wanting

NB caution !! ... I only keep these preliminary notes on my website so I don't lose them !   

 

 

Thinking about Evolution & Economics and Some Notes on the Natural Selection of Ideas

Part 15 - Just So Stories - Human Ignorance & Learning

Trials & Error 

Now Socrates said, and I agree with him - 

'admitting ignorance is the first step in acquiring knowledge''

History as writ always required a rewrit as folk learned. New 'know how' necessarily involved a reinterpretation of past happenings?

 Just So StoriesSo even Rudyard Kipling's Just So Stories took on new meanings when spied through the evolutionary lens of Charles Darwin ...  there was an evolutionary explanation for everything.

All these Just So Stories need to be rewritten in proper English -

1 - 1776 an' all that - Adam the Smith & Tommy Jeffers

2 - Businessmen & Bishops - synergy & exploitation

3 - Fatty Sweetness - pre-existing genetic propensities

4 - Phlogiston - new paradigms

5 - Inner Lights - worms in the head

6 - Scotland's Sassenachs - trade or raid

7 - Origins of Trade - what's your trade?

8 - Money Illusions - the origins of taxes

9 - Ancient 'political cycles' - Bishops, Princes & Generals and Bureaucrats

10 - Tolpuddle Martyrs

11 - Peterloo Massacre

12 - Old Enemy

13 - Northwich Mill - Bob Owen

14 - Grandiose Bureaucratic Failure - the wit of human kind

15 - Luddite Hatred - John Barton

16 - HSBC - the 'local' bank

17 - Data Dependent Monetary Policy - Mark Carney 

18 - Rainey Day Funds - Profitable Projects, Pension Funds & Insurance

19 - Siren Voices - Taxing Rainy Day Funds & Subsidising Bad Behaviour - Martin Wolf & Joseph Stiglitz 

20 - Paper & Ink Production - GOSPLAN, WTO, NAFTA

21 - Repeal of Corn Laws - Free Trade

22 - Imbalances & Managed Trade - Dodd/Frank 

23 - Brussels Bureaucracy - Regulation & Managed Trade - Half baked Euros

24 - Emergence - Chris Langton 

25 - Theory of Mind - self consciousness, opportunity costs & difficult sums

26 - Intelligent Design - All Things Bright and Beautiful

27 - Othello - Nowt so queer as folk

28 - Babies & Hunting - Cooperation & Defence

29 - Cooperation & Conflict - Dice are Loaded

30 - Horse Manure Crisis - Problems of Social Costs

31 - Jimbo Riley's Christening - Doing Verbs not Nouns

32 - Designer & his devious devices - Theory of Mind

 

1 - 1776 an' all that

In 1776 as Adam the Smith and Tommy Jeffers were writing, and Jimmy Watt was doing his steam engine with all the 'unforeseen accidents and the skill & ingenuity of numberless contrivers' ... only years later did Henri Carnot explain what was going on ... wot a year!

Maybe Adam the Smith and Tommy Jeffers were the founding fathers of Evolutionary Economics with their writings in 1776 and Charlie Darwin added the science in 1859?

These giants tried to explain difficult ideas but were often misinterpreted -

1759 Adam Smith – ‘Theory of Moral Sentiments’ – was not about individual ‘self interest’ but about cooperative synergies. Adam Smith's shattering insight was to think of cooperative synergies of specialisation & scale which created wealth and economic growth. This was shattering for the conventional Mercantilists of competitive rivalry who thought wealth was all about pilfered gold.

1776 Thomas Jefferson - 'Checks & Balances' and 'Separation of Powers'. Adam Smith & Thomas Jefferson wrote about understanding what folk had been doing since for ever - hard work, honesty & thrift and the synergies of specialisation & scale ... was compound interest. But Tommy Jeffers twigged that without 'Checks & Balances' and 'Separation of Powers' wealth would soon be thieved by inevitable parasites & predators

1859 Charles Darwin – ‘Origin of Species’ – was not about ‘nature red in tooth & claw’ but about moral social animals. Charles Darwin's insight was to think of change and 'progress' as a process of weeding out failures and the not the design of good works! The natural selection of evolution was constantly economic, relentlessly cutting losses and chasing profits, a creation process. This was shattering to conventional Bishops of intelligent design.

The dramatic impact of the Industrial Revolution and self sustaining economic growth was undermined by the threatened elites who wrote the history books. Most businessmen were too busy to write their own history and some businessmen had a different interpretation of the problems that emerged.

For sure the problems could all have been caused by selfish parasites & predators, and for sure some of them were. But perhaps many were the consequence of the economic systems that Adam the Smith and Charlie Darwin described which led to betterment and the wealth of nations.

All too often the erudite chronicler's of history were enthusiastically careering away into a purely imaginary world from a nonexistent anthropomorphic start point ... they ascribed human emotions and intentions to the laws of nature ... prior to 1859 these chronicles were mostly plausible 'just so' stories ... and many said they didn't get much better after 1859! ... but the real world was not like that ...

The evidence of history was always best recounted by stories, the old equivalent of modern case studies at Harvard, Stanford & Four Acres, not old wives tales but tales like the one my great grandpa told about education and compound interest. But he called it learning 'nous' and 'saving for a rainy day'. The kids loved the stories they were all about getting out in the sunshine and discovering things to accumulate and they all hated rainy days. Most of great grandpa's stories were short and there was nothing threatening, all you had to do was to listen and guess whether they were true or not ... because sometimes great grandpa told tall tales ...

Guessing was much more fun than being on the receiving end of dictates from Bishops, Princes, Generals and bureaucrats who resorted to shouting louder, or even worse if they were ignored ... and more fun than being overawed by the formal instructions from boring sages who reiterated in incomprehensible language, incomprehensible facts was not much better ... ask any teenager ...

I learned most from my mum who told me '8 was like a snake' and more from my mates Tony Bowen & Jost Wendt, who spoke in the vernacular ... I could understand them ... I knew exactly how they ticked ... like ... I knew they fancied the girls from the Queen's School ...

Of course communication was always difficult but much more so when the concepts were difficult and all the experts disagreed ... 

Folk didn't believe difficult concepts, why should they? They had survived big time in ignorance ... but then so had the sparrows. Natural selection & comparative advantage were real real difficult ... 

Darwin himself described the difficulties -

'it's an awful stretcher to believe the peacock's tail was thus formed, I must be a bad explainer, I suppose 'natural selection' was a poor term ...'

Richard Dawkins, perhaps Darwin's most articulate populariser -

'it's almost as if the human brain was specifically designed to misunderstand Darwinism and find it hard to understand ...'

Nobel Economics Laureate Paul Krugman also argued that together with Ricardo's 'comparative advantage', Darwin's 'natural selection' was a 'difficult idea' ... most folk 'somehow find this particular idea impossible to grasp' ... he explained some reasons for the difficulties -

natural selection was an exclusive alternative to 'intelligent design' which was 'intellectually fashionable' and a 'conventional wisdom' ...

understanding was much harder than it seems because it involved studying 'a dense web of linked ideas' ...

emotional human beings had an aversion to 'mathematical models' peddled by 'aliens armed with equations and computers' ...

Also, perhaps, another difficulty ... emotional human beings had instinctive behavioural survival traits - social empathy and loss aversion and false consensus bias. These behavioural traits had been forged by hard wired neural circuits deep down in the skull ... hard wired as survival advantages of co-operation to secure social synergies so vital for generating survival 'know how' ... until the penny drops such universal instincts sit uncomfortably with an economic rule of thumb of chasing profits and cutting losses ...

The basic process of wealth creation and economic growth is selection not instruction - natural selection not deliberate rational purposeful intentional planning.

Us arrogant folk always tend to flip into 'design' mode ... the view from above ... or more confusingly us arrogant folk always tend to think we are doing the 'selection'.

Much better to tell stories ... there is no better method of fixing understanding in the mind than by telling a gripping yarn about history ...  

2 - Businessmen & Bishops - synergies & exploitation

Some Christian business men, believed in a God who was not a control freak, and was not a designer, and saw no conflicts whatsoever between God, markets & evolution; all were an inseparable whole shebang & caboodle.

The economic history of Crewood Hall & Cheshire agriculture could perhaps best be understood as a 'complex adaptive system' with interminable interconnections and intractable messes everywhere. Nobody got to live in a world without problems, the only hope was that through hard work, honesty & thrift a better alternative could be discovered.

Hard work, honesty & thrift changed change ... as they always had done ... there was no idyllic past which was exploited by dark satanic mills ... there were just ordinary folk desperately trying to earn a crumb to feed their babies ... and, of course, there were always the parasites & predators ... that's how evolution worked?

Innovative technologies first sparked an agricultural revolution producing product surpluses which then sustained an industrial revolution which then accumulated capital to fund a financial services revolution ... this sequence was powered by new ways of organising production technology; new ways which were not planned but discovered, most notably, in the manufactories of joint stock companies & in the diversity of free markets where people were free to choose for themselves ...

Hard thinking propelled some folk along a very personal road to epiphany from empathy, sympathy, compassion to love. But incredible complexity hurt the brain and polarised viewpoints ... positions which could seldom be resolved by Bishops, Princes, Generals nor bureaucratic majorities ... things were just too darned complicated.

 It was the complex, changing, conflicting & scarce nature of companies, markets & economics that troubled folk - as soon as there were stocks there were inevitable parasites & predators

Here's what the Bishops, Princes, Generals & Bureaucrats said, they believed in a revealed truth -

'Well done the joint stock company for creating wealth BUT it became clear to me that the market alone cannot bring love as markets are vulnerable to greed & indifference to the poor; for example, Britain’s industrial wealth was built on the poor of Lancashire'.
This was the Mercantilist view of rival competition & scarce resources. Perhaps this was the 'less selfishness please'  viewpoint of the bishops, reflecting the problem of selfishness & exploitation by parasites & predators?

Here's what the businessmen said, they believed in empirical understanding -

'Well done the joint stock company for creating wealth BUT it became clear to me that the market alone cannot function without love as markets are immune from greed & inclusive of the poor; for example, Britain’s industrial wealth was built by the poor of Lancashire'.
This was the Capitalist view of Adam the Smith & cooperative synergies. Perhaps this was the 'more love please' viewpoint of the businessmen, reflecting the benefits of cooperation & synergies and some immunity from inevitable parasites & predators?

3 - Fatty Sweetness - genetic propensities 

Survival on the savannah was tough, ancestral hunter gatherers roamed far & wide to find a crumb of sustenance. During their searches they experienced a biological attraction to fatty sweetness; the most calorific of crumb taste characteristics.

Any genetic pre-existing propensity for fatty sweet crumbs tended to be beneficial for survival. Those that had a pre-existing propensity for fatty sweetness survived and tended to have more children with a genetic pre-existing propensity for fatty sweet crumbs than those who were mal nourished. Statistical tendencies over eons turned those genetic pre-existing propensity for fatty sweet crumbs into hard wired physiology.

