You Say Po-tay-to and I Say Po-tah-to!

Our political divide between left and right is most often characterized by the media as an ideological battle between liberalism and conservatism. Yet the meanings of these ideological terms are too often misinterpreted and mischaracterized – mostly by the opposing point of view – in order to fit a preferred political narrative. For those on the left, liberalism implies tolerance and empathy, while conservatism connotes bigotry and selfishness. For those on the right, liberalism infers intellectual naiveté and moral degeneracy, while conservatism assumes moral rectitude and time-tested reason. A clear understanding of political ideology can be useful; false stereotypes much less so. We should unpackage these terms as they are used in the popular vernacular to understand just how unhelpful and misguided they have become.

The etymological root of liberal is liber, or free, as it pertains to individual human rights and freedoms. Merriam-Webster offers this definition: a political philosophy based on belief in progress, the essential goodness of the human race, and the autonomy (i.e., freedom) of the individual and standing for the protection of political and civil liberties. Liberalism shares the same root as liberty and it would be difficult to find an American conservative who was not attuned to the universal idea of individual liberty.

Likewise, the root of conservative is conservare, meaning to preserve. Merriam-Webster offers the following definition: a political philosophy based on tradition and social stability, stressing established institutions, and preferring gradual development to abrupt change. If one assumes the evolutionary perspective, it would be difficult to find a society, American liberal or otherwise, that did not seek to preserve certain time-worn traditions in the interests of stability and self-preservation. We should also note that conservatism shares the same word root as conservation, so nature weighs in on this meaning as well.

So where did we get the idea that these ideologies are opposed? Merriam-Webster is partly culpable by posing these ideologies as antonyms but, as we will discover, they should be mostly viewed as useful complements.

Jonathan Haidt, in his psychological studies summarized in The Righteous Mind, explains how our ideological leanings can be expressed through complex moral matrices, where differences arise in moral interpretations and priorities. Haidt cites six moral precepts: 1) care; 2) liberty; 3) fairness; 4) loyalty; 5) authority; 6) sanctity. Haidt results show how liberals privilege the first three, while conservatives employ a mix of all six, giving additional weight to loyalty, authority, and sanctity.

One should read Haidt’s book to understand the nuances of these moral matrices, but the major divergence between our conceptions of liberal and conservative seem to revolve around the moral values of care and fairness. Haidt argues that everyone cares about fairness, but there are two major kinds.: “On the left, fairness often implies equality, but on the right it means proportionality—people should be rewarded in proportion to what they contribute, even if that guarantees unequal outcomes.” Implicit in these interpretations is the idea that consequences follow actions, but some consequences are rooted in contextual factors that are outside the individual’s control, such as educational opportunity. The takeaway from Haidt’s studies is that these moral matrices are hardly set in concrete and can be easily reconciled through a fuller understanding of the different emphases. They do not really divide us into red vs. blue.

The other dichotomy posed by our definitions of liberal and conservative is the implication that conservatives are intolerant and resistant to change while liberals seek to remove institutional barriers to change. Conservatives may be guilty of saying ‘don’t fix what ain’t broke,’ while liberals may be guilty of forcing change without due regard to the uncertainty inherent in change. But there is a way of reconciling these two approaches to inevitable change.

All societies embrace change to a certain degree, what matters is the pace of change. Change that is disruptive to social traditions naturally will be resisted by those it disrupts. This does not mean change will not occur, it merely means the pace must be managed prudently. Pushing change beyond the limits of social adaptation often leads to reactionary backlashes, causing undo conflict over the inevitable. The gradual evolution of cultural mores is a good example of how change occurs within the limits of order and stability. Naturally, there will be those in society who object to the too slow or too rapid pace of change.

Finally, opinion polls and surveys suggest that fewer Americans define themselves as truly liberal or conservative, with conservatives exceeding liberals by roughly 35% to 26%, though the gap has been closing. I would also guess these poll numbers are biased by the partisan mischaracterization of both ideological labels.

If this is the case, how do we politically define or classify most American voters? Perhaps we don’t. I would suggest that average non-political Americans are neither conservative nor liberal as strictly defined by their true ideological meanings. Elsewhere I have suggested that most of us, regardless of our politics, are both tolerant and traditional. I have called this dominant ideology based on liberty and justice tolerant traditionalism, as opposed to conservative or liberal. Americans are generally willing to adapt to societal changes as best we can, embracing the good to come of it while feeling wistful for the past we know. Societies that evolve and endure by adapting to change have a proud past and an ever-brighter future.

Was Quantitative Easing the Father of Millennial Socialism?

If you’ve been reading these pages for the past 8 years you know that central bank policy has been a constant refrain. The financial policies of the Fed for the past generation under both Greenspan and Bernanke have created a historic asset bubble with cheap credit. This has greatly aggravated wealth inequality and invited greater risks of both economic catastrophe and political chaos. We’re still experiencing where it leads. The eventual correction will likely be more painful than the original problem…

From the Financial Times:

Is Ben Bernanke the father of Alexandria Ocasio-Cortez? Not in the literal sense, obviously, but in the philosophical and political sense.

As we mark the 10th anniversary of the bull market, it is worth considering whether the efforts of the US Federal Reserve, under Mr Bernanke’s leadership, to avoid 1930s-style debt deflation ended up spawning a new generation of socialists, such as the freshman Congresswoman Ms Ocasio-Cortez, in the home of global capitalism.

