The Committee of Public Safety

It's pronounced Vinjey

A short story that was probably by Vernor Vinge with a title I can’t remember had the following plot: Humanity was in the ascendant over the nearby stars. Mankind had only encountered one sentient race with enough raw intelligence that it could challenge it. However, that species was hobbled by short lifespans and rampant overpopulation. As a result, humanity is complacent because the aliens’s culture will never build up enough momentum to threaten it. A protagonist in the story, however, decides that mankind is growing soft and weak. He fixes the alien race’s biology so that their culture can evolve towards spacefaring, arguing that mankind needs a credible enemy in order to keep evolving.

America, with its crisis driven governmental system, may need a similar whetstone to keep itself sharp. Since the passing of the Soviet Union, America has been looking for something that can satisfy its need to struggle against something. The fare on offer has been dismal. Saddam Hussein, Mohammad Farrah Aideed, Radovan Karadzic, Ratko Mladic, Slobodan Milosevic, Osama bin Laden, Mullah Omar, Abu Musab al-Zarqawi, all have been offered as potential supervillians to whet our appetites. However, they lack that Existential Threat to Mom, Home, Apple Pie, and All That Is Good that Supervillian Hall of Fame members Imperial and Nazi Germany, Nationalist Japan, COBRA, and Communist Russia had.

Fortunately, Azar Gat, expanding on his later chapters in War In Human Civilization has identified a promising new enemy in  The Return of the Authoritarian Great Powers: fascism:

Today’s global liberal democratic order faces two challenges. The first is radical Islam — and it is the lesser of the two challenges. Although the proponents of radical Islam find liberal democracy repugnant, and the movement is often described as the new fascist threat, the societies from which it arises are generally poor and stagnant. They represent no viable alternative to modernity and pose no significant military threat to the developed world. It is mainly the potential use of weapons of mass destruction — particularly by nonstate actors — that makes militant Islam a menace.

The second, and more significant, challenge emanates from the rise of nondemocratic great powers: the West’s old Cold War rivals China and Russia, now operating under authoritarian capitalist, rather than communist, regimes. Authoritarian capitalist great powers played a leading role in the international system up until 1945. They have been absent since then. But today, they seem poised for a comeback.

Fascism was a more formidable system than commonly recognized:

Liberal democracy’s supposedly inherent economic advantage is also far less clear than is often assumed. All of the belligerents in the twentieth century’s great struggles proved highly effective in producing for war. During World War I, semiautocratic Germany committed its resources as effectively as its democratic rivals did. After early victories in World War II, Nazi Germany’s economic mobilization and military production proved lax during the critical years 1940-42. Well positioned at the time to fundamentally alter the global balance of power by destroying the Soviet Union and straddling all of continental Europe, Germany failed because its armed forces were meagerly supplied for the task [...] All the same, from 1942 onward (by which time is was too late), Germany greatly intensified its economic mobilization and caught up with and even surpassed the liberal democracies in terms of the share of GDP devoted to the war (although its production volume remained much lower than that of the massive U.S. economy). Likewise, levels of economic mobilization in imperial Japan and the Soviet Union exceeded those of the United States and the United Kingdom thanks to ruthless efforts.

Is there a possibility that this underestimated mix of authoritarianism and capitalism is coming back?:

The question is made relevant by the recent emergence of nondemocratic giants, above all formerly communist and booming authoritarian capitalist China. Russia, too, is retreating from its postcommunist liberalism and assuming an increasingly authoritarian character as its economic clout grows. Some believe that these countries could ultimately become liberal democracies through a combination of internal development, increasing affluence, and outside influence. Alternatively, they may have enough weight to create a new nondemocratic but economically advanced Second World. They could establish a powerful authoritarian capitalist order that allies political elites, industrialists, and the military; that is nationalist in orientation; and that participates in the global economy on its own terms, as imperial Germany and imperial Japan did.