Niche construction gathered apace during the industrial revolution and fatty sweetness became abundant and folk gored with alacrity. Obesity and associated mal functions proliferated and affected the survival chances of fatty sweetness biology -

slow - slow slowly obesity could die out as those with the wherewithal to escape from the evil cravings could have more surviving children.

Perhaps things can be speeded up by niche construction by changing the environment - 

faster - regulation of fatty sweetness may create an environment which feeds back as a sanction on obesity and the obese are cleft sticked and cold turkey dominates their sex as they tend to have fewer children

fastest - discovery of physiological interventions which reverse the calorific chemistry.

If birds can build nests it is not surprising, it is not supernatural, for us folks to build Boeing 747s. But the penny has to drop ... it's the same process ... isn't it? wot else could it be?

There was a DIRECTION to evolution ... betterment ... folk learned ... it was a bit slow but it was speeding up.

Anti cancer wizardry is great but it's

as well as warding off cancer in the long run.
You know what I'm going to say -

more exercise

more sleep

more fresh fruit and veg

less smoking

less fat & sugar

less red meat

less alcohol

less obesity

But it is really tricky, isn't it? Exercise is painful and fatty sweetness a joy?
Life style choices are cheap and saves money overall. Granted, it's hardly exciting but we don't want to let the selfish, incontinent fatties bankrupt our health system by paying US Big Pharma for salvation in a pill, do we ?
(jpb - I suppose it is politically incorrect to suggest insurance premiums should reflect known lifestyle risks?
The PC view is that lifestyle choices are confidential and liberal, incontinent fatties can choose to bankrupt our health system if they wish??)

4 - Phlogiston - new paradigms

Once upon a time in 1703 Georg Ernst Stahl, perhaps an alchemist or professor of chemistry at Halle, proposed the theory of phlogiston. He told an unlikely story about phlogiston, the kids loved it, it was a great curdling of the imagination. But Antoine-Laurent de Lavoisier and Joseph Priestly were troubled, mercuric oxide seemed to gain weight when it lost phlogiston? The world in ignorance became polarised; who to believe?

Instead of shouting abuse Joe Priestly got going with empirical science and discovered oxygen. Science had a remarkable track record of pushing back the boundaries of knowledge. Of course nobody knew what oxygen was, it just made a bit more sense of the world than phlogiston. And as Joe's mates in Warrington believed it was better to resolve matters by science rather then shouting. Science involved 'peer review' and 'citation counts' ... not the whims of Bishops, Princes, Generals nor bureaucratic majorities but repeatable experimental evidence.

There was a DIRECTION to knowledge ... betterment ... folk learned ... it was all a bit slow but it was speeding up.

FT Feb 1st 2018 -

also very expensive and although kinder than chemotherapy the drugs are still not good for you. They are a last resort for the very ill.
Do we need to focus on cancer prevention rather than cure? It's MUCH cheaper per life saved (or QALY saved if you must) and it also tends to improve people's lives, health, productivity and happiness in the here and now

'the more grit you throw into a smoothly running system, the worse the outcome and if you ditch profitable longstanding relationships in the vague search of something new, pain is likely to exceed gain'.

May be

'the thicker the clouds, the more likely it is to rain'.

the grit was being thrown from Brussels?

May be rain was needed to make things grow?

'People talked about a crisis in economics but it was the crisis in politics that really concerned us'.

May be 'economics' was an Empirical Science with 'peer reviews' and 'citation counts'? But wot happened when the experts disagreed on 'Phlogiston'? 

5 - Inner Lights - worms in  the head

Once upon a time The Quakers told an unlikely story about worms in the head, they called them 'inner lights', the business men loved them, they were great curdlings of the imagination. But it seemed the Quakers were not alone the Jews had a 'bad conscience', the Christians had a 'Holy Spirit', the Muslims had 'a judge having spiritual quality that differentiated between right and wrong' and Adam Smith had 'universal moral sentiments',

But some were troubled, science just didn't get involved, science just couldn't explain worms in the head.

The world in ignorance became polarised; who to believe, the dissenters or the Bishops?

Science beavered away and Darwin's ideas began slow slowly to explain more and more. Human behaviour and compelling morality became a legitimate area of study. The neuroscientists and the evolutionary economists had a field day. The Brights uncovered 70 scientific references to the 'inner light'.

Science involved peer review not the whims of Bishops, Princes, Generals nor bureaucratic majorities but repeatable experimental evidence.

Emotions, instincts, feelings are hard wired guidance from the past, that's how genes worked, they did cost benefit analysis. Conscience stood the test of time. Conscience was a concept in national and international law, and was increasingly conceived of as universal.
Universal inner light, conscience, spirit, love ... feelings you actually feel ... personal directions from feelings were always more authoritative than formal rules, creeds or philosophies that were not grounded in one's own experience of self & culture.
Feelings were felt, rules have to be interpreted, gut feelings had a proven track record of success. Introspection benefits?
Introspection generally provides a privileged access to our own mental states, not mediated by other sources of knowledge ... like mental prayer and meditation.

Plato suggested -

'why not calmly and patiently review your own thoughts and see what these appearances in us really are'?

'The God Delusion' by Richard Dawkins suggested our sense of right and wrong could be derived from our Darwinian past. Conscience was that which makes us behave well when nobody was looking.

There was a DIRECTION to morality ... betterment ... folk learned.

6 - Scotland's Sassenachs - trade or raid

Something always seemed to be happening in London.

Sure the French were good news, not only did help with the Pope, they also worship Mercantilist Gods and those Bourbon sun king's were filthy rich, everybody agreed it was a good idea to accumulate gold & trinkets ... usually by theft from 'colonies'.

But then Adam the Smith started contemplating ... the dark satanic mills of the Sassenachs were rumoured to be forging gold & trinkets themselves! How could that be? Was it a philosopher's stone? or was it hard work, honesty & thrift there were always alternative strategies ... and Adam was intrigued by moral sentiments & compound interest.

What were folk to trade or were folk intent on theft? Was the Darien grab any different from the North Sea oil grab?

Had the Sassenachs stumbled on an elixir ... after all Adam the Smith had thought this through by 1759 & 1776.

Perhaps the Sassenachs & the Mercantilists were not all or nothing alternatives perhaps folk could vote with their feet without moving ... after all Thomas Jefferson had thought this through by 1776.

Why fight? Why squabble? Those that do did and those that don't didn't ... and all Torts were well tried & tested by a preponderance of evidence before 12 good mates & true ... as well as by the rigors of time ... everybody knew about anti social behaviour and fairness, wrongful injury & death, assault, theft (conversion), contracts, fraud, restraint of trade, due care, nuisance, negligence, false imprisonment, defamation, product liability, pollution, trespass, slander, defamation. Everybody knew the difference between negligent and intentional Torts, and personal injury & property rights ... Torts evolved by custom & practice and precedent.

Later some wrongs were classified botleas; theft, murder, arson, treason ... where there was no reasonable remedy of compensation, the perpetrators were at the mercy of the King ... crimes evolved by legislation.

... join the 'club' of your choice and learn that all clubs had 'rules' and ostracisms ... rights & obligations ... there was no free lunch ...

... and the only economists who predicted the future were ones that were paid to do so!

There was a DIRECTION to economics ... betterment ... folk learned.

7 - Origins of Trade - what's your trade?

The micro institutions of capitalism & complex adaptive systems ... cooperation & synergy ... save & invest

 It all started so well. The micro institutions of capitalism were everywhere inexorable emergent phenomena as economic agents interacted ... torts, trades, technologies, exchanges, pedlars, chapmen, mongers, hawkers, tinkers, shopkeepers, merchants, markets, fairs, shops, workshops, factories, companies, banks and parasites & predators ... as soon as folk specialised they improved their performance and when they traded their improvements they created synergies; and some intent on hard work, honesty & thrift outperformed the parasites, predators & competitors and some invested in their trades to secure economies of scale. Their trade was a transfer of ownership at market prices, prices which tended to eliminate the costs of gluts & queues. No point in specialising if you don't trade. Folk doing deals with other folk and facing the unknowable unavoidable unintended consequences

The traders were a dynamic force which provided distribution channels for goods & services involving nothing less than the creation of a modern capitalist economies. They established the trading networks and broke down the medieval hierarchies, undermined the monopolies of the guilds by being innovative and responsive to consumers ... in addition to distributing exotic goods they offered crucial channels of communication about the wider world ... it was the pedlars who smuggled in the Protestant books and all the many forbidden desirables which had been monopolised by the guilds and confiscated by taxation ... the traders knew about creative destruction and the Peacock's tail! They plugged into a virtuous cycle -

specialised hard work = better goodies as creative innovative individuals specialised to hone their skills and trial & error required hard work

trade honesty = exchanges in co-operative groups generated synergies and exchange required trust

scale, thrift & investment = compound interest secured economies of scale.

... nobody knew but positive feedback loops emerged as market prices rewarded successful innovations through profit and punished competitive failures by bankruptcy.

Genetic propensity to truck, barter & exchange, to specialise & trade as hard work, honesty & thrift nurtured human trajectories. Survival depended on the synergies of trade, self sufficiency was a mirage. But capitalism can only emerge from a certain kind of culture one which creates a favourable environment from far back in time without being aware in the slightest of the process being set in train or of the processes for which it was preparing the way in future centuries. These decentralised societies exploited the positive feed back loops as co-operative groups of agents were motivated by profits and selected through bankruptcy in competitive markets.

The Anglo Saxons were like everyone else; adaptable folk, exploiting technology, cultivation & husbandry, good manners, stimulating minds with drugs, high protein food, clothes, constructing homes, harnessing energy, extracting metals, gunpowder, paper, navigation, transport, money, credit, cities ... What is your trade?

Innovative leadership, hegemony, passed from Sumer to Egypt, Phoenicia, Athens, Alexandria, Persia, Rome, Genoa, Venice, Bruges, Amsterdam, London, New York, Shanghai ... but the feedback loops ebbed & flowed in a fractious world full of parasites & predators ... and bloody foreigners ...

8 - Money Illusions - the origins of taxes

Debt, fake money & idleness ... parasites & predators ... tax & spend.

Taxes, debt & doubts and the filthy rich Germans.

'The sun was constantly shining in the southern Mediterranean but times were tough, everybody in the village was in debt, credit was easy and consumption was titillating.

Senor Siesta had a small hostelry in one of the local villages, he hadn't been in the hotel business for long but it seemed a much easier way of earning lucre than strenuous hod carrying for McAlpines.

One day a filthy rich German tourist from the bleak north called at the hostelry in search of a room for the night.

He placed a new fangled €100 paper note on the desk as a deposit and was then invited by the hotelier to inspect the rooms upstairs.

