU, the European Monetary Union), or will Greece default and a way will be found to keep the country in the EMU? The more these questions are followed by further questions the more obvious it becomes that those asking the questions are seeking justifications and rationalizations to retain Greece within the Eurozone even as it defaults.

During the last episode of Greek default brinkmanship it became increasingly obvious that the powers that be would find a way to avoid Greek default and exit from the EMU (known by the ugly coinage “Grexit”). How do we know this? There was no significant shorting of the Euro in currency markets. Greek bonds took a hit, but they didn’t collapse. In the final analysis, no one really believed that anything dire would happen. Financial markets remained calm. Now that we are once again approaching the brink, and the drumbeat in the financial press is that Greece must default this time, again financial markets are mostly calm. The Euro is not plunging in value (the Euro is lower in value, but not at historic lows), and Greek bonds recently rallied on the assumption that the sidelining of Yanis Varoufakis would make negotiations easier. It seems, once again, that the conventional wisdom is that the worst will be avoided. In other words, a way will be found for Greece to default on its debt and to remain within the EMU so as to create the fewest waves in the markets.

There are at least two interesting things to notice about this process. The first is how far an institution (or institutions) can be pushed in a desired direction in order to obtain a desired result. The Eurozone is today a rather different entity than when the Eurozone treaties were drafted in the late 1990s and the Eurozone was only imagined. Today the Eurozone is at a crossroads, but as important as the crossroads is the long road behind it — a road of repeated and flagrant violations of the Maastricht criteria that were to govern the Eurozone, in which no nation-state has been held to account for its violations. In this context, the further violations required to keep Greece after default in the EMU do not seem particularly outrageous, as they would have seemed to those drafting the Maastricht criteria.

The “convergence” that didn’t happen

Here a little history is in order, and not the history that you are likely to get from those tying themselves in knots to try to find ways not to put the Eurozone asunder. The conditions for accession to the EMU (also known as “convergence criteria”) are known as the “Maastricht criteria” (cf. Who can join and when?):

● Price stability, to show inflation is controlled;

● Soundness and sustainability of public finances, through limits on government borrowing and national debt to avoid excessive deficit;

● Exchange-rate stability, through participation in the Exchange Rate Mechanism (ERM II) for at least two years without strong deviations from the ERM II central rate;

● Long-term interest rates, to assess the durability of the convergence achieved by fulfilling the other criteria.

Of course, these are statements of general principle and not quantifiable economic measures, but the Eurozone also has stipulated quantifiable economic measures, and there is a lot of fine print involved in these stipulations.

It is now known and generally acknowledged that Greece did not meet the convergence criteria when it was admitted into the EMU. It doesn’t take much research to find the documentation on this, but you do have to have a memory that goes back more than ten years. Also cf. The politics of the Maastricht convergence criteria by Paul De Grauwe.

Plausible deniability for the Eurozone

To understand why Greece failed to meet accession criteria but was admitted anyway one must enter into the mindset of those laying the groundwork for the EMU. The Eurozone’s monetary union was viewed as a shoe-in for success, and getting in on the ground floor was seen as something as a coup for a marginal economy like Greece, which had hitched its wagon to a star. The people of Greece had only to sit back and watch their economy soar into the stratosphere, pulled along by German and French economies. By allowing Greece into the EMU with a wink and a nod, the EU has plausible deniability when it comes to Greek entry into the Eurozone — their papers were in order, if falsified — but no one at the time really believed the Greece met the Maastricht criteria.

In all fairness, while the Eurozone did not enforce its own accession conditions for the entrance of Greece into the EMU, other nation-states within the Eurozone have repeatedly and routinely failed to meet Eurozone convergence criteria, and they have not been held to account. No consequences follow from having too large of a budge deficit or allowing inflation to get out of hand. The individual economies within the Eurozone appear to enjoy complete impunity in regard to the convergence criteria. This is how the Eurozone has arrived at its present position, which is that of trying to find excuses to allow Greece to default while remaining within the institutional structure of the Eurozone and the EMU.