It is widely contended that economic and social development creates pressures for democratization that an authoritarian state structure cannot contain. There is also the view that “closed societies” may be able to excel in mass manufacturing but not in the advanced stages of the information economy. The jury on these issues is still out, because the data set is incomplete. Imperial and Nazi Germany stood at the forefront of the advanced scientific and manufacturing economies of their times, but some would argue that their success no longer applies because the information economy is much more diversified. Nondemocratic Singapore has a highly successful information economy, but Singapore is a city-state, not a big country. It will take a long time before China reaches the stage when the possibility of an authoritarian state with an advanced capitalist economy can be tested. All that can be said at the moment is that there is nothing in the historical record to suggest that a transition to democracy by today’s authoritarian capitalist powers is inevitable, whereas there is a great deal to suggest that such powers have far greater economic and military potential than their communist predecessors did.

China and Russia represent a return of economically successful authoritarian capitalist powers, which have been absent since the defeat of Germany and Japan in 1945, but they are much larger than the latter two countries ever were. Although Germany was only a medium-sized country uncomfortably squeezed at the center of Europe, it twice nearly broke out of its confines to become a true world power on account of its economic and military might. In 1941, Japan was still behind the leading great powers in terms of economic development, but its growth rate since 1913 had been the highest in the world. Ultimately, however, both Germany and Japan were too small — in terms of population, resources, and potential — to take on the United States. Present-day China, on the other hand, is the largest player in the international system in terms of population and is experiencing spectacular economic growth. By shifting from communism to capitalism, China has switched to a far more efficient brand of authoritarianism. As China rapidly narrows the economic gap with the developed world, the possibility looms that it will become a true authoritarian superpower.

Such a model would be intriguing for elites in all parts of the world:

Even in its current bastions in the West, the liberal political and economic consensus is vulnerable to unforeseen developments, such as a crushing economic crisis that could disrupt the global trading system or a resurgence of ethnic strife in a Europe increasingly troubled by immigration and ethnic minorities. Were the West to be hit by such upheavals, support for liberal democracy in Asia, Latin America, and Africa — where adherence to that model is more recent, incomplete, and insecure — could be shaken. A successful nondemocratic Second World could then be regarded by many as an attractive alternative to liberal democracy.

There may be hope:

On the positive side for the democracies, the collapse of the Soviet Union and its empire stripped Moscow of about half the resources it commanded during the Cold War, with eastern Europe absorbed by a greatly expanded democratic Europe. This is perhaps the most significant change in the global balance of power since the forced postwar democratic reorientation of Germany and Japan under U.S. tutelage. Moreover, China may still eventually democratize, and Russia could reverse its drift away from democracy. If China and Russia do not become democratic, it will be critical that India remain so, both because of its vital role in balancing China and because of the model that it represents for other developing countries.

But the most important factor remains the United States. For all the criticism leveled against it, the United States — and its alliance with Europe — stands as the single most important hope for the future of liberal democracy. Despite its problems and weaknesses, the United States still commands a global position of strength and is likely to retain it even as the authoritarian capitalist powers grow. Not only are its GDP and productivity growth rate the highest in the developed world, but as an immigrant country with about one-fourth the population density of both the European Union and China and one-tenth of that of Japan and India, the United States still has considerable potential to grow — both economically and in terms of population — whereas those others are all experiencing aging and, ultimately, shrinking populations. China’s economic growth rate is among the highest in the world, and given the country’s huge population and still low levels of development, such growth harbors the most radical potential for change in global power relations. But even if China’s superior growth rate persists and its GDP surpasses that of the United States by the 2020s, as is often forecast, China will still have just over one-third of the United States’ wealth per capita and, hence, considerably less economic and military power. Closing that far more challenging gap with the developed world would take several more decades. Furthermore, GDP alone is known to be a poor measure of a country’s power, and evoking it to celebrate China’s ascendency is highly misleading. As it was during the twentieth century, the U.S. factor remains the greatest guarantee that liberal democracy will not be thrown on the defensive and relegated to a vulnerable position on the periphery of the international system.