Senor Siesta looked at the crisp €100 note with some envy & greed.

Herr Riche was given the keys and went off to inspect the room, but as soon as he had disappeared up the stairs, Siesta grabbed the €100 note and ran next door to pay off his debt to his butcher.

The butcher quickly took the €100 note and went down the street to repay his debt to the pig farmer. The pig farmer similarly took the €100 note and headed off to pay his outstanding bill at the anxious feed & fuel supplier. The guy at the suppliers likewise accepted the €100 note and immediately paid off his drinks bill at the tavern. The publican very quietly slipped the same money along to one of the local girls drinking at the bar. The girl had also been facing hard times and she had been offering her services on credit. The girl then went back to Siesta at the hostelry and triumphantly paid off her room bill from the previous night with the self same €100 paper note.

Siesta then nonchalantly placed the €100 note back on the desk so the German tourist would not suspect anything. Herr Riche came down the stairs and firmly declared that the room needed cleaning and was not satisfactory. He picked up the €100 note returned to his wallet and left town.

All the folks in the village got really excited. No one had produced anything. No one had earned anything. No one had saved anything. However, everyone in the village was now out of debt and looking to the future with optimism ... what a neat solution to their lethal debt problems which avoided the inconvenience of hard work, honesty & thrift! Was this the elephant in the room which no one dared to talk about?

Cleaning rooms was a pain especially as the filthy rich Germans left an awful mess. And although the trade with the ladies of the town was welcome but it was a dirty trade and rates were low, and, furthermore, it seemed to add to the mess in the rooms.

Siesta couldn't be bothered, hard work was not for him.

He had heard from friends that there were good clean jobs going with the council which included inflation proofed pensions and expense account perks. These jobs were easy; just redistributing to his mates all the Deutsche Marks that the Germans had been persuaded to lend long long term at low low interest rates.

Things were looking up for the villagers as it was also rumoured that a new Presidential candidate was campaigning with a new promise to 'create more jobs' - a brand new shovel ready infrastructure project was proposed where idle resources would be mobilised to build a shiny spanking new bridge from the airport to the village which would offer free passage for the filthy rich Germans directly to the centre of the idyllic village. This would bring easy jobs, prosperity and joy to all. No need to squeeze olives for a pittance ...

The bridge would be paid for by the filthy rich Germans themselves who would be shamed into providing 'food aid' to alleviate the humanitarian disaster which had inadvertently smitten the village.

The President was brimming with confidence and even if the filthy rich Germans refused to fund the project he could always issue an 'executive order' to the central bank instructing them to print the necessary money which would be paid back later by future generations. After all future generations didn't have a vote at the next election and in any case they would be in clover once the bridge was built.

Some suggested that the central bank would be happy to cooperate in the scheme as the Governor's reappointment term was coming up soon and his job description said he was supposed to be responsible for 'creating' jobs?

All this seemed much more preferable than raising taxes on the villagers; nobody would vote for that! And in any case it was clear to everyone that nobody was earning any money to tax and savings had been spent years ago!

The rival Presidential candidate in the election had been 'exposed' in the popular press when he suggested that the spanking new bridge was a 'bridge to nowhere' and that the village had a real problem with dirty unhygienic hotel rooms which were a threat public health. 'The Daily Clarion' declared that these suggestions were racialist smears on the destitute villagers, both immoral and unpatriotic.

It came to pass that some interested folk in a neighbouring village were perplexed, why didn't their village have a spanking new bridge?

And they also suspected that if it was too good to be true it probably wasn't true ... and doubts crept in ... after all, they mumbled, the village hotel still had an unresolved problem with its customers ... and the butchers ... if the hotelier didn't clean his hotel room he couldn't eat ... and nobody could eat bridges ...

Senor Siesta took the job with the council and cast his vote?

But 'kicking the can down the road' was no solution ... it seemed jobs with the council didn't cut the mustard ... Siesta slowly learned about productivity and hard work, honesty & thrift - 'clean the hotel rooms' ... and 'squeeze more olives'!

A maze of problems - solvency, liquidity, morality & money - and inevitable outcomes moral hazard, mal-investment & financial repression - problems which were ameliorated during the industrial revolution, but were undermined as the liberal democracies became social democracies and winner takes all institutions and started meddling and imposed moral hazard as Walter Bagehot described ...  

9 - Ancient 'political cycles' - Bishops, Princes & Generals and Bureaucrats  

The king was short of money he had so many schemes but he only had three choices -

tax & spend - voters were bribed with grandiose spending plans & promises for majorities paid for by taxes on the 'others', the oppressed minorities ... there were few votes for privatisation, markets & risk equity 

borrow - future generations, who didn't vote, were unethically committed to fund the gap when current tax revenues inevitably declined ... there were always votes for borrowing from others to fund current consumption

print money - inflation was deliberately created to erode debt & savings when credit worthiness declined and debt servicing became onerous ... debt was never to be repaid! What magic was this?

The same old con trick, the Romans clipped coins; in 2008 money was printed, 'created out of nothing' ... plus ca change. Denial, misunderstanding & fraud ... blaming bloody foreigners and the rich ...

But the problem was debt - it was physically impossible to manage & control 'complex adaptive systems' by top down, deliberate, rational, purposeful, intentional, planned design ... promising the earth was doomed to failure. Technological innovation was bottom up, heuristic, trial & error, emergence rather than top down imposition of dogma.

Efficient market theory, perfect knowledge, rational expectations, equilibrium & convergence were bum assumptions. Reality was diversity, choice and natural selection.

Physics described natural phenomena but random mutations produced uncertainty and thinking introduced more uncertainty! Thinking & wiggling are not cause & effect but parts of feedback loops. Testing in the imagination and wiggling reality intertwine uncertainty.

These were fundamental differences between laboratory & history, physics & behaviour. But differences were ephemeral, differences between linear & non-linear maths which folk found difficult to understand.

 You can fool some of the people some of the time but you can't fool all the people all the time. Someone will notice and proven survival aids will survive ... genes did cost/benefit analysis ... so did cultures ... in this way markets corrected their own failures ...

Evolutionary economics investigates real people & their real choices, folk doing deals with other folk and facing the unknowable, unavoidable, unintended consequences, some turn right, some turn left. Darwin's scientific theory cannot be supernatural nor right wing, or left wing ... it can only be falsified ... proved wrong.

10 - Tolpuddle Martyrs

In 1834 protested against low agricultural wages caused by -

surplus labour as investment in mechanisation began to have an impact on agricultural working practices. This was a particular problem in parts of southern England, remote from the higher wages paid in London and in the northern towns of the Industrial Revolution.

Gregory Clarke in 'Farm Wages & Living Standards in the Industrial Revolution: England, 1670-1850' - 'In the South real wages did not rise above the average level of 1670-1769 until the 1840s. In industrialising economies, the poorest workers are those in agriculture. Since urban areas are providing an increasing proportion of employment there is migration from the country to the city. To induce this rural to urban migration, urban living standards have to rise relative to those in rural areas. As real wages rise then we can be sure that real wages in the cities are rising more. Otherwise the migration flow to the cities would not be occurring'.

The unavoidable effects of comparative advantage were sometimes misunderstood.

11 - Peterloo Massacre

In 1819 the Peterloo Massacre followed demonstrations in Manchester when the cavalry charged into a
crowd of 70,000 that had gathered to demand a change of government and action on high food prices caused by -

protectionism and the Corn Laws which resulted in famine and chronic unemployment.

The magnificent free trade hall was built on the site of the massacre as a celebration of the achievements of Richard Cobden & Quaker, John Bright, and the Anti-Corn Law League. Although the battle for free trade was won in 1836, free trade economics has almost been forgotten as the World Trade Organisation wrestles with rent seeking political elites who appear to be more concerned with war and the manipulation of money for votes than trade.

The debilitating effects of protectionism were sometimes misunderstood.

12 - Old Enemy

From 1756 to 1815 Britain was almost constantly at war with France; the Seven Years War, the War of American Independence & the Napoleonic Wars hindered industrial progress, not only through export declines, ruinous freight charges & insurance premiums but also through -  

taxation & debt which crowded out the investment in problem solving technological innovation.

Niall Fergusson, Reith Lecture 2012 -

 'A compelling consensus is fast being formed that institutions determine modern historical outcomes, more than natural forces such as geography; the scientific revolution, the consumer society & the work ethic' - 'Why were the Chinese not as assiduous?' - 'In 1688 Britain had a revolution that transformed the politics and thus the economics of the nation, culminating in the industrial revolution as numerous associations, societies & clubs encouraged technological innovation. One particular institution that really altered the trajectory of English history; improved taxation protected private property, audited royal expenditures and in effect prohibited debt default. Although national debt grew enormously reaching a peak of 260% after the Napoleonic wars borrowing costs were low. On the other side of the balance sheet was a global trading empire. Critics of western democracy are right to discern that something is now amiss. Today's huge debts are unfunded liabilities of welfare schemes, a growing charge on employment, now and in the future. The mind boggling numbers represent a vast claim by the current generation on grandchildren who are obligated by law to find the money. It is not surprising that current voters support intergenerational inequality but the present system is, to put it bluntly, fraudulent, huge liabilities are simply hidden from view; no legitimate business could possibly carry on in this fashion. Writing in 1776 it seemed obvious to Adam Smith that the reason for China's puzzling stationary state of economic stagnation lay in its laws and institutions' ...

The destructive effects of taxation were sometimes misunderstood.

13 - Northwich Mill - Bob Owen

In 1815 Robert Owen publicised the deplorable living conditions in the factories and the cities; disease, dirt & pollution, long working hours, child labour and a host of other ills associated with -

investment in innovative technology which was to ameliorate the problems.

Rural life on the land was often static & cruel where famine, plague & infant mortality were rampant and agricultural surpluses were fickle dependents of weather & disease. In the idyllic past there were no paupers; they were all dead or rescued by family & friends. But through hard work, honesty & thrift some enterprising folk had escaped the terror of scraping out an existence on the land and joined the urban trek. There was a population explosion; a steep fall in death rates as real living conditions & life expectancy improved.

The illuminating effects of opportunity costs were sometimes misunderstood.

14 - Grandiose Bureaucratic Failure - the wit of human kind.

Technology has reshaped everything in the business environment from the way we manufacture, distribute and shop to how we provide services and communicate with global friends.
The lack of progress made by the NHS bureaucracy is astonishing as its archaic system absorbs costs and creates complexity making it impossible to reliably deliver the medical solutions which are currently available nor fund the R&D necessary for future progress.
In 2002 the government announced, to a 'grateful' NHS, a taxpayer funded national IT project that would be the world's largest civil computer scheme. The 'laudable' objective was to revolutionise the way technology was used in the health service by exploiting electronic records, digital scanning and integrated IT systems across hospitals and community care.
After a breathless start, delivery dates for key software were missed, the costs of implementation which had always been 'unclear', escalated. The £12bn struggle failed in the bureaucratic morass of the NHS.
'Experts' were always divided over whether the scheme was too ambitious to ever work 'top down' for 60 million accounts as originally 'planned'.
The NHS is now desperately trying to devolve responsibility down to a local level and building 'bottom up', starting with the patient. And it is the individual patient records that comprise the 'big data' input into R&D expenditure.
Unfortunately 'bottom up' is no use to the politicians who gather votes by promising 'top down' action?