Cognitive bias as a guide to political economy

To return to the two things I said above deserve to be noted in the present situation, the second thing to notice is that, however far an institution (or institutions) can be pushed, there eventually comes a breaking point — the straw that breaks the camel’s back, as it were — and the real brinkmanship going on is not whether Greece will default or whether Greece will leave the Eurozone, but whether the Eurozone will push its institutions to the breaking point. I want to pause over this ancient problem of brinkmanship and breaking points, because recent scholarship can shed light on this in an unexpected way.

A good portion of Daniel Kahneman’s book about cognitive biases, Thinking, Fast and Slow (especially Part I, section 9, “Answering an Easier Question”), is devoted to cognitive biases in which we substitute an answer for a difficult question with an easier question that we know how to answer and to which we can give a definitive answer. I don’t think that we can stress strongly enough how important (and how under-appreciated) this insight is in relation to economics and politics. All you have to do is to read the reasoning of traders in volatile commodities, and review their elaborate justifications for investments that miss the point of the biggest questions, in order to see how profoundly this affects our world today. Because it is relatively easy to talk about quantitative measures of the economy, and what these have predicted in the past, but it is very difficult to say exactly when public discontent is rising to the point that an unprecedented disruption (or a revolution) is about to occur, it is not surprising that economists and politicians alike prefer to answer the easy question, and sometimes they even convince themselves that the easy question is the only question.

The theology of the insurance adjustor

Not to worry. Insurance companies are ready for such unprecedented events. I have often reflected on the theology of the insurance adjustor who must adjudicate between events anticipated by the language of a policy and those events not anticipated or predicted, and so come under the all-embracing umbrella of “Acts of God.” Wikipedia says that, “An act of God is a legal term for events outside human control, such as sudden natural disasters, for which no one can be held responsible.” This term of art from the insurance industry can paper over a multitude of sins and cognitive biases: deal with the easy problem you’ve substituted for the difficult problem, and then when the difficult problem asserts itself, call it an “Act of God” (or the political equivalent thereof).

If we are honest, we must admit that we do not know what will become of the Eurozone and the EMU. Trying to predict the future of an enterprise so large and so complex is like trying to predict the weather: we can say pretty well what will happen tomorrow, within certain parameters, but the farther we go into the future the more our models for predicting the future diverge, until at some point different models are making inconsistent if not antithetical predictions. This is the essence of a chaotic system, and financial markets and political communities are chaotic systems.

A political and not an economic union

The Eurozone is not fundamentally economic, but political. It is a political project masquerading as an economic project, and while diplomacy often requires masquerades, when the music stops and the ball comes to an end, the masks must come off. Because the Eurozone is a political project, the glosses on its presumed political meaning are legion. I have read accounts in reputable media claiming that it was the intention of the Eurozone that, once economic unification had started, member states would lurch from crisis to crisis, and these crises would force member states to surrender political sovereignty, thus slowly transforming the Eurozone into a political union — perhaps the political union it should have been from its inception. I wouldn’t go quite this far, but such an account at least understands that only political union would make possible the wealth transfers within the Eurozone that would make the EMU workable in the longer term.

Since these is no clear idea of what the Eurozone stands for, one cannot convict the Eurozone of hypocrisy or contradiction. And there is no question that the Eurozone can find some way for Greece to default and to remain within the Eurozone, but any such arrangement will have to accept that Greece will in no sense be an equal member of the Eurozone and EMU. What, then, will Greece be?

What will become of Greece?

Quite some time ago I noted the possibility of “Euroization,” that is to say, the adoption of the Euro as a currency by a nation-state (or other political entity) not part of the EU, much less the EMU. There is precedent for this in dollarization — the use of the US dollar outside US territories. The Ecuadorian economy dollarized, and the Argentinian economy is partially dollarized, with real estate purchases traditionally transacted in US dollars and its many dollar-denominated financial instruments.