Pull out a Gat and bust a Cap

The War on Terror is literally a war on terror. The war’s object is to make terror ineffective. Specifically, the link between modern global media and terror must be broken. As a tactic, terror has been around for millennia. The novelty is the intersection between media with global reach and age old tactics that gives terrorism its power. War is theater and terrorism is theater at its purest. War on terror is not war on a specific religion or ideology. It is war on a specific tactic. Azar Gat, in War in Human Civilization, expanded this point in 2006:

It has been claimed by some in the wake of 9/11 that it is wrong to define terror as the enemy, because terror is only a tactic, whereas the enemy is militant Islam. True, radical Islam stands behind most terrorist attacks in today’s world, and dealing with it is an intricate and complex problem. Yet, although labelled a new fascist problem, the Arab and Moslem societies from which the challenge arises are generally poor and stagnant. They represent no alternative model for the future and pose no military threat to the developed liberal-democratic world, as did the fascist powers, which were among the world’s strongest and most advanced societies. Only the potential use of WMD makes the threat of militant Islam significant. Furthermore, even if the problem of militant Islam were overcome, other causes and ’super-empowered angry men’ would always be present and, in contrast to the past, could now make themselves felt horrendously, because the means for this are potentially available. The Aum Shinrikyo, probably the yet unknown perpetrator of the anthrax attacks in the USA [ed. now thought to be Bruce Edward Ivins], and, indeed, the Christian millenarians and extreme right-wing perpetrators of the massive conventional bombing in Oklahoma City (1995) and the Atlanta Olympics bombing (1996) were not Moslem. Whereas societies in general can become pacifically inclined, as through the affluent liberal-democratic path, there will always be individuals and small groups that will embrace massive violence for some cause. Thus although Moslems today are the most likely perpetrators, unconventional terror is the problem.

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I subscribe to the IT Conversations podcast channel. It boasts an eclectic mix of conference talks, interviews, and conversations, joined only in the loosest sense by a shared theme of technology. A recent podcast was an interview of Howard Bloom by John Udell. The interview covers themes related to Bloom’s book The Global Brain: The Evolution of Mass Mind, published in 2000. The Global Brain deals with the role of group selection in evolution and groups of organisms act as complex adaptive systems:

A Complex Adaptive System (CAS) is a dynamic network of many agents (which may represent cells, species, individuals, firms, nations) acting in parallel, constantly acting and reacting to what the other agents are doing. The control of a CAS tends to be highly dispersed and decentralized. If there is to be any coherent behavior in the system, it has to arise from competition and cooperation among the agents themselves. The overall behavior of the system is the result of a huge number of decisions made every moment by many individual agents.

OODA loop

Bloom sees each individual agent within a CAS as a hypothesis proposed by the mere fact of its existence. All agents add up to a World Brain that, as a CAS, both constantly proposes hypotheses and constantly subjects them to testing to see which are true in the sense that they survive, survival being a kind of truth.

The forces driving this testing of hypotheses is a cycle of attraction and repulsion. Attraction and repulsion are essentially the synthesis and analysis processes of science. Analysis and repulsion tear stuff apart; synthesis and attraction pull stuff together. There are 5 mechanisms used to fuel the cycle:

1. diversity generators: individual agents that generate novel hypotheses.
2. conformity enforcers: individual agents that ensure that agents have enough in common to exchange hypotheses.
3. inner-judges: systems that decide if an individual hypothesis is true (it other words, that it survives) or if something is untrue (if it fails).
4. intergroup tournaments: competitions between groups that test the hypotheses produced by the group as a whole against hypotheses produced by other groups. Victory produces truth and defeat is the father of lies.
5. resource shifters: systems that do the dirty work for inner judges and intergroup tournaments. They heavily reward winning hypotheses and heavily punish hypotheses that perform poorly. Bloom summarizes this by quoting the Lord: For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath.

This structure has interesting interactions with John Boyd’s Observe-Orient-Decide-Action loop:

Lion King

Boyd, according to the Osinga book, studied the literature of complexity theory and CAS so he’s already mixed CAS into the OODA loop. Where do Bloom’s ideas fit within the OODA loop framework? Some are straight-forward carryovers. Within an OODA loop, decision posits the hypothesis and action launches the test. Diversity generation and conformity enforcing happen in the all important orientation stage. Inner judges would happen in orientation as well. Intergroup tournaments occur out in the environment. Resource shifting could happen in orientation or outside in the environment.

Boyd also argued that the essence of victory was disrupting a system’s connections to the outside universe. This causes entropy to increase in the system since it has no outlet for exporting its internal forces. Eventually, the increase in entropy overwhelms the system. Similarly In Bloom’s work, winners (winning hypotheses) get more connections, more feedback, more interaction, and just plain more. Losers lose connections, lose feedback, don’t have anyone who wants to interact with them, and just gets less.