15 - Luddite Hatred

In 1811 the Luddites were frit. Nobody blamed them they were on their uppers as unemployment loomed ... so they smashed the new fangled machines which appeared to be throwing skilled workers on the scrap heap as -

new technology created new better paid employment opportunities and growth in productive employment.

In 1836 James Wheeler again uncovered the how the evolution of the steam engine created a stream of new opportunities as it 'required the skill & ingenuity of numberless contrivers' ... including the technology developed by John Wilkinson at Bersham ... imagine how many 'contrivers' were employed by John Wilkinson and his suppliers ...

The more we know as the knowledge base expands at 3% pa the more new opportunities for progress.

The transformative effects of innovative technology were sometimes misunderstood.

HSBC16 - HSBC - the 'local' bank

In 2008 lethal debt piled up as Chinese imbalances fuelled a real estate bubble and excitement turned to dreaded fear which all but destroyed the global financial system.

When the shit hit the fan a blame game started and hapless politicians & economists became embroiled, because as HM asked, 'Why didn't somebody see it coming'?

Celebrate DiversityHSBC were diversified and coped better but were pulled into an abyss of fiat currencies and regulatory hopes of avoiding inevitable counter party risk.

Flack was directed at - rogue traders, money laundering, American real estate, Swiss tax avoidance/evasion.

A safe deposit service for customers clashed with government debt 'restructuring' through rewarding bad behaviour and swimming with the moral hazard of bailouts & inflation, as debt crippled real growth in private companies as the elephant turned into a zombie.

BT was a conduit for porn. Google was censored for privacy. Costa Coffee was damned for providing quality services to customers and jobs for the unemployed while paying all legal taxes. HSBC was blamed for 'fat cats', 'immoral tax evasion', 'rate fixing', 'money laundering', 'too big to fail', 'too big to manage', 'private banking in Switzerland', 'refusing to lend by discriminating against people who wore string vests.

Focus was deflected from lethal debt and waste to ever more complex tax collection. From tax collecting by HMIR to tax collecting by companies. From illegal drug activities to underwriting standards. From subsidising debt to the profit as a cost to society and tax as a moral obligation.

Economic policy became politically polarised in the mire of the 'theory of mind'. Was the looting state the problem or investment profit? Debt or equity? Elephants or zombies? Stimulus or financial repression? More investment in white elephants or asset price bubbles? Deflation or inflation? Money illusions or structural reforms? QE, stimulus or 3rd arrow?

Image result for mark carney speech17 - Data Dependent Monetary Policy - Mark Carney   

On June 1st 2014 the FT in London commented pathetically on regulation and the manipulation of money -

'Globalisation has greatly reduced the capacity of governments to provide for the security of their citizens'.

Mark Carney FT Jan 2015 -

'Since the financial crisis all major advanced economies have been in a debt trap where low growth deepens the burden of debt, prompting the private sector to cut spending further. Persistent economic weakness damages the extent to which economies can recover. Skills and capital atrophy. Workers become discouraged and leave the labour force. Prospects decline and the noose tightens. As difficult as it has been, some countries, including the US and the UK, are now escaping this trap. Others in the euro area are sinking deeper'.

Mansion House Speech, 12th June 2014 -

'The UK economy is currently unbalanced internally and externally. We need balance. Its absence can have serious consequences.
The MPC has no pre-set course. The ultimate decision will be data-driven. The MPC is monitoring a broad range of indicators.
It is indebtedness that concerns us. A highly indebted private sector is particularly sensitive to interest rates.
Achieving internal balance will not be enough to guarantee a durable expansion. The perennial trade deficit has been reinforced by the fact that the UK is growing much faster than its main trading partners.
Our exchange rate will remain flexible. Nonetheless, sustained borrowing from abroad to consume at home is hardly a recipe for a balance.
Capacity utilisation and pricing indicators and balance in housing should be watched.
We can limit risks tomorrow by acting against a loosening in underwriting standards in new mortgage lending today. We all know that real markets can seize up in crises of confidence, threatening financial stability and the wider economy.
The City’s strength is founded on markets. Markets are the source of dynamism, prosperity and progress.

Markets that are open and transparent

Markets where access extends beyond a privileged few

Markets where all who wish to trade have common information and commonly accessible prices

Markets where the informational integrity of key benchmarks is beyond question

Markets must end too big to fail

Markets must balance risk & reward in remuneration.

FT October 3rd 2014 -

'All political parties are promising levels of public services that they are simply not willing to pay for with taxation'.

Mark Carney, FT November, 2014 -

Monetary Policy alone isn't going to turn around the challenges in Europe.

There is a marginal role for Fiscal Policy if it s coordinated and consistent with the rules.

Most fundamentally there is an immense role for considerable additional Structural Reforms that will be required to change the trajectory of the Eurozone.

Structural Reforms a euphemism for market synergies of specialisation & scale?

Mark Carney, FT February, 2015 -

'Economies are complex, dynamic and constantly evolving systems that are underpinned by social interactions and behavioural change, shaped by fundamental forces like technology and globalisation, and supported and disrupted by money'.

The evidence of history was mutable; conflict, change, complexity & scarcity ... too much for mere mortal folk to grasp ...

Hyman Minsky, 'excitement & fear of folk herds'. Joseph Schumpeter, 'creative destruction'.  Nobody was in charge!

Mark Carney, Oxford, October 2015 -

Benefits of a reformed Europe.

benefits of openness (of trade) & avoidance of reduced flexibility (of a common currency)

as the Eurozone seeks to deepen financial integration & regulation must not adversely affect the Bank of England's ability to ensure stability nor compromise the single market.

18 - Rainey Day Funds, Profitable Projects, Pension Funds & Insurance

The best laid plans of the arrogant messiahs of deluded false hope thieved our rainy day stocks?

They had tried squeezing until the pips squeaked but there were dangers and problems for the messiahs -

Tax on success = less output.

Price fixing = gluts & queues.

lies - it was always physically impossible to control the out comes of Complex Adaptive Systems; taxing rainy day funds, the maths didn't work

looting - tax, borrow, print was the inevitable political plan for my rainy day stocks; as soon as there were stocks there were parasites & predators

discrimination - them & us - them squeezed until us with rainy day funds squeaked; a mugs game the synergies of specialisation & scale disappeared

Fewer & fewer of the folks believed the lies and they either stopped saving for a rainy day of moved their stocks out of sight.

 In desperation the messiahs promised to create money out of nothing.

There were no flies on smart folk who anticipated the juggernaut of the looting machine -

cash was moved to another place and then abandoned and invested into an income stream, a capital gain & shareholder M&A perks - global institutions grow synergies of specialisation & scale, confront the costs of looting machines better than individuals, and weed out poor performers

Cadbury - Zeneca & ICI - AstraZeneca & Pfizer - Distillers - Bain Capital - Google - selling the family silver

pensions became targets

mansions which couldn't be easily moved were the next to target

vast bureaucracies of state characteristically sucked in funds, wasted them on obsolete technology and avoided innovative risk & rewards

education was secured by interaction between peers paid for by Unilever and Apple apps

health was secured by technology paid for by Genentech and Apple apps

Voting and Referendums solve nothing. In Scotland the problems were exactly the same the day after the vote
but they do manage antagonise 49% of the population.

Forget Crooked Hillary and The Donald and watch Dan O'Day, stick to the knitting, everyone will be happy if he finds a cure for cancer.

Not money illusions, elephants & zombies but back to real jobs = savings & investments in profitable projects as opportunities grow at 3% pa in global technology (robots, clouds, 3d printing) and structural reforms, privatisation ...

Politicians & economists are impotent ... may be 'we the people' should be saving & investing in innovative businesses of our choice and 'we the people' checking & balancing the Bishops, Princes, Generals & bureaucratic majorities from taxing & spending away our rainy day funds, pension & insurance in an anti business furore where economic growth from profitable projects are dirty words.

Nation States are in decline as the global cities grow.

Sure folk still vote to 'throw the bastards out' and elect a new set of bastards who would, hopefully, do better.

But doing better was impossible for politicians because 'know how' had to be discovered & accumulated by trial & error & learning. And folk always found themselves voting for lies ... promises of utopia which didn't exist.

In 2014 California was debating a split into 5 states, the 2 state solution to the Palestine crisis was the only game in town, Ukraine split into 2 states when nobody was watching, Scotland's 2 state solution could not be solved by voting, Ireland's 2 state solution swapped jawing for warring, and UK was not in the mood to abandon subsidiarity in Europe ...

Why not go the whole hog and split into city units? Why not?

Certainly Adam Smith approved in The Wealth of Nations; a small town was 'a continual fair of market' which avoided 'the wretched spirit of monopoly, which threatened economic, political and moral health.

After the 2008 financial crisis there was a gut reaction against Democracy, Markets and the America of 'The Washington Concensus' which was established after the 'Fall of the Berlin Wall' in 1989 ... 'politics' was repolarised into petty gridlock.

Years after the 2008 crisis, The Governor of the Bank of England was still unheeded ... 

19 - Siren Voices - Taxing Rainy Day Funds & Subsidising Bad Behaviour - Martin Wolf & Joseph Stiglitz 

The Marxist blame game and dream of a better intelligent design -

'Those in charge got it wrong, they never thought it would happen, failures of understanding bubbles and how lethal debt was for Balance Sheets'.

IMBALANCES - gluts & queues result from price fixing - lots of money, led to low interest rates, borrowing went into real estate (instead of infrastructure, global warming, small businesses, health & education) instead of 'real' demand (profitable projects). Banks dysfunctional lending channeled savings into the 'wrong' projects (unprofitable) and nurtured perverse incentives and antisocial moral hazard (excessive risk, fictitious rewards, price fixing, miss selling, cartels too big to fail and fraud). Distortions, dislocations and externalities.
China surpluses, a savings glut, ruined America. German surpluses ruined Greece
(In the 1980s Alan Walters predicted Greek wages would 'stick' and not adjust as with floating exchange rates. The system was 'half baked').