Mr Bernanke’s unorthodox “cash for trash” scheme, otherwise known as quantitative easing, drove up asset prices and bailed out baby boomers at the profound political cost of pricing out millennials from that most divisive of asset markets, property. This has left the former comfortable, but the latter with a fragile stake in the society they are supposed to build. As we look towards the 2020 US presidential election, could Ms Ocasio-Cortez’s leftwing politics become the anthem of choice for America’s millennials?

But before we look forward, it is worth going back a bit. The 2008 crash itself didn’t destroy wealth, but rather revealed how much wealth had already been destroyed by poor decisions taken in the boom. This underscored the truism that the worst of investments are often taken in the best of times. Mr Bernanke, a keen student of the 1930s, understood that a “balance sheet recession” must be combated by reflating assets. By exchanging old bad loans on the banks’ balance sheets with good new money, underpinned by negative interest rates, the Fed drove asset prices skywards. Higher valuations fixed balance sheets and ultimately coaxed more spending and investment. [A sharp correction and reflation of solvent banks would have given asset speculators the correct lesson for their imprudent risks. Prudent investors would have had access to capital to purchase those assets at rational prices. Instead, we rewarded the profligate borrowers and punished the prudent.]

However, such “hyper-trickle-down” economics also meant that wealth inequality was not the unintended consequence, but the objective, of policy. Soaring asset prices, particularly property prices, drive a wedge between those who depend on wages for their income and those who depend on rents and dividends. This wages versus rents-and-dividends game plays out generationally, because the young tend to be asset-poor and the old and the middle-aged tend to be asset-rich. Unorthodox monetary policy, therefore, penalizes the young and subsidizes the old. When asset prices rise much faster than wages, the average person falls further behind. Their stake in society weakens. The faster this new asset-fuelled economy grows, the greater the gap between the insiders with a stake and outsiders without. This threatens a social contract based on the notion that the faster the economy grows, the better off everyone becomes. What then? Well, politics shifts.

Notwithstanding Winston Churchill’s observation about a 20-year-old who isn’t a socialist not having a heart, and a 40-year-old who isn’t a capitalist having no head, polling indicates a significant shift in attitudes compared with prior generations. According to the Pew Research Center, American millennials (defined as those born between 1981 and 1996) are the only generation in which a majority (57 per cent) hold “mostly/consistently liberal” political views, with a mere 12 per cent holding more conservative beliefs. Fifty-eight per cent of millennials express a clear preference for big government. Seventy-nine per cent of millennials believe immigrants strengthen the US, compared to just 56 per cent of baby boomers. On foreign policy, millennials (77 per cent) are far more likely than boomers (52 per cent) to believe that peace is best ensured by good diplomacy rather than military strength. Sixty-seven per cent want the state to provide universal healthcare, and 57 per cent want higher public spending and the provision of more public services, compared with 43 per cent of baby boomers. Sixty-six per cent of millennials believe that the system unfairly favors powerful interests.

One battleground for the new politics is the urban property market. While average hourly earnings have risen in the US by just 22 per cent over the past 9 years, property prices have surged across US metropolitan areas. Prices have risen by 34 per cent in Boston, 55 per cent in Houston, 67 per cent in Los Angeles and a whopping 96 per cent in San Francisco. The young are locked out.

Similar developments in the UK have produced comparable political generational divides. If only the votes of the under-25s were counted in the last UK general election, not a single Conservative would have won a seat. Ten years ago, faced with the real prospect of another Great Depression, Mr Bernanke launched QE to avoid mass default. Implicitly, he was underwriting the wealth of his own generation, the baby boomers. Now the division of that wealth has become a key battleground for the next election with people such as Ms Ocasio-Cortez arguing that very high incomes should be taxed at 70 per cent.

For the purist, capitalism without default is a bit like Catholicism without hell. But we have confession for a reason. Everyone needs absolution. QE was capitalism’s confessional. But what if the day of reckoning was only postponed? What if a policy designed to protect the balance sheets of the wealthy has unleashed forces that may lead to the mass appropriation of those assets in the years ahead?

Suburbs vs. Urbans

Our modern politics are defined by locational choices of urban, suburban, and rural communities. None of these dominate the other; nor should they as we enjoy each during different phases of our lives. Our parties make a senseless war over this. By Joel Kotkin in The Daily Beast:

The Democrats Finally Won the Suburbs. Now Will They Destroy Them?

Whatever the thinkers say people should do, what they keep doing given the choice is moving to places where they can live in single-family homes.

read more

 

 

Why We’re Jaded With Facebook

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Facebook has been under constant fire for more than a year now and seems unable to answer its critics. Under such criticism the company’s executive team has promised to make user privacy its primary concern, until the next revelation exposes its duplicity. Now it seems every other week another article is written demanding that Facebook be broken up or regulated by government oversight.

We might wonder what exactly is wrong with Facebook and why can’t they fix it?

https://www.tukaglobal.com/why-were-jaded-with-facebook

 

Financial Moral Hazard

If we believe this Houdini act then we have only ourselves to blame.

How Many Bank Bailouts Can America Withstand?

The architects of the 2008 rescues pretend they’ve been vindicated.

Ten years after the financial crisis of 2008, the architects of the bailouts are still describing their taxpayer-backed rescues of certain financial firms as great products which were poorly marketed to the American people. The American people still aren’t buying.

A decade ago, federal regulators were in the midst of a series of unpredictable and inconsistent interventions in the financial marketplace. After rescuing creditors of the investment bank Bear Stearns and providing a partial rescue of its shareholders in March of 2008, the feds