The Lion King

Consider the example of the lizard Bloom provides in the podcast. Lizards compete by seeing who can raise their head higher. The winner strikes a “Lion King” pose and turns a bright green. The loser digs a hole and turns a light brown. A significant percentage drop dead. The inner-judge, acting like a fifth column, releases chemicals that shout down the lizard, telling it that it’s a loser. These chemicals either kill or come close to killing the lizard. The lizard wants to and literally crawls into a hole and dies. Losing is lethal.

Similarly, OODA loops, if they repeatedly produce losing hypotheses, may have a inner-judge that starts to disrupt it internally, meaning that if it is under attack, it ends up fighting a two front war, one against the outer intergroup tournament and internally against an inner-judge. The inner-judge, because it’s deeply embedded in the cycle, may be tougher to defeat.

The Toyota Production System (TPS) represents an interesting variation. Given the principles extracted from TPS:

1. All work shall be highly specified as to content, sequence, timing, and outcome.
2. Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no
   way to send requests and receive responses.
3. The pathway for every product and service must be simple and direct.
4. Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization.

TPS uses conformity enforcement from steps 1-3 to ensure that the process is running smoothly and uses the conformity to reveal diversity. Conformity enforcement can be or produce diversity generators. Oppression has generated creativity in the past and will probably produce creativity in the future.

Cerf's Up

Python testing guru Grig Gheorghiu tracks Google’s march to global domination of the IT industry through its hiring of prominent figures in IT history:

• Ken Thompson == Unix
• Vint Cerf == TCP/IP
• Andrew Morton == #2 in Linux
• Guido van Rossum == Python
• Ben Collins-Sussman and Brian Fitzpatrick == subversion
• Bram Moolenaar == vim

I wouldn’t brag about vim though.

Portrait of the artist as a young man

In the spirit of recent discussions of Clausewitz, this article, Clausewitz after 9/11, on the continuing relevance of Clausewitz, popped up. It takes aim at the core of Clausewitz revisionists:

As early as 1991, in his book On Future War: the Most Radical Reinterpretation of Armed Conflict Since Clausewitz, the Jerusalem military historian Martin van Creveld proclaimed that low intensity conflict was now the name of the game. Clausewitz had been superseded. Wars would henceforth no longer be based on governments, armies and peoples, but upon ethnic and religious groups.

Van Creveld’s gripes come from this passage from Book I, Chapter I of On War:

War is more than a true chameleon that slightly adapts its characteristics to the given case. As a total phenomenon its dominant tendencies always make war a remarkable trinity–composed of primordial violence, hatred, and enmity, which are to be regarded as a blind natural force; of the play of chance and probability within which the creative spirit is free to roam; and of its element of subordination, as an instrument of policy, which makes it subject to reason alone.

The first of these three aspects mainly concerns the people; the second the commander and his army; the third the government. The passions that are to be kindled in war must already be inherent in the people; the scope which the play of courage and talent will enjoy in the realm of probability and chance depends on the particular character of the commander and the army; but the political aims are the business of government alone.

These three tendencies are like three different codes of law, deep-rooted in their subject and yet variable in their relationship to one another. A theory that ignores any one of them or seeks to fix an arbitrary relationship between them would conflict with reality to such an extent that for this reason alone it would be totally useless.

Our task therefore is to develop a theory that maintains a balance between these three tendencies, like an object suspended between three magnets.

Van Creveld defined Clausewitz as “trinitarian” which he juxtaposes against his own concept of “non-trinitarian” war:

Clausewitz’s trinitarian model of war (a term of van Creveld’s) distinguishes between the affairs of the population, the army, and the government. Van Creveld criticizes this philosophy as too narrow and state-focused, thus inapplicable to the study of those conflicts involving one or more non-state actors.