REGULATE INEQUALITY & CAPITAL RESERVES - inequality & diversity result in & from evolutionary processes - reverse the free for all of the 1980s. Regulate decisions. Regulate income distribution & inequality. Regulate capital reserves against risk & uncertainty.
But there was regulation - income redistribution, debt and real estate were subsidised, small businesses were taxed, 'green' projects were subsidised, bankruptcies were bailed out, currencies were manipulated, 'legal' tender currencies nationalised ... perverse incentives & moral hazard came with government guarantees which replaced due diligence & caveat emptor.
Dodd / Frank added more regulation but little structural reform to encourage comparative advantage & global trade, the move from manufacturing to higher value services, increases in investment productivity, privatisation & profitable projects, labour flexibility - all became targets for correction = Secular Stagnation.

Regulating inequality is a political misunderstanding of the role of diversity in evolution and a calamitous failure to distinguish between successful positive sum wealth creation and zero sum theft & cheating. Thomas Jefferson - 'all men are created equal with certain inalienable rights; life, liberty & the pursuit of happiness' -  was not a plea for clones but a plea not to discriminate against individuals because they belong to an identifiable group.

State size? target 36% in 2020 (as 1950s & 1999). US 35%. France 53%.

Austerity = Cuts - politically intolerable?

No money! High taxes are good in Germany ... tax, borrow & print.

Unnecessary! Social choice as in redistribution ... 51% vote to tax 49%.

Alternative funding! BUT purchaser not provider, philanthropy not tax, charging ... rainy day funds

Poor suffer? NO universal benefits.

 Complex means testing? NO everybody pays.

'Costly' saving incentives? NO there is a real problem when rainy day funds are taxed!

USA at nightGoogle20 - Paper & Ink Production - Bureaucratic Compromise or Cooperative Deals

 GOSPLAN

WTO involved a 29,000-page treaty, a bureaucrat’s dream of tariffs, regulations & quotas to protect interest groups against competitive value for consumers.

NAFTA weighed in at over 2,000 pages, 900 of which are tariff rates. Under 'true' free trade, there is one tariff rate = 0%.

but DODD/FRANK took the biscuit ...

In 2008 debt reared its ugly head again. But bubbles didn't start with Greenspan, misconceptions loom large in history. He was honest about his ignorance and used FedSpeak, 'Senator if you think I was clear you must have misunderstood me'.

But what was the difference really between comparative & absolute advantage? Nobody seemed to understand and the designs of the Bishops, Princes, Generals & bureaucrats which distorted clearing prices and raised the monopoly costs of gluts & queues couldn't be stopped. Red tape, tariffs, quotas, customs & market interference must be banned by introducing 'corrective' red tape, tariffs, quotas, customs & market interference.

Our Tort Law expert ruminated on -

Negligence = failure to exercise due care expected of a reasonably prudent person.

Malfeasance = hostile action taken to injure client interests

Force Majeure = extraordinary events beyond the control of the parties

Assumption of Risk = voluntary acceptance of risks

so ... Tribunal? or Grand Jury? or whitewash? or witch hunt? or Kangaroo Court?
Wot do I tell the grandkids ... when they ask?

nothing it's none of my business

stealing from filthy rich Germans is OK

embroil confusion about illiquidity or insolvency

forget siesta, get off your butt and clean the unsatisfactory hotel room

explain why there is no evolutionary stable survival alternative to hard work (discover improvement to your trade), honesty (to secure future repeat trades) & thrift (invest for synergies & compound interest)

Marvin Minsky suggested excitement & fear should be banned!

Deregulation and cooperation to secure synergies of specialisation & scale was 'only a theory'.

Paper Production - Regulation - Dodd-Frank, Volker, Vickers - instructions to secure moral sentiments. Gillian Tett once did an estimate for the FT quantifying the output of paper.

Berlin Wall 1989

1989 GOSPLAN - The Failure of Intelligent Design - the wall came down  

The rhymes of history were played out in the globalisation of local successes.

Endless reinterpretations of history as 'know how' progressed ... relentlessly confirming that the intelligent design of adaptations was physically impossible.

Some folk clung on to ancient myths ... just like the prognostications of the old Bishops, Princes, Generals and Bureaucrats 'we can do it, this time is different'. But this time wasn't different. Economic growth had never been the result of intelligent design by skillful draughtsman ... very few remembered the long necked giraffes and very few explained how businesses learned from failure ... even though most agreed that the girls actually enjoyed dancing backwards.

Evolutionary economists were not surprised when the Queen said,

'Why didn't anyone see the financial crisis coming'?

And again, evolutionary economists were not surprised,

'Why didn't anyone see Brexit and Trump coming'?

But we all had an inkling that Robbie Burns was right,

'The best laid plans of mice and men often go awry'!

Of course there was failure ... there must be failure ... that was the only way ignorant folk learned.

Nevertheless intelligent design and the anti business rhetoric were very plausible ... ideas as old as the first glimmers of self consciousness ... when frightened folk saw designer Gods behind every tree?

Darwin had a tough task in championing failure as a route to progress,

'I must be a very bad explainer, I suppose natural selection was a bad term'?

And after 150 years the Darwinian conjecture remained unacceptable to many (or perhaps the penny hadn't dropped?).

As businesses got on with the job of globalising local successes political pretenders were polarised; how best to command and control evolving economies?

So how did folk vote?

against past failures - 'half baked Euros and ever closer union' and 'Crooked Hillary and the Washington swamp'

OR

for future plans - 'the best laid plans of mice & men oft go awry'

Folk had better grip on past failures than future plans ... the evolutionary bias of human nature was to learn from past mistakes and try something new ... half baked Euros and crooks were not on ... after all few folk invested in bankrupt companies?

'Political Correctness', 'managed trade' and arrogant 'intelligent design' involved price fixing and ever more regulation which inevitably led to distortions & imbalances in the Balance Sheets of business & commerce ... and the Balance Sheets of Nation States. Open season for tyranny & oppression and bribery & corruption.

The result of price fixing was always the excess costs & wastes of gluts & queues ... nobody knew the price which cleared the markets ... such prices had to be discovered ...

The result of regulation of lawful free trade was always 'restraint of trade' and 'restrictive practices'.

The Anti Business Rhetoric never accepted the norm of failure and the natural selection of trade synergies. Folk were confounded by universal moral sentiments and unavoidable ignorance.

Future outcomes were unknowable, not because of immense complexity but rather because -

mutations must be random for evolution to work = nobody can ever know the which? where? what? who? when? or how?

nobody can foresee the emergent novelty of the future = unintended consequences make a mockery of intended consequences

nobody knows how the flip flopping emotions of other folk will respond to any interaction = animal spirits ... 

The Darwinian insight involved two relevant evolutionary experiments -

long neck giraffes were bad news for short necked giraffes and similarly the large human brain was bad news for smaller brained apes ... and

differential survival of the large brain over the long neck is an evolutionary experiment that is still being played out ...
and, perhaps, further, there was more; the large human brain was bad news for the now extinct ancestral cows ... an evolutionary experiment that has been played out ... ancestral cows died out as the Teesside 'Milking Shorthorn' proliferated ... Google it?

The arrogance of intelligent design was given a boost with Rousseau's idea of a 'general will' ... a consensus ... an impossible idea for Darwin, because evolution produced necessary diversity ... no diversity no evolution ... no change.

The Bishops, Princes, Generals & Bureaucrats made the 'general will' their own and used 'the will of the American people' to justify their anti-business rhetoric of impositions and manipulations. At the same time as businesses were experimenting ... and failing ... and going bankrupt ... and learning ... the 'powers that be' clung on and continued their intelligent designs ... not as 'experiments' but as 'convictions'.

The Bishops, Princes, Generals & Bureaucrats were alive and kicking -

Price Fixing & Regulation - intelligent design became focused on 'restraints on trade' & 'restrictive practices' and interest group politics for votes.
State elites seized taxes to subsidise their Balance Sheets and bailout cronies in return for votes. Thus perpetuating zombies which avoided the natural sifting of bankruptcy. The result was gluts & queues, 'imbalances' in trade and Balance Sheets escalated as regulation, taxation & prices became the focus of interest group politics.
Chinese & Russian money poured into real estate in San Francisco, London & Cyprus because of the fear of the looting machine back home.
Simple Supply & Demand?
Manipulating FX? Tariffs? Regulations?

Tax Revenues - intelligent design became justified by 'resentment of cheats' & 'fairness of shares' and interest group politics for votes.
Crowd trouble erupted because tax funded 'Leviathan' public services failed as one size never fitted all. Tax funding became the problem not the solution as 51% had no moral right to tax 49% ... but rather everyone had a moral obligation to protect human rights and protect minorities.
Apart from a 'Poll Tax', taxation was arbitrary?

Unprofitable Projects from Restraints & Restrictions and Resentment & Fairness - 'politically correctness' and 'managed trade' became the focus of interest group politics for votes.
The surplus after costs was not measured.  Productivity and real wages declined as tax was a cost on good gotten gains.
Subsidies for Zombies crowded out comparative advantage?

All regulation, price fixing and arbitrary taxes, perpetuated unprofitable projects and produced distortions, imbalances and gluts & queues ... and worse still such shenanigans resulted in a political polarising schism; a 51% v. 49% society and gridlock. Voting produced polarisation as like mended people flocked together for advantage ... in the same old way as 'tribalism' of the past ... a new schism emerged not Catholic v. Protestant, nor Sunni v. Shiite, nor left v. right, nor socialism v. capitalism ... but rather intelligent designers v. businessmen ... two different breeds ... the question became how best to drain the swamp of tyranny & oppression and bribery & corruption?

But don't get it wrong ... there were votes to be had from bailouts & subsidies as taxing, borrowing & printing sustained elites for extended periods. 

There was a schism in the institutions of Liberal Democracy; a polarisation.

'Classical Liberalism' claimed 'economic growth' v. 'Modern Liberalism' claimed 'moral authority' ... 'as if' they were alternatives?

Classical Liberals had their roots in the Scottish Enlightenment and the evolved emotions of 'moral sentiments'.

Modern Liberals actively seized the moral high ground and reinterpreted the Constitution, infiltrated the legal system and enforced an intelligently designed morality on 'we the American people'.

Comparative Advantage1999 World Trade Organisation - The Battle of Seattle

The WTO signed everyone up but nobody did anything about productivity in case there wasn't any.

The case for business rested on the opportunities for profitable projects which created the mutual benefits of lawful free trade. It was profitable to cooperate; lawful free trade at market prices was in everyone's interest. Businesses thrived on freedom & democracy in the cities, but if free trade was such a no brainer ... why did the WTO always seem to end up in the political quagmire of 'negotiated managed trade' ... negotiation was the wrong word for the discoveries & accumulations of natural selection?

Was the WTO itself a club which was 'open for business'? Or perhaps the WTO was just a collection of polarised politicians who disagreed? 

The machinations of the World Trade Organisation and other global economic institutions exposed the difficulties faced by the men of system in business policy implementation. Sooo ... a 29,000-page treaty, a bureaucrat’s dream of tariffs, regulations & quotas to protect interest groups against competitive value for consumers.