If Greece defaults but remains within the EMU, it will become a de facto “Euroized” economy that employs the Euro as its currency, but which has little real participation in the European economy. The Greek economy is not large enough, even in its presumed implosion, to seriously threaten the economies of the other EMU nation-states. If Greece defaults and exits the EMU, both Greece and the remaining nation-states of the EMU will pass through a painful adjustment, but Greece would probably be better off than languishing in the perpetual twilight of Euroized poor cousin to the EMU.

Some consequences of a Greek exit form the EMU are quite easy to guess. Tourism has been a major component of the Greek economy for some decades, and it is likely that most of the upmarket hotels patronized by foreign visitors will price their rooms in dollars or Euros, and in so doing a major sector of the Greek economy will take in hard, convertible foreign currencies. This alone will keep a substantial portion of the Greek economy in operation, even if no one wants to think of their country as nothing but a tourist destination. This is not at all unusual. Many hotels I have stayed at in South America price their rooms in dollars, and some will only take dollars. I especially noticed this in Argentina when I was there in 2010. Even as the Argentine economy stumbles under mismanagement, those who have a hotel that attracts foreign guests capable of paying in hard convertible currencies can do quite well in such an economy desperate for dollars. But while the Greek economy can subsist, after a fashion, on tourism, agriculture was always the strength of the Argentinian economy, and tourism does not represent a substantial contribution to the overall economy.

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Satisfactions of Life in a Subsistence Economy

Tuesday

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One of the most memorable passages in political philosophy, quoted by many who do not know the source, is Thomas Hobbes’ description of life in a state of nature:

“Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.”

Thomas Hobbes, Leviathan, CHAPTER XIII OF THE NATURAL CONDITION OF MANKIND AS CONCERNING THEIR FELICITY AND MISERY

For Hobbes, the state of nature was no idyllic peaceable kingdom, but the arena of the war of all against all — a violent vision of anarchy at odds with many subsequent romanticized visions of anarchy.

There has always been an undercurrent of dissatisfaction with civilization that leads to a romantic and idyllic of life without civilization — Freud devoted a famous essay to this, Civilization and its Discontents, and I dedicated a significant portion of my essay “The Moral Imperative of Human Spaceflight” to what I call the hostile argument against civilization. During the Enlightenment Rousseau was perhaps the most famous critic of civilization who celebrated the state of nature, but not everyone was convinced:

“We were favoured with Sir James Colquhoun’s coach to convey us in the evening to Cameron, the seat of commissary Smollet. Our satisfaction of finding ourselves again in a comfortable carriage was very great. We had a pleasing conviction of the commodiousness of civilization, and heartily laughed at the ravings of those absurd visionaries who have attempted to persuade us of the superior advantages of a state of nature.”

James Boswell, The Life of Samuel Johnson, LL.D: Including a Journal of His Tour to the Hebrides – Vol. 2, NEW YORK: DERBY & JACKSON, 119 NASSAU STREET, 1859, p. 449

From the point of view of indoor plumbing and modern conveniences, we might today look at the condition of Boswell and Johnson as being little raised above the state of nature, but even with all our creature comforts the seductive idea of a simpler life that is better because it is simpler continues to haunt us. The appeal is not universal, but some are so enthralled by the idea that they can only conceive of the good as the destruction of the civilized order that we have built up over the past ten thousand years. I discussed the source of this some time ago in Fear of the Future, in which I argued that, “apocalyptic visions graphically illustrate the overthrow of the industrial city and the order over which it presided… While such images are threatening, they are also liberating. The end of the industrial city and of industrial civilization means the end of wage slavery, the end of the clocks and calendars that control our lives, and the end of lives so radically ordered and densely scheduled that they have ceased to resemble life and appear more like the pathetic delusions of the insane.”

Kenneth Clark added his voice to those who question the pretensions to preferring a state of nature to civilization:

“People sometimes tell me that they prefer barbarism to civilization. I doubt that they have given it a long enough trial… they are bored by civilization; but all the evidence suggests that the boredom of barbarism is infinitely greater. Quite apart from the discomforts and privations, there was no escape from it. Very restricted company, no books, no light after dark, no hope.”