Van Creveld’s definition of Clausewitz as “trinitarian” is too narrow. Clausewitz wasn’t a trinitarian in that sense:

Clausewitz thought of war in a framework that included his formula, but went way beyond it. That framework, known as the trinity, is usefully re-translated in Clausewitz in the Twenty-First Century by Christopher Bassford, editor of the Clausewitz Home Page. In Clausewitz in the Twenty-First Century, Bassford has Clausewitz, in the famous final section of chapter one of book one of On War, keeping his theory ‘floating among’ three ‘tendencies’, as ‘among three points of attraction’. The three tendencies from which war is composed are:

1. the blind natural force of primordial violence, hatred and enmity
2. the play of chance and probability, within which the creative spirit is free to roam
3. the element of subordination, as an instrument of policy, which makes it subject to pure reason.

Bassford’s direct translation of Clausewitz goes on: ‘The first of these three aspects concerns more the people; the second, more the commander and his army; the third, more the government.’

This passage is vital. Andreas Herberg-Rothe treats his formula’s nuances – war as both a continuation of politics and as involving other means – with the careful thought they deserve in the prologue to Clausewitz’s Puzzle

[...]

Clausewitz revisionists can’t be bothered to read what he had to say. In particular, they reduce Clausewitz’s dynamic trinity to his quite secondary reference to government (or state), army and people. Instead of Clausewitz’s rich and contradictory trinity of hatred and violence, chance, and politik, war is reduced to its agents, or what management-speak would cheerfully describe as its one-way ‘drivers’.

Reclaiming the Clausewitzian Trinity is Christopher Bassford’s article expanding upon the actual trinity:

In arguing that war is more than a chameleon (an animal that merely changes color to match its surroundings, but otherwise remains identical), Clausewitz is saying that war is a phenomenon that, depending on conditions, can actually take on radically different forms. The basic sources of changes in those conditions lie in the elements of his “trinity.”

Far from comprising “the people, the army, and the government,” Clausewitz’s trinity is really made up of three categories of forces: irrational forces (violent emotion, i.e., “primordial violence, hatred, and enmity”); non-rational forces (i.e., forces not the product of human thought or intent, such as “friction” and “the play of chance and probability”); and rationality (war’s subordination to reason, “as an instrument of policy”).*9

Clausewitz then connects each of those forces “mainly” to one of three sets of human actors: the people, the army, and the government:

1. The people are paired mainly with irrational forces–the emotions of primordial violence, hatred, and enmity (or, by implication, the lack thereof–clearly, it is quite possible to fight and even win wars about which one’s people don’t give a damn, especially if that is the case on both sides.)

2. The army (which refers, of course, to military forces in general) and its commander are paired mainly with the non-rational forces of friction, chance, and probability. Fighting organizations deal with those factors under the creative guidance of the commander (and creativity depends on something more than mere rationality, including, hopefully, the divine spark of talent or genius).

3. The government is paired mainly with the rational force of calculation–policy is, ideally, driven by reason. This corresponds to the famous argument that “war is an instrument of policy.” Clausewitz knew perfectly well, however, that this ideal of rational policy is not always met: “That [policy] can err, subserve the ambitions, private interests, and vanity of those in power, is neither here nor there…. here we can only treat policy as representative of all interests of the community.”

[...]

The trinity also provides us with clues as to what Clausewitz meant by his famous phrase, “war is a continuation [fortsetzung] of politics by other means.” This oft-quoted sentence contains two very different messages because of the dual meaning of the German word he used: Politik. That one word encompasses the two quite different English words “policy” and “politics.” The policy aspects he discusses are those connected with the trinity’s element of rational calculation. Politics, on the other hand, encompasses the whole trinity: Politics is a struggle for power between opposing forces–political events and outcomes are rarely if ever the product of any single actor’s conscious intentions. Politics, as any intelligent watcher of the evening news soon realizes, is a chaotic process involving competing personalities (whose individual actions may indeed have a rational basis), chance and friction, and popular emotion. (Is the candidate’s most brilliant speech blown off the airwaves by a natural disaster in the countryside? Will his embarrassing slip of the tongue get picked up by the evening news? Can a widespread “throw-the-bums out” mentality engulf even the most responsible politician?) The “remarkable trinity” is, in fact, Clausewitz’s description of the psychological environment of politics, of which “war is a continuation.” The only element of this political trinity that makes it unique to war is that the emotions discussed are those that might incline people to violence, whereas politics in general will involve the full range of human feelings. Thus Clausewitz tells us that the conscious conduct of war (strategy, etc.) should be a continuation of rational calculation and policy, but also that war inevitably originates and exists within the chaotic, unpredictable realm of politics.