But, of course, the intelligent design  of evolution didn't work ... in 1999 there was a battle in Seattle ... could evolution be stopped by violence?

It should have been easy -

'all trade between consenting adults and their companies of choice must be lawful free trade to maximise efficiency'.

The principles were agreed but they proved almost impossible to implement by bureaucrats who disagreed -

no discrimination and restrictive practices

no restraint of trade

no arbitrary interference

competitive market prices

help others to trade through education and dispute resolution

Such was a foul predicament 'cos it seemed business and free trade did the bureaucrats out of a job. It was very difficult for politics to be pro-business and pro-free trade? No one could expect turkeys to vote for Christmas.

Following the lead of Walter Bagehot, in 2014 the Bank of England reiterated the WTO principles; a strategy of confronting lethal debt with continued path dependent evolution which rode on the ongoing inevitable cycles of the boom & bust of human emotions. The central bank was to specialise in the provision of high growth, high value, financial services in cahoots with economies of scale from global time zone synergies in the USA & China -

global commercial banks were to be diversified equity capitalised institutions with failure absorbing capacity so they didn't become zombies but evolved as risk taking innovators seeking to discover profitable projects for the investment of rainy day savings ... 

global competitive markets were to be based on transparent asset valuations of profitable projects, avoiding the costs of gluts & queues and avoiding fake money created out of nothing ...

global central bank services were to orderly administer transparent market failures, to back diversified currencies & risk taking banks funding profitable technological innovation projects for customers everywhere ... encouraging folk to save & invest and restraining tax & spend ...

Tort Law, Trade & Technology drove policy - no bailout schemes, no ponzi schemes, no job creation schemes, no money printing, no moral hazard, no restraint of trade, no restrictive practices, no barriers to business but deep structural reforms freeing up clogged markets, diversified privatisation, enabling technological business cycles which created real jobs ... and if they didn't businesses went bankrupt.

Education and simple rules of thumb - chase profits and cut losses, celebrate diversity, think the unthinkable and go for hard work, honesty & thrift, expose the myth of promises & manipulation of the instinctive emotions of the business cycle and invest personal rainy day funds in the innovative technology of choice.

Sure social folk get excited & frightened together, that is the only way economics ... & sex ... worked ... think about it?

But perhaps the stirrings of adaptation appeared after the latest crisis ... the next time would be different ... the baby survived ... the rhetoric started to change?

Different folk at different times in different places had different ideas and behaved differently ... girls danced backwards and celebrated diversity the feedstock of evolutionary change.

Diversity in social animals was mediated by universal biology and innate empathies. Adam the Smith's 'moral sentiments' underpinned the vast scale of human productive interactions.

Global social and economic interactions were so diverse, dispersed & unknowable that it was physically impossible for Bishops, Princes, Generals or bureaucrats to mediate effectively through incorporation, regulation, interest group bribery and commands & controls on productive endeavour ... all in the name of unwanted solidarity, security & stability. Such hubris, never achievable, would stop evolution in its tracks. Evolution didn't work that way.

Insights from biology led inexorably to understanding economics ... not in impossibly complex detail but as a process of change ... genes did cost/benefit analysis.

Subsidiarity & Solidarity20 NAFTA - Mexican Car Capers

In 2017 The Donald had ago at repealing the Corporate Tax Laws on General Motors. It all got messy. 

US Exports to Mexico = 20% Profits Tax in the US + VAT in Mexico = very expensive.

US Imports from Mexico = low tax 'export inducements' in Mexico + 0% Profits Tax (until repatriated) + 0% VAT in US = dirt cheap.

 This was not 'free & fair trade' it was 'managed trade' as the tax system produced imbalances and distortions.

There's a sameness about the political quagmire as 'this time is different' doesn't cut the mustard polarised society and 'power' corrupted the Bishops, Princes, Generals and bureaucrats.

Complexity led to more complexity and crisis ... wot were they trying to do?

Free Trade was in the constitution.

 Article 1, Section 9, of the Constitution of the USA -

'No tax or duty shall be laid on articles exported from any state. No preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another: nor shall vessels bound to, or from, one State, be obliged to enter, clear, or pay duties in another'.

y = c + i +g + x - m

and 

x - m = savings - investment

This is true by definition of business accounting: Balance Sheets must balance ... and everything effects everything else ... it is illegal and long term impossible for insolvent companies to continue trading ... bills must be paid at market prices!

Subsidiarity was in the constitution.

The 10th Amendment, of the Constitution of the USA -

'The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people'.

The President was in the constitution.

An Administrator and Commander-in-Chief, just one cog in a machine with constitutional checks & balances and a separation of powers as a Common Law counterbalanced 'the powers that be'. 

How can such simple simplicity of principle lead to such gross complexity, cons, corruption and confusion?

History continued to rhyme after the intense upheavals. The cookie crumbled as the Bishops, Princes, Generals and Bureaucrats still refused to mind their own business and messed mine all up something rotten - 'Brexit means Brexit' and 'The Donald means Business' ... but who knows what it meant?  

'Folk have a moral duty to pay their fair share of taxes' - quite so, but as if Bishops, Princes, Generals and bureaucrats defined what is fair and what is moral ... is our morality any of their business?

'I will change the culture of tax avoidance' - as if Bishops, Princes, Generals and bureaucrats defined what was our culture ... is our culture any of their business?

Subsidiarity or Solidarity? We need both, but whatever Balance Sheets must balance -

'Vote with your Feet and join a Club of your Choice'

Bread Tax21 - Repeal of The Corn Laws - free trade

Agricultural interest groups lobbied for the protection of tariffs on foreign imports thus producer groups denied everybody the benefit of cheaper imported corn. This reduced the welfare of all inside the tariff barrier.

A unilateral repeal of the tariff reduced the cost of corn and benefitted everybody. The repeal of the Corn Laws was not a negotiation it was an understanding.

The repeal of the Corn Laws was not a negotiation it was an understanding. Trade negotiations are irrelevant ... business must get on with their job of the provision of innovative products & services for global markets ... otherwise bankruptcy ... releasing valuable resources for alternative experiments and providing some immunity from parasites and predators.

Trade negotiations are irrelevant ... for better welfare for everybody businesses must get on with their job of providing innovative products & services for global markets ... otherwise they go bankrupt.

Read the Anti Corn Law Pamphlet of 1845, as tariffs are reduced -

businesses have MORE markets for their products

business become MORE efficient and productive

business become MORE competitive to foreign competition

MORE jobs

LOWER prices

MORE trade MORE peace

In 1846 Robert Peel repealed the Corn Laws.

Adam Smith described absolute advantage. David Ricardo described comparative advantage. Robert Peel, after being coached by Richard Cobden, understood business and the mutual benefits of free & fair trade ...  

Imbalances22 Imbalances and Managed Trade - Dodd/Frank

Dodd-Frank, Volker, Vickers ... complexity treated with more complexity -

FT October 28th 2011 Gillian Tett reported the Dodd-Frank Bank Regulation legislation involved 2,600 pages, 243 new rules, 65 studies, 100plus committees with 100 page consultation documents with generated 25,000 legal memos & comments which could run to several hundred pages each, which by law had to be read by the regulatory officials ... such complexity cubed made 'collateralised debt obligations' look simple?

FT May 2nd 2014 Lionel Barber reported the Dodd-Frank regulations were still producing paper. For implementation, Dodd-Frank required an additional almost 400 pieces of detailed rule making by a variety of US regulatory agencies. As of July 2013 two years after enactment of Dodd Frank, a third of the required rules had been finalised. Those completed had added a further 8,843 pages to the rule book

Reuters Feb 24th 2015 7 years after the 'banking crisis' and following a general election in Greece, debt burdens were still crippling the economy, onerous bailouts had merely kicked the can down the road, key economic structural reforms had not been implemented and were to be reversed ... but creditor conditions for bailout extensions were based on long term economics not on short term politics -

STRUCTURAL REFORMS paper promises were reversed as 'politically impossible' -

halt privatisations

boost welfare spending promises

raise minimum wages

Even in America politics was doing business. A most successful businessman of the time supported the President -

'The President was not anti-business, hadn't he saved General Motors and rescued the banks?'

So there we have it; ... fighting dynamic Complex Adaptive Systems with more complexity produced more zombies and more moral hazard ... making matters worse ... business policy was one of the grandiose designs of Nation States just like 'Gosplans', 'New Deals', 'Great Societies', 'Great Leaps Forward', 'Welfare States' & 'European Unions' ... which led inexorably via, tax, borrowing & printing to the bailout and too big to fail ... the ultimate arrogance; there were no votes in dreaded failure; failure had to be banned by edict ...

It was politically impossible to be economically efficient. But economic efficiency was adaptive efficiency as Darwin had explained ...

In 2008 DODD/FRANK took the biscuit ...
In 2011 the FT reported the Dodd/Frank Bank Regulation legislation involved 2,600 pages, 243 new rules, 65 studies, 100plus committees with 100 page consultation documents which generated 25,000 legal memos & comments which could run to several hundred pages each, which, by law had to be read by the regulatory officials ... such complexity cubed made 'collateralised debt obligations' look simple? ... and on & on it went, as of July 2013 two years after enactment, only a third of the ‘required’ rules had been finalised. Those completed added a further 8,843 pages to the rule book ... by 2014 the Dodd-Frank regulations were still producing paper. For implementation, Dodd/Frank required an additional almost 400 pieces of detailed rule making by a variety of US regulatory agencies .. on June 22nd 2017 the FT reported The Treasury Department had unveiled deregulatory proposals, a response to The President’s call to dismantle the Dodd-Frank post-crisis reforms ... on June 27th 2017 the FT reported Italian Banks Veneto and Vicenza had been rewarded for their willingness to bet on Brussels approving a takeover that included a €17bn government funded rescue. Crucially, a ruling that continent-wide regulations for bank failure, which force losses on senior bondholders, did not apply in this case! Maybe fighting dynamic Complex Adaptive Systems with more paper complexity simply produced more zombies and more moral hazard ... making matters worse?

Stifling Regulation 23 Brussels Bureaucracy - Regulation & Managed Trade -  The half baked Euro

The terror of 9/11 and the financial crash of 2008 shook the cosy atmosphere of business globalisation. The rhymes of history suggested eternal vigilance was necessary and well worn issues resurfaced  -

cultural competition - did tit for tat behaviour lead to cooperation & synergies, were the dice loaded?

business competition - Balance Sheets must balance, was it illegal for insolvent companies to trade?   

Such issues were impossible to resolve by 'Democratic' voting.

Structural Reforms 
= the improvement of an institution that is immoral, corrupt & tyrannical.

Synergies
= more tolerance of diversity (individual specialisations, ‘know how’) & more trust in deals (economies of scale, interactions)
= productivity = output per man = real wages = economic growth = globalisation.