Kenneth Clark, Civilisation: A Personal View, New York, et al.: Harper & Row, 1969, p. 7

A distinction should be made among the detractors of civilization, between those who look upon a violent convulsion in which civilization is brought to an end as a necessary purging of contemporary wickedness, and those who look rather to the peaceable kingdom they believe will follow after the work of the destruction of civilization is completed; these are two very different motives for welcoming the end of civilization.

Those who wish to fight in a cosmic war in order to be part of the grand work of destroying our wicked civilization — whether it be judged wicked for its wealth, its lack of religious piety, its industrialization, its pollution, its tolerance of individuals who where not tolerated in traditional regimes, or any other reason — have a distinct set of motivations from those who want to inhabit the post-apocalyptic peaceable kingdom, and I will not address these former individuals or their motivations at present, as I have dealt with them elsewhere (e.g., in Kierkegaard and Russell on Rigor).

For the rest, for those who look forward to the peaceable kingdom of a post-apocalyptic, post-industrial world in which human beings will live in harmony with nature (not, presumably, the nature of Hobbes, but rather the nature of Rousseau), what satisfactions will they expect to derive from the restoration of a subsistence economy lacking the creature comforts that we today take for granted, like flushing toilets, hot showers, clean clothes, and our choice of foods made available from the entire world?

Looking around the surrounding world of nature, what will natural man — the noble savage — do in order to seek satisfaction? He may attend to his bodily needs, using his mind and his hands to build shelter, sew clothing, hunt or gather food, and perhaps preserve some part of that food for a future time when the supply of food is less certain. When his bodily needs are met, he may choose to amuse himself, making up stories, or singing, perhaps using his mind and hands again to create a musical instrument or a painting or a piece of sculpture.

In short, natural man in search of satisfaction will begin to transform himself into unnatural man, and thus begin the long process of creating civilization. In the midst of the plenitude of nature, natural man draws upon his own resources to go beyond nature. In other words, he creates civilization as a natural response to his desires. This process, iterated over generations, gives us the traditions of agrarian-ecclesiastical civilization.

Recently in David Hume and Scientific Civilization I quoted from an essay by Susanne K. Langer, “Scientific Civilization and Cultural Crisis.” Here is the passage I quoted:

“There is no denying that the spearhead of this ruthless social revolution is something we all… honor and desire: science. Science is the source and the pacemaker of this modern civilization which is sweeping away a whole world of cultural values.”

Of this scientific civilization Langer further observed:

“It is only rather recently that we are realizing what it has destroyed, and also the very grave fact that in its advance it is still destroying many things of undoubted and irreplaceable value — social orders of rank and status built up by a long national or local history, religious faith and its institutions, arts supported by solid and good traditions, ways of life in which people have long felt secure and useful. Such losses are not to be taken lightly.”

It would be an interesting exercise to parse the above quote in detail, as contains so many interesting assumptions, but I will desist for the time being, except to note that the “social orders of rank and status built up by a long national or local history” closely resemble the traditions described alike by Marx and Edmund Burke (and which I discussed in Globalization and Marxism).

For now, I only want to observe that the satisfactions of life in a subsistence economy — really, a subsistence economy for the great mass of humanity, and a luxury economy for the privileged few, since agrarian-ecclesiastical civilizations invariably take the form of a mass of peasantry working the land and living hand-to-mouth while elite culture is reserved for the small fraction of the population with the leisure for art and literacy — are precisely those cultural institutions slowly built up over the course of ten thousand years of agricultural civilization, and rudely brought to an end by scientific civilization.

I do not doubt that, given enough time, humanity could be re-acculturated to these institutions, but I suspect that this process would require generations to become effective, and that individuals acculturated in the world today would largely reject these satisfactions of life specific to a subsistence economy — frequent religious festivals, occasional spectacular entertainments (theater, jousts, processions, etc.), etc. — as insufficient compensation for the loss of modern plumbing and the re-imposition of heavy physical labor.