William McChesney Martin

America suffers from victory disease. We have been so successful for so long that we are frozen into patterns of behavior that no longer fit the current world scene. Worse, when we’re wrong, we’re aggressively wrong. Change is not impossible. However, change is hard. We must live with uncertainty since we can’t predict exactly how we’ll need to change in order to adapt. However, we can take comfort (and hints, if extracted conservatively) from the example of past American eras.

Era of Hegemony (1943-1973): At the end of the Great Intervention, America assumed control of the Third Circle. The nations of the British Isles, Western Europe up to the Elbe, Japan, Formosa (Taiwan), and Indonesia became American satellites. America had a nuclear monopoly. America was responsible for half of the world’s economic output. America was at her fully capitalized zenith. America was positioned for securing the Heartland of Eurasia and removing it as a threat. Adaptations of this era include:

• Opening its markets as an indirect subsidy of economic recovery in the Third Circle and using its consumers to consume foreign products.
• Establishing a framework for managing its client states without assuming direct rule through institutions like NATO, the IMF, the Common Market, and Bretton Woods.
• Spreading the prosperity of its hegemony throughout the American population.
• Massive aid to buy political affiliation through programs like the Marshall Plan and other foreign aid.
• A institutionalized military that reduced the ad hoc approaches to defense America had taken in the past.
• Formal infrastructure for fighting non-kinetic war and establishing cultural hegemony like USIA, the CIA, and Radio Free Europe and informal structures like the films and television programs produced by America’s entertainment industry.
• Establishment of a superior university system through subsidies like the GI Bill.
• Successful pursuit of monetary policy by the Fed under William McChesney Martin.
• A policy of cheap victory by fighting proxy and cultural wars with the Soviet Union instead of a direct great power confrontation. Victory in a nuclear war with Russia was not impossible until the mid-1960s.
• Building a massive infrastructure of highways needed to protect the First Circle:
  

  President Dwight D. Eisenhower, who was influenced by his experiences in 1919 as a young Army officer crossing the country in a truck convoy (following the route of the Lincoln Highway), and his appreciation of the German Autobahn network as a necessary component of a national defense system. In addition to facilitating private and commercial transportation, it would provide key ground transport routes for military supplies and troop deployments in case of an emergency or foreign invasion.

Gross

Era of Strategic Leverage (1973-?): During this era, America leveraged the capital it had accumulated in the preceding 197 years in order to maintain the level of consumption that prevailed during the Era of Hegemony. This leverage was also used to force Soviet Russia to spend itself into oblivion. However, American society became so dependent on consuming foreign capital to fund its consumption that it morphed, as Bill Gross has argued, from a industrial or service economy to a finance economy. However, this era, drawing to a close, had its own share of adaptions:

• The building of a first rate military force capable of defeating middle tiered countries and occupying small ones.
• The adoption of digital computers for automating certain routine tasks and even some non-routine ones (like the models that deluded Wall Street).
• The introduction of some flexibility into the economy that made it better able to adapt to a narrow range of changing conditions.
• The use of a preemptive arms buildup to destroy an imperial adversary without significant cost to the world’s infrastructure.
• The spread of computer networks to form new mechanisms of adaption.

I hold my light beside the open door

America suffers from victory disease. We have been so successful for so long that we are frozen into patterns of behavior that no longer fit the current world scene. Worse, when we’re wrong, we’re aggressively wrong. Change is not impossible. However, change is hard. We must live with uncertainty since we can’t predict exactly how we’ll need to change in order to adapt. However, we can take comfort (and hints, if extracted conservatively) from the example of past American eras.