Genetic biology acts ‘as if’ to calculate cost/benefit analysis of experimental constructions in local populations.

Species constructed in this way display parasitic & predatory behaviour, resulting in survival arms races.

Folk have evolved a propensity to behave cooperatively which trumps parasitic & predatory behaviour because of synergies.

A whole evolutionary economic shebang -
economics = biology = behaviour = cooperative behaviour = culture = political institutions.
The money measurement system lubricates, stabilises and balances the system.
Price fixing distorts & destabilises (taxes, subsidies, bailouts)
Those Economic Institutions which generate fewer synergies than alternatives die out.

Turning Elephants into Zombies. The Balance Sheet must balance. In 1988 Alan Walters described the Euro and Nigel Lawson’s involvement with it as half baked.

A basket case. Top down intelligent design was preferred to bottom up evolution

Unintended consequences followed as cooperative synergies were ignored.

The cultural dirigisme of Scotland & France confronted the culture of an island nation described by Adam Smith.

Woodchurch Estate idle or immigrant labour

‘I promise to pay the bearer’ and ‘I have a government guarantee’ became meaningless.

Euro rules were intelligently designed, the WTO rules followed David Ricardo's discovery of Comparative Advantage.

Structural Reforms = all half baked experiments die out.

Market competition & bankruptcy regulated company trade? Why protect French agriculture with tariffs barriers? Why regulate Financial Services with non-tariff barriers? 

The Great Repeal Bill had a go at free & fair trade by making in roads into the stifling mountain of EU regulations ... Brussels had for 40 years churned out streams of 'restraints of trade' and 'restrictive practices' in the name of 'protection'.     

Then there was the 'lawful' $14bn Brussels tax grab on Apple surpluses which were 'lawfully' earmarked to go to the US Treasury to be paid on repatriation ... the baffling question was ... who owned the tax revenues?

In January 2017 as technology roared ahead spear headed by the innovative AI of the remarkable 'Alexa', Amazon offered some fun 'Webminster' advertising copy. Labour MP Hodge was not amused -

'Amazon should use its profits to pay taxes, not pay for an advertising campaign designed to give them the cloak of respectability they do not deserve' ...

Top down elected dictatorships and 'the powers that be' fix prices and regulate markets for their own survival ... a vested interest in their own club.

Free Trade == Article I, Section 9, of the Constitution of the USA -

'No tax or duty shall be laid on articles exported from any state. No preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another: nor shall vessels bound to, or from, one State, be obliged to enter, clear, or pay duties in another'.

Managed Trade == NAFTA weighed in at over 2,000 pages, 900 of which are tariff rates. Under true free trade, there is one tariff rate = 0%. And WTO involves a 29,000-page treaty, a bureaucrat’s dream of tariffs, regulations & quotas to protect interest groups against competitive value for consumers.

Subsidiarity == 10th Amendment, of the Constitution of the USA -

'The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people'.

The President == Administrator and Commander-in-Chief == constitutional checks & balances and Common Law counterbalance 'the powers that be' ... voting simply antagonises 49% and emboldens 51%. 

The reactions of 2016 to the financial crisis of 2008 - 'Brexit means Brexit' and 'The Donald means Business'.

FT Alphaville Feb 2nd 2017 avoids misunderstanding business & Complex Adaptive Systems ... but understanding for 'command & control' proves impossible - 

everything depends on everything else - Darwin's Conjecture

your brain can't cope with multi levels of interactions - Theory of Mind 

Business copes by following very simple trial & error rules of thumb ...

discover a product or service that is wanted when sold at a price which clears markets

and failure results in bankruptcy.

 24 - Emergence - Chris Langton 

Emergence is difficult. Chris Langton drew a picture depicting emergence with social folk, learning, doing deals, seeking synergies from specialisation & scale ... and institutions emerge ...  

If 't+1' is different from 't' because of entropy increase, can emergent phenomena be deterministic?

Or are emergent phenomena genuinely novel?

The Economic Problem

25 - Theory of Mind - Self consciousness, opportunity costs & difficult sums

Different folk at different times in different places have different ideas and behave differently ... girls dance backwards ... celebrate diversity the feedstock of evolutionary change.

Deliberate rational purposeful intentional plans aren't what they seem to be ... as Peanuts suggested -

 

Like Darwin, students eventually have a slow dawning rather than a 'eureka' moment - an epistemic leap ...

... inheritance with random modification ...

... accumulation of successive slight variations ...

... copy - vary - select ...

... the giraffe's long neck resulted from the death of the short necked giraffes ...

 

It seems 'as if' there is a struggle to survive with hostile environments forcing adaptation & change ...

 

Diversity is not the result of evolutionary change, diversity precedes change ...

Not survival of the fittest but generation of differences ...

Rather one pre-existing variant is 'naturally selected' and differentially survives and increases in frequency in the variant population!

No instruction, no foresight ... just generate & test variants ...

The cause of the variation is irrelevant for the process, 'natural' or 'artificial', the variant is 'random' or 'independent' or 'indeterminate' but the existence of the variation is vital! The variation if useful will be preserved ...

Darwin used 'artificial' selection to teach 'natural' selection. Not because it was a different process.

Natural and artificial selection depend on accumulation of slight independent variations.

Natural selection was going on a long long time before us arrogant folk could think and a long long long time before we could think we were doing the selection ... what us arrogant folk were doing was generating the variants! Think about how the steam engine evolved!

Sally & AnnUnderstanding Complex Adaptive Systems was immensely difficult as they involved repeated interactions between folk and The Theory of Mind suggests us mortals have great difficulty cottoning on to more than a few iterations ... ask my wife ... she knows that I know that she knows that I know that she knows that this is true ...

Science and problem solving were never about political left or right, or big or small Government. Economic science was was all about 'know how' - and alternatives to industrial capitalism had exactly the same economic problems to solve - unemployment, poverty, scarcity, congestion, crime, pollution & waste, health & safety ...

'Philosophy for Children' - The Society for the Advancement of Philosophical Enquiry and Reflection in Education (SAPERE).
Philosophy for Children aims to help children to question, reason, construct arguments & collaborate. It is extremely valuable academically and socially in making a huge difference to the way children interact with each other - talk about their disagreements, respect other points of view, understand how others think and accept that alternatives are relevant.
Communication skills improve; maths, reading and writing.
Ignorance - nobody knows. What do you mean? How do you know?
Can you create money out of nothing?
Can children be less intelligent and grandchildren more intelligence. Paul Seabright?
Can science settles arguments.
'Where does the flame on the candle go?
when you blow it out, I want to know.'

26 - Intelligent Design - All Things Bright and Beautiful

Before 1859, my g-granddad, like everybody else believed order in the universe was a result of intelligent design -

Read the words - Ask the questions -
All things bright and beautiful,
All creatures great and small,
All things wise and wonderful:
The Lord God made them all.

Each little flower that opens,
Each little bird that sings,
He made their glowing colours,
He made their tiny wings.

The rich man in his castle,
The poor man at his gate,
He made them, high or lowly,
And ordered their estate.

He gave us eyes to see them,
And lips that we might tell
How great is God Almighty,
Who has made all things well.
universal omnipotence?








or molecular biology?






privileged position?
or hard work, honesty & thrift?



observation? maths theory? testable hypotheses? validating experiments? peer review?

27 - Othello - Nowt so queer as folk

Shakespeare's plots, like Beowulf, reveal an historical idea of England; a band of brothers of all shapes & sizes, who constructed niches as cities in an island nation, experiencing interminable intrigued & tragedy, and out of the chaos emerges tea, warm beer and cricket ... and a moral urgency which made freedom work ...

Shakespeare told a tale - Ask the questions -
  Othello, a Moorish general in Venice, favours the enterprising youth of Cassio as his new lieutenant; Iago is bypassed and disgruntled. Othello recently married Brabantio’s daughter, the lovely Desdemona, which frustrated Roderigo’s own designs on the lady.
Iago seeks revenge against Othello by recruiting the rich & influential Roderigo to feed the latent racial emotions of Othello’s boss, the Duke.

 Iago & Roderigo spread the malicious rumour of the kidnapping of Desdemona and her forced marriage to the Moor.

But the Turks have invaded Cyprus and Othello’s military skills and resources are needed. The Duke was inclined to believe that Othello won Desdemona with heroic tales of courage and valour in war. This was confirmed by the fragrant Desdemona.
The Cyprus campaign was a triumph for Othello & Cassio.

Iago tries again to discredit Cassio by this time suggesting a liaison with Desdamona and manipulating Roderigo into a street brawl with Cassio which inadvertently results in the stabbing of the innocent Governor. Othello is angry. Casio attempts an explanation and Desdemona believes the honest man. Iago then uses Desdemona to plead Cassio's case for reinstatement before Othello. Apparently securing the desired result of Othello's displeasure with Cassio & Desdemona's undignified behaviour. A love token from Othello to Desdemona is stolen by Iago's wife Emilia and planted in Cassio's room to support Iago's treacherous fabrication.
However Othello responds by surprisingly and unexpectedly and resolves to kill his wife for her adultery and asks Iago to kill Cassio for his treachery.

Iago uses the false evidence to provoke murderous rage against Cassio in the mind of Bianca his mistress. Othello mistakenly believes Cassio's liaison was with Desdamona not Bianca. 
 
With Bianca framed for the blame, Iago embroils Rodrigo yet again with a contract assassination of Cassio. But the attempt is botched, forcing Iago to stab Cassio himself. Othello believes the deed had been done.

Iago blames the jealous mistress Bianca for Cassio's injury sending his own wife Emilia to Desdemona with the news of the plausible cover up.

Rodrigo loses his motivation for his partnership in crime as the plot thickens. Iago kills Rodrigo to ensure the truth will not be exposed.

Othello kills the innocent Desdemona in a jealous rage.

Emilia knew about the stolen love token and realises her husbands guilt. Iago kills Emilia for her betrayal.

Othello fails to kill Iago and blames himself and commits suicide.

Iago is arrested. Cassio triumphs.
Is social mobility a class conspiracy? or hard work, honesty & thrift?



Different agendas were always written?


Always conspiracy?



Force majeure of economic reality. Stuff happens? The Duke reacts unexpectedly?





When you're in a hole stop digging. Another compounding conspiracy with unintended consequences as innocent bystanders get hurt ...
 – 'is blood made dull with the act of sport'?






Unknowable responses of others?



The cover up escalates?




The blame game?










Too late, it all unravels and ends in tragedy? 



Touché ... the best laid plans of mice and men oft go awry?

28. Babies and Hunting - cooperation & defence?

gender specialisation - brain size increased & female pelvic changes AND infant dependency co-evolved - the biology co-evolved with cooperative parenting of larger brained infants ...
NB parents who did not cooperate & defend their babies had fewer surviving children ...

morphological specialisation - high protein consumption increased & sophisticated specialised coordination of hands/legs for bipedalism AND hunting activities co-evolved - the biology co-evolved with cooperative teamwork for the peaceful sharing of meat ...
NB hunters who did not cooperate & defend their kill had fewer surviving children ...