Of course, what I have elsewhere called neo-agriculturalism (in Another Future: The New Agriculturalism) need not necessarily be so technologically rudimentary. I recently considered something like this in Ash Wednesday and Identity Politics, in which I quoted from one of my unpublished manuscripts:

Let us suppose, merely for our private amusement, that human civilization lasts long enough for the pendulum to swing completely, and that our civilization is slowly transformed into its opposite, from its present decadence into renewed, post-modern medievalism. This new epoch of medievalism would be an age with technology superior to our own and a more complete record of the past than we possess. Would these medievals look back upon us as the Golden Age, or upon the Middle Ages as the lost Golden Age? Would they nod while reading the Scholastics and react with horror to the existential excesses of the nineteenth and twentieth centuries? Would they want to preserve our pagan learning, or would they feel entirely justified in extirpating it? Upon such twists of fate do our efforts enjoy success or come to grief.

Perhaps the satisfactions of life in a subsistence economy might be rendered more acceptable if we could retain some of our creature comforts. But supposing the transition could be made with plumbing intact but our intellectual horizons severely constrained, would this be any better? If the great mass were kept more or less comfortable but deprived of the possibility of expanding their horizons intellectually, and living in a society without expanding intellectual horizons, would this be easier to accept than a straightforward return to idyllic primitivism? This is a question that could only possibly be settled by a social experiment on a civilizational scale. And it suggests another experiment: suppose we preserve the open intellectual horizon but take away the creature comforts — how would this fare as a form of social organization? And of any of these social experiments, we could ask whether they really would restore us to some sense of the presumed satisfactions of a subsistence economy, or whether this has become strictly unimaginable to us.

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Compensating Losers in a Winner-Take-All Economy

Thursday

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I‘ve just finished Thomas Piketty’s much talked about book Capital in the Twenty-First Century. There is much that could be said about this rather long book, but I will not attempt a review. Piketty’s theme is the concentration of capital at the top of the income hierarchy. Income inequality has become a political issue of some importance, and Piketty’s book speaks directly to this interest, which partially explains its popularity.

One point that Piketty does not make explicit in his book, but which could be said is implicit throughout, is the transition to an economic paradigm that could only be called a “winner-take-all” model. Many have commented on this. Skyrocketing executive pay is only only symptom of this social transition. It is arguable that the upward skewing of income and expectation is a function of what has been called the “attention economy” (and which in terms of the internet specifically is sometimes called “clickbait”). In a world flooded with a cacophony of voices competing for attention, those who can best capture the interest of others have an advantage. In each field of endeavor — music, sports, entertainment, industry, government, media, etc. — there are a handful of superstars who disproportionately command public attention and the rewards that follow therefrom. They are the winners, and they have scooped up the pot and left nothing on the table.

Kevin Kelly discussed the winner-take-all aspect of contemporary society in The Technium: A Conversation with Kevin Kelly [2.3.14] (I previously discussed this interview in Science, Knowledge, and Civilization). Kelly said in this interview:

Another point about this winner-take-all phenomenon is that at first we have a natural reaction saying, “Well, winner take all; there can only be one winner,” but here’s what technology is doing: technology is increasing the number of races in which you can win. There are more and more niches and more and more places in which the technology creates new ways in which one can win. There isn’t a finite number of winners, there’s an infinite number of winners as long as you’re not trying to win someone else’s race. The way everybody can become a winner is to continue to increase the number of ways to play, even though you have these winner-take-all phenomena. There’s only going to be one search winner, but there are so many other ways to race and to win other than in, say, search. In most cases, trying to compete against a winner is not going to succeed in this kind of dynamic. What you want to do is make up a new way to win.

I suppose that you could call this the “long tail” argument for a winner-take-all economy, and Kelly is arguing that technology is increasing the length of the tail and therefore the number of individuals who can find some place to call their own along this long tail. But the long tail is a tail only, and not the bump in the statistics that identifies the explosive growth of attention (and therefore income earning potential) that takes place at the center of things. Sure, if there’s an infinitely long long tail there could be an infinite number of “winners,” and each of these winners will take all that is at stake in the miniscule region they dominate, but the share of society’s total wealth available in the infinitely long sections of the long tail is also infinitesimally thin. Being a “winner” in this sense is like the boast of being “big in Japan.”

What will we do with the losers in a winner-take-all economy? Keep in mind that most of us are “losers” — including those who are “winners” along some thin segment of the long tail. Most of us are neither rich nor famous nor well-connected and influential. What is to be done with us? are we to be quietly forgotten? Are we to go gentle into that good night of poverty and obscurity?

There is a well-known quote from Boswell’s Life of Johnson about the condition of the poor in relation to those better off:

He said, ‘the poor in England were better provided for than in any other country of the same extent: he did not mean little cantons, or petty republics. Where a great proportion of the people,’ said he, ‘are suffered to languish in helpless misery, that country must be ill policed and wretchedly governed: a decent provision for the poor is the true test of civilization. Gentlemen of education,’ he observed, ‘were pretty much the same in all countries; the condition of the lower orders, the poor especially, was the true mark of national discrimination.’

For Dr. Johnson, then, the mitigation of poverty is a civilizational issue. This is, moreover, the differentia that marks the distinction between true and false civilization. The condition of the well-to-do is pretty much the same everywhere. That is still true. Indeed, it is likely to be even more true today than when Johnson said this to Boswell. The technocratic elite of global society have access to similar resources, they shelter their wealth in similar ways, they travel in the same circles, gather in the same hotels, eat at the same restaurants, and send their children to the same schools. What continent they happen to come from is much less important than their bank account, or what tax haven they happen to use as their address — or the address for their offshore bank accounts.

One of the ways in which individuals become impoverished, marginalized, and socially invisible is through unemployment. While growing income inequality is a complex problem with many historical forces driving it, the problem of unemployment — a problem intrinsic to industrial-technological civilization that can never be “solved,” but only managed — may be significantly exacerbated in the near future (by which I mean within the next 50 years). If technological unemployment becomes a major economic factor in the coming decades, this could drive an already widening social gap to dangerous levels that are not socially sustainable. This may happen anyway, but my point is simply that technological unemployment could make this happen more rapidly.

In several posts on technological unemployment (“…a temporary phase of maladjustment…”, Autonomous Vehicles and Technological Unemployment, Automation and the Human Future, Addendum on Automation and the Human Future, Technological Unemployment and the Future of Humanity, and Addendum on Technological Unemployment) I have pointed out that, not only is our society not making the transition to an economic regime in which the structure of employment realistically mirrors the nature of industrialization, but rather the prevailing attitude is punitive. Unemployment is seen as a personal failure, and even as a moral failure — a moral failure deserving of social disapproval. The poor are widely viewed as requiring discipline, regulation, and oversight by the professional classes.

Is it possible to find a way to compensate the losers in a winner-take-all economy when losing is seen as a sign of moral failure and winning is ascribed to meritocratic success? These social attitudes exacerbate rather than mitigate the damage of extreme income inequality. And social attitudes cannot be easily changed. Piketty in his book makes a case for a global tax on capital, but honestly calls it utopian. He probably understands all-too-well that nothing like this is politically possible. But changing policies is much easier than changing social attitudes. Social attitudes do change, but they change with glacial slowness, and while they are ever so incrementally adapting to changed conditions, generations are being effectively lost.

As Dr. Johnson rightly observed, this is a civilizational concern. If we care to pay attention, we can see this before our very eyes. The homeless live the life of nomadic foragers within the interstices of civilization. They have ceased to participate in civilization as we know it; they have given up on civilization, and civilization has given up on them. Of course we know that many of the homeless are mentally ill, and that many are alcoholics and drug addicts. Even today there are a few individuals who devote their lives to trying to help even those who spurn help and who abuse those who seek to help them. This is a thankless task, and it is only done out of love if it is done at all.

That many of these individuals who have gone from merely being unemployed to being utterly destitute have serious deficits that require significant intervention to overcome is an indication that they come at a price that even the destitute are unwilling to pay. We have all heard stories of the indignities visited upon the impoverished and the helpless. Some of these stories are horrific, and, somewhat disturbingly, cultural Foucauldianism is sometimes invoked in order to excuse the failure to intervene in the lives of those who have suffered from the tender mercies of institutionalized “kindness.” I can both understand and sympathize with a desire to live free as an urban forager rather than to be subject to the discipline of some “total institution.” But are these our only choices? Are there not ways to intervene without insisting on control, regulation, and discipline conceived as a moral corrective?

Compensating losers in a winner-take-all society is something that must be done with our eyes wide open, understanding the mistakes that we have made in the past, but understanding also that we are not limited by the mistakes we have made in the past. And if we do not find some constructive way to address the glaring inequity of our society, before the end of the century even the most pleasant lives will not be able to be fully insulated from the growing masses of marginalized and impoverished individuals whose only failing is that they are not good at making money.

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Europe and its Radicals

Wednesday

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Greek PM Alexis Tsipras and Finance Minister Yanis Varoufakis

Financial crisis or political crisis?

Democracy does not come naturally to the governments of Europe. Europe may have the institutions of democracy, and have them in a stronger form than elsewhere in the world, but democracy has shallow roots in the Old World, and in extremis we are not surprised to see Europe move in the direction of statism or populism. The problem of elite opinion, which I began to examine in The Technocratic Elite, is especially strong in Europe, and it repeatedly encounters the limits of engineering consent.

Because of the strong democratic traditions of the nation-states of the western hemisphere, governments are eventually aligned more-or-less with public opinion, but in Europe the attempt to maintain a facade according to which elite opinion is presented as mass opinion leads to periodic instability in which the distance between elite and mass opinion opens up like a fault line during an earthquake, at time swallowing whole the political order entire. The European press, which is itself split between elite opinion and mass opinion, documents this divide. If you visit a European nation-state you will find highbrow media of a quality far superior to that of the US, but you will also find popular newspapers and magazines pandering to the lowest common denominator (the “yellow press”). The individual who reads the Financial Times (as I do) is likely to never read The Sun, and vice versa.

I do not read the mass opinion press of Europe, so I do not know what it says, but I read quite a bit of the elite opinion media from Europe, and this tells us that Syriza, just elected to power in Greece, is a “radical party” of the left; the press also tells us that the National Front in France is a “radical party” of the right. There is a real concern, rooted in the painful lessons of European history, that Europe might once again turn to radicalism and extremism. How radical are these parties? Is Syriza a front for Stalinism or the National Front a front for fascism? Is Europe truly on a verge of an ugly populism that must be suppressed in order to assure the continuity of democratic institutions in Europe? This, as I read it, is the sotto voce position of elite opinion in Europe.

There are, of course, limits to European radicalism. One of the best explications of these limits that I have heard was to be found in a series of lectures by Jeremy Shearmur, an Australian philosopher and political scientist, who recorded a series for The Great Courses titled “Ideas in Politics.” Like many of my favorite lectures from The Great Courses, these have been discontinued and are no longer available (other discontinued favorites include An Introduction to Archaaeology by Susan Foster McCarter and The Search for a Meaningful Past: Philosophy, Theories and Interpretations by Darren Staloff). Shearmur noted in one of his lectures that if a truly radical government were elected, as soon as it came to power there would serious financial consequences: the currency would be bid down on international markets, foreign investors would seek to take their money elsewhere, and the country would become an international pariah. The leaders of a radical regime would then be forced from financial necessity to try to step in and calm the markets by making moderate-sounding statements. The lesson is that all the advanced industrialized nation-states are tightly integrated into the international financial system, and it would be quite painful for anyone of them–even a smallish economy like that of Greece–to separate themselves from this system.

What I have just described is a mechanism of moderation within elite opinion that guides the international system. It is assumed that political leaders will say radical things to get elected, but as soon as they get elected they will begin to moderate their stance. In fact, we have already seen this with Syriza in Greece, and the deal that Greece struck with the EU was not quite the renunciation of its bail out that Syriza had campaigned on. In fact, this pattern is so predictable that truly radical leaders with little or no concern for pragmatism have been elected on the assumption that, once they came to power, they would moderate their tone and their demands. This was one of the mechanisms that made it possible for Hitler and the Nazi party to come to power.