Second Era of Intervention (1891-1917): After the Era of Reconstruction, during this period America embarked on a series of interventions aimed at:

1. Securing the remainder of the Second Circle (Alaska, Hawaii, Guam, Pacific Island Territories, Cuba, Panama Canal Zone, powerful Atlantic Naval Fleet).
2. Keeping overseas markets threatened by consolidating European colonization open, even if it meant colonizing them ourselves
3. Securing a place in the global pecking order

Adaptations included:

• Securing the outer circle of defense by taking Puerto Rico, Hawaii, the Panama Canal Zone, and Guam as territories and reducing Panama and Cuba to client states.
• Creating an American national identity with formal measures like adopting a standard flag layout, synthesizing a common historical mythos, and the Pledge of Allegiance.
• Easing class divisions within American society by Progressive legislation.
• Adopting the Open Door policy and annexing the Philippines to keep foreign markets open to American exports
• Seeking to expand the American ideal of republican nation states through interventions in Cuba, Haiti, the Dominican Republic, Columbia (Panama), and Mexico. Said Thomas Woodrow Wilson: I am going to teach the South American republics to elect good men.
• Entering the Third Circle (British Isles, West European Littoral, Japanese Islands, Formosa (Taiwan)) by expanding the US Navy, forcing the British to appease us by de facto ceding their sphere of influence in the Western Hemisphere, and reducing the British and French to net debtors of the United States in the lead up to our intervention in World War I.
• Intervening in overseas conflicts diplomatically such as Theodore Roosevelt’s negotitation of the end of the Russo-Japanese War and American efforts to mediate European squabbles like the Moroccan Crisis and World War I.

Over-the-top supervillian

The Great Intervention (1917-1943): Intervention in Europe during World War I led to an unstable international order whose most powerful member was an unwilling American Republic. The new world order was created by Thomas Woodrow Wilson as a perhaps conscious implementation of the worldview of American supervillian John C. Calhoun. A League of Nations would act as a weak central authority (Calhoun’s vision of the Federal government) with the nations of the Earth accepting or rejecting its mandates as they pleased (Calhoun’s super-strong States of the Union). This States’s Rights world would be the international model into the 21st century. Essentially, the result was a beginning of American domination of the Third Circle by contesting its rule with Imperial Germany and later Nazi Germany and Japan. Adaptions during this era included:

• Developing a distributed transportation system that included airplanes and cars in addition to horses and railroads.
• Consolidating American populations into a more cohesive unit by severely cutting back on immigration in the 1920s.
• Creating the Four Powers framework to formalize American hegemony in the Western Hemisphere, institutionalized in the United Nations and Bretton Woods framework.
• A consumer economy to absorb more of the products produced by American industry domestically.
• A global culture epitomized by jazz music and motion pictures that extended American cultural influence into the Third Circle.
• Creating a more stable society through a more equitable distribution of wealth to an expanded American middle class.
• Development of air power and nuclear weapons to further insulate America from the Second Circle inwards from Eurasian penetration.
• Eclipsing England through the negotiated parity of the Washington Treaty.

• Bits blog at the New York Times picks up on Taleb’s point that risk management models efficiently allowed Wall Street to blind itself when it came to the riskiness of its loan portfolios.
• Complete transcript of Alan Greenspan’s testimony.  (props Ivan Krstic)

Count no man happy until he is dead.

- Solon, quoted by Croesus in Herodotus, Histories

Solon

To cope with our black swan (or is it a white swan?), we may need a Solon. Solon has been called the father of democracy. A package of reforms he introduced in a time of crisis in ancient Athens laid the groundwork for the broad based representation later Athenian democracy achieved. The same package of reforms also had an economic component. The crisis, as Plutarch describes it:

…there was conflict between the nobles and the common people for an extended period. For the constitution they were under was oligarchic in every respect and especially in that the poor, along with their wives and children, were in slavery to the rich…All the land was in the hands of a few.

Desperate times called for desperate measures. Economic strains produced a wave of tyrants taking power in city-states all over Greece. In order to keep an opportunistic politician from taking over in Athens, the Athenians chose to appoint a temporary dictator: Solon. Solon passed a broad package of reforms, with legal, moral, and economic components. The economic component is the most relevant to the current tsunami:

In his poems, Solon portrays Athens as being under threat from the unrestrained greed and arrogance of its citizens…Up until Solon’s time, land was the inalienable property of a family or clan and it could not be sold or mortgaged…A family struggling on a small farm however could not use the farm as security for a loan even if it owned the farm. Instead the farmer would have to offer himself and his family as security, providing some form of slave labor in lieu of repayment…In the event of ‘bankruptcy’, or failure to honor the contract…farmers and their families could in fact be sold into slavery.