There were costs and benefits but synergies loaded the dice; cooperation & defence were profitable. Both examples provided strong impetus towards social interconnectedness AND associated psychological propensities. Not a linear cause & effect but a co-evolution of genes & culture.

In this way the mutual benefits which flowed from cooperation fostered new patterns of economic activity -

Skills of specialisation = property, stocks & trade (the practice makes perfect) = risk of violence; treachery, theft, war & slavery.

Economies of scale = larger participating groups = families, villages, tribes, companies (the widening circle) = larger risk of violence; treachery, theft, war & slavery. 

This scenario has important implications for political theory and social policy, suggesting that folk became increasingly biologically predisposed to seek larger coalitions of trusted co-operators for love, play & work and for both exchange trade & defence. Folk became totally dependent on social interaction for survival. Empathy became more difficult with distance; biological, geographical & cultural distance.

But parasites & predators were everywhere and defence system were necessary for survival. Think of the evolution of the adaptive immune system. Defensive 'tit for tat' behavioural strategies encouraged cooperation & defence at every level ... and the waters were muddied ... most folk didn't understand competition & cooperation were two sides of the same coin -

competition = red in tooth & claw = genuine emotional concern to confront foes & cheats = post rationalised as violence is costly.
Why so many different tribes & religions & cultures?

cooperation = empathy & trust = genuine emotional concern to cooperate with friends & members = post rationalised as cooperation is profitable.
Why not one harmonious world government?

Folk became instinctively cooperative & defensive because of empathy, biological chemistry, deep down in the skull where decisions were ante emotional and post rationalised.

Selfish genes cooperated to secure synergies long before any thoughts of rational selfish Machiavellian reputation enhancement. In fact most folk had no idea what was going on and when they 'listened' to their feelings & predispositions they thought they 'heard' the voice of God. This was not enlightened self interest associated with close relatives or likely to be repeated interaction ... it was a human universal ... an instinct ... brain chemistry produced oxy pleasure from fulfilling obligations to others and guilt & shame if cheats are not punished.

In this way customary tort law evolved it was not the rational encyclical of a pope and not the whim of a king.

Customary Tort Law is internalised ...

it is not top down regulation. Top down regulation ... is an obvious misrepresentation of social behaviour -

1. compliance - regulations don't stop treachery, there is a drug problem?

2. unintended consequences - outcomes are unknowable, legal abortions reduced the crime rate?,

3. less innovation - new experiments are hindered?

4. reckless precaution - GM food production delayed?

5. arbitrary numbers - $14 retrospective tax on Apple Corps?

 6. barriers to entry - compliance costs reduce competition?

7. regulatory capture - bureaucratic costs of regulation and avoidance? 

Biological cost/benefit analysis. Herbert Gintis -

'As a result, members of groups that sustained cooperative strategies for provisioning, child rearing, sanctioning non-cooperators, defending against hostile neighbours, and truthfully sharing information had significant advantages over members of non-cooperative groups. In the course of subsequent history we created novel social & physical environments exhibiting similar or even greater, benefits of cooperation, among them the division of labour coordinated by market exchange and the respect of rights of property, systems of production characterised by increasing returns to scale ... and warfare'.

Biological niche construction. Herbert Gintis -

'Humans became a cooperative species because cooperation was highly beneficial to members of groups that practiced it, and through cognitive, linguistic & physical capacities we were able to construct social institutions that minimised the disadvantages of competition and heighten the advantages of cooperation. These institutions proliferated because they favoured the survival of a biological and cultural entity'.

In this way some cultures (some governments) protected large groups of cooperators without resorting to violence through the tort law; property rights, punishment of free riders and erosion of hierarchies ... and nurtured scientific method and the sharing of information.

29 Cooperation & Conflict

Did cooperation outcompete conflict? The dice were loaded -

control of parasites & predators - ostracism & immune systems tended to exclude bloody foreigners and become a pleasurable social norm. Internalising social norms in institutions & cultures.

erosion of the pecking order - monogamy tended to become a pleasurable social norm rather than a constraint on behaviour. Within group leveling practices.

development of technology to win wars - democracies tended to defeat dictatorships and gain reproductive & survival advantages. Between group competition.

Stephen Pinker has suggested that the key to explaining the decline of violence and the increase in cooperation was understanding the inner demons of the small brain that inclined us toward violence - fear, revenge, sadism, tribalism and the better angels of the big brain that steer us away - we empathize with others, bargain rather than plunder. The ancient 'state of nature' & 'nature v nurture' arguments are redundant; moral sentiments biologically evolved. Positive feedback loops in complex adaptive systems where scientific reasoning pushed at an open door of empathy -

'All our behaviours are a result of neurophysiologic activity in the brain. There is no reason to believe there is any magic going on. Smarter people tend to think more like economists. Human nature is a complex adaptive system with many components. It comprises mental faculties that lead us to violence, but it also has faculties that pull us away from violence, such as empathy, self-control, and a sense of fairness. It also comes equipped with open-ended combinatorial faculties for language and reasoning, which allow us to reflect on our condition and figure out better ways to live our lives. Morality is not a set of arbitrary regulations dictated and written down in a book; nor is it the custom of a particular culture (universal human emotions). It is a consequence of the interchangeability of perspectives (empathy) and the opportunity the world provides for positive sum games (synergies). You and I are both better off if we share our surpluses. People have feet, they move to places where opportunities are best, and they soon invite their friends and relatives to join them.
Democracy is an imperfect way of steering between the violence of anarchy and the violence of tyranny, with the least violence you can get away with. I don't think it's a triumph, but it's the best option we have found.
The implications of the historical decline of violence are profound, a better understanding of what drove the numbers down can steer us toward doing things that make people better off -

Liberal democracy - customary law trumps violence - few predators, parasites, dictators, sadists, racialists, idealists

global commerce - exchange trade cities is intense not violent - more empathy, moral sentiments, self control, understanding

universal emotions - girls matter gender specialisation - less discrimination

economies of scale - foreigners matter globalisation - less them & us

exponential learning - culture & science to UDHR - evidence trumps anecdote

Physical power and theft were replaced by empathy & coalition building where success depended on persuasion & motivation. Folk were much more capable of forming powerful and sustainable coalitions than other primates, due to enhanced longevity, cognitive, linguistic & physical capacities building on cooperative & defensive psychological propensities.

The prisoner escaped from his dilemma and the tragedy of the commons was averted!

 Maybe John Lock's 'State of Nature' was more than a match for Thomas Hobbes's 'Leviathan' but it seemed instinctive moral sentiments had to be complemented by constraints on parasites & predators.

This summarises a biological defence of morality, economic institutions & liberal democracy, based not on political philosophy, but on the historical & biological evidence of our evolution.

Herbert Gintis -

'This scenario has important implications for political theory and social policy, for it suggests that humans are predisposed to seek dominance when this is possible and not excessively costly, but also are predisposed to form coalitions to depose and dispose of pretenders to power. Moreover, humans are much more capable of forming powerful and sustainable coalitions than other primates, due to our enhanced cooperative psychological propensities. This, of course, is a defence of liberal democracy, but it is based not on political philosophy, but rather on the facts of our evolution'.

30 - Horse Manure Crisis and The Problem of Social Costs & Ronald Coase (2013)

The Tragedy of the Commons & the Magic of Property.

On September 3rd 2013 Nobel Laureate Ronald Coase (1910-2013) died in New York at the grand age of 102. 43 years after his breakthrough paper on 'The Problem of Social Costs'.

On the same day the FT reminded readers of the 'The Wisdom of Horse Manure' and the crisis of 1894.

The Times of London - 'In 50 years time every street in London will be buried under nine feet of horse manure'.

At the time London, the largest city in the world, was burgeoning with 11,000 cabs, several thousand buses and carts, drays & wains for Africa; all horse powered. New York had a population of 100,000 horses. And chemical fertilisers made by Tommy Astles at Acton Bridge was destroying the market for horse manure.

In 1898 the first international urban planning conference was abandoned after three days because no one could agree on a solution to the crisis.

By 1912 Henry Ford had propelled the urban horse into oblivion as cars were established as the main type of city transport.

In 1997 climate change was a problem and 192 countries signed the 'Kyoto Protocol', but the USA could not agree to the solution because the solution did not yet exist!

31 - Jimbo Riley's Christening. 16/6/2013 at Church, Staffs.

How long have I got?
I’m going to explain why life is not a ‘thing’ that you can have or own or buy.
Think Verbs not Nouns. You do Christianity you don’t accept a package of faith.
Welcome him into the club, try to give him a better chance.
By doing not by exchanging. We exchanged marriage vows but we do love.
We can prove it by evidence – how did all that happen? For that length of time? And still going on!
Lucky me? But the harder we practise the luckier we get.
Hard work brings momentous rewards.
How are we doing? Thanks anyway ... not for giving me a nice gift but for doing with me ...
That’s wot it is! It is not something we have it is something we do ...
We would love you to join us for a casual golden celebration at 12 noon on October 23rd 2015 at The Goshawk, Mouldsworth?

If you can make it let us know so we can order another bottle!

32 - Designer and his Devious Devices? Theory of Mind & Human social behaviour in a nutshell?

Hard work, honesty & thrift is a better behavioural strategy because no matter how deliberate, rational, purposeful & intentional are our well prepared plans possible outcomes always suffer from –

unintended consequences from hitherto unconnected connections and the emergence of novelty &

unknowable responses of others as 'Designer' constantly ties our shoelaces together and messes up our plans as soon as he knows about them.

But how do you know he knows better? He may be acting like he doesn't know so you won't do anything different? Yes, but if he knows I know he knows, he may mess me up instead. But what if he knows more than I think he does. He could be acting like he only knows that I know he knows, when in fact he knows that I know he knows I know he knows!?

I want [1 self consciousness, aware of past, present and future]
Keith to listen & understand [2 empathy, accepting others think differently]
that I believe [3 language, symbolic communication problem]
that God intends [4 shared beliefs, establishing trust, coalition building]
that Keith & I instinctively feel [5 moral urgency, deep down in the skull]
that Les should willingly [6 shared synergies] cooperate with us and
that we all should retaliate [7 cheat detection & testing interactions] against parasites & predators if his grand children are to survive.
But it was my Great Granddad and cultural ancestors, long dead, who persuaded [8 group enlargement & cohesion] me to wish like this and build bigger social networks of trusted friends … and confront the impositions of Designer.
Such was not ‘equality’ and ‘society’ for ‘rent seeking Luddites’ but education and compound interest from tapestries of diversity, choice and risk, dynamic opportunities for innovative technology … but the penny has to drop!

john p birchall

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