But this is not Germany in 1933. Conditions have changed. Indeed, we could with greater justification call these changes “radical” that to call contemporary European political parties or their leaders “radical.” The rule of Syriza is not going to initiate a new communist crackdown on Greek society, in which artists and poets will be jailed and Lysenkoism is imposed upon agriculture. Syriza may well effect an economic leveling that makes everyone except the nomenklatura and apparatchiks equally poor (this is, after all, what communist regimes typically do), but making everyone equally poor through economic policies known to be disastrous might be stupid, and it might mean the loss of an enormous amount of human potential, but it is unlikely to be criminal in the way that twentieth century communist regimes were criminal. Moreover, these are the policies that the people have voted for, and apparently it is necessary every single generation that people be taught a lesson on the unworkable nature of socialist economic policies.

If Syriza is communist (and Yanis Varoufakis, e.g., has been very upfront about the influence of Marx on his own views), it is a kinder and gentler form of communism (to borrow a phrase from George H. W. Bush). And if the National Front is fascist, it is kinder and gentler form of fascism. No more than Syriza is going to jail opposition intellectuals is Marine Le Pen and the National Front going to preside over a Kristallnacht aimed at Muslims living in France, though if you read the records of elite opinion in Europe you very clearly get the idea that there is a profound undercurrent of anxiety that extremists will come to power in Europe who will repeat the most brutal episodes in European history. However, this anxiety seems to be almost entirely focused on a right-of-center populist reaction against Muslim influence in Europe, as elite opinion journals seem to have little interest in the rise of an extremist left.

It could be argued that Europe would benefit from some political diversity (not to mention controversy), since monolithic elite opinion since the end of the Second World War has had the practical effect of denying the bully pulpit to alternative views. The election of Syriza in Greece, the rise of Podemos in Spain, the rallies of Pegida in Germany, and the improving poll numbers of the National Front in France are in this sense welcome. In so far as they give the bully pulpit to politicians who do not automatically mouth the euphemisms of elite European opinion, they actually give greater credibility to the EU and its programs.

In so far as the EU and the PR spin doctors of Europe’s elite opinion seek to deny even a voice to radical and marginal parties, they are making the same mistake in relation to politics today that they made with religion in earlier centuries. Instead of a free market of ideas, the attempt to shape a top-down definition of acceptable views has the opposite effect of making the “official” view laughable while piquing curiosity about the other views. In so far as some view is universally condemned in official sources, intellectually alert individuals will take notice and will suppose that there is something of interest and possible even something that is a clear and present danger to the established order in these marginal views.

Of course, the Europeans are not so stupid or as vulgar as to ban minority views outright (although there are a number of laws that make it illegal to make certain claims), but kinder and gentler elite opinion (like kinder and gentler communism and fascism) can be almost as effective in mere disapproval as it can be in outright legal sanction. Again, one need only pay attention to the monolithic on-message character of European politics. If you’re a careerist, you cannot possibly afford to neglect this.

With Round Two of the Eurozone crisis being played out across Europe, and headlines looking a lot like they looked a few years ago, although this time with Syriza in power in Greece, European elite opinion is faced once again with kicking the can down the road or dealing with the problems on the merits. Given the record of European elite opinion being so tightly focused on message, in contradistinction to meaningful action, the likely result seems to be further muddling through while hoping all turns out OK in the end. How many times can Europe lurch to the brink of crisis only to lurch backward from the brink at the last possible moment? European elite opinion worries about the brinkmanship of Europe’s radicals, but it is elite opinion itself that is pushing Europe toward the brink.

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During the initial iteration of the Eurozone Crisis I blogged extensively on the problem, including the following posts:

● The Dubious Benefits of the Eurozone

● Shorting the Euro

● Will the Eurozone enact a Greek tragedy?

● A Return to the Good Old Days

● Can collective economic security work?

● Poor Cousins

● What would a rump Eurozone look like?

● An Alternative to the Euro

● The Old World in Turmoil

● Gibbon, Sartre, and the Eurozone

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