Solon’s reform of these injustices was later known and celebrated among Athenians as the seisachtheia (shaking off of burdens)…The seisachtheia laws immediately cancelled all outstanding debts, retroactively emancipated all previously enslaved debtors, reinstated all confiscated serf property.., and forbade the use of personal freedom as collateral in all future debts.

Sometimes theater is necessary to regain confidence and, given the magnitude of the crisis, theater must be as grand as possible. It may become necessary to have our own seisachtheia, debt forgiveness on an individual, national, or international scale.

Tsk, Tsk

It may be argued that debt forgiveness violates the sanctity of contracts, enshrined in the Constitution:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

One important reason for George Washington’s slow motion coup d’etat in 1787 was to ensure that American states met their debt obligations to European creditors. There were serious moves afoot by the states to forgive debts. The Constitution forbade this and Alexander Hamilton ensured that the debts would be paid by having the nascent Federal government assume the states’s Revolutionary War debt. It may be that, as bad as our system is now, it may not be as bad as the state of the Union in the aftermath of our War for Independence. They managed without debt forgiveness.

Debt forgiveness may be most potentially harmful in that it breaks off the constructive interplay between borrower and lender. Moral hazard is raised: if you forgive debts once, the pressure builds to forgive debt again if things get rough. Breaking contracts breaks trust. Loans may not happen if lenders fear they’ll never receive anything back. The discipline necessary to conservatively make loans is harmed as well. The thrill of gain and the punishment of loss build moral fiber and reinforce good market behavior. However, securitization, by allowing lenders to pass pain on to new buyers while keeping the profit, may have already broken that feedback loop. Alan Greenspan hinted at this in his testimony before Congress when he suggested that, in the future, lenders should have to keep some of their loans so they have better incentives to make good loans.

However, if the crisis gets really bad, as Taleb hinted at, greater drama may become necessary. Since there is a high risk of deflation in the current contraction, we could face a situation where Americans, saddled with debt, have the value of their debts increase while the amount of their income shrinks. Debt forgiveness might become necessary as the crisis deepens.

It doesn’t need to be a total repudiation of all debt. Forgiveness might be more selective: bad mortgage debt, borrowers beneath an income threshold, international relief of the debts of poor countries, or unwinding derivative positions in one fell swoop. Hard times require hard measures.

Interesting quotes from the twilight of Charles Darwin:

1. “The mystery of the beginning of all things is insoluble by us; and I for one must be content to remain an Agnostic.” (Autobiography)
2. “It seems to me absurd to doubt that a man may be an ardent Theist & an evolutionist.” (Letter to John Fordyce, May 7 1879)
3. “I hardly see how religion & science can be kept as distinct as [Edward Pusey] desires… But I most wholly agree… that there is no reason why the disciples of either school should attack each other with bitterness.” (Letter to J. Brodie Innes, November 27 1878)
4. “In my most extreme fluctuations I have never been an atheist in the sense of denying the existence of a God.” (Letter to John Fordyce, May 7 1879)
5. “I think that generally (& more and more so as I grow older) but not always, that an agnostic would be the most correct description of my state of mind.” (Letter to John Fordyce, May 7 1879)
6. “I am sorry to have to inform you that I do not believe in the Bible as a divine revelation, & therefore not in Jesus Christ as the son of God.” (Letter to Frederick McDermott, November 24 1880)
7. [In conversation with the atheist Edward Aveling, 1881] “Why should you be so aggressive? Is anything gained by trying to force these new ideas upon the mass of mankind?” (Edward Aveling, The religious views of Charles Darwin, 1883)
8. “Would any one trust in the convictions of a monkey’s mind, if there are any convictions in such a mind?” (Letter to Graham William, July 3 1881)
9. “My theology is a simple muddle: I cannot look at the Universe as the result of blind chance, yet I can see no evidence of beneficent Design.” (Letter to Joseph Hooker, July 12 1870)
10. “I can never make up my mind how far an inward conviction that there must be some Creator or First Cause is really trustworthy evidence.” (Letter to Francis Abbot, September 6 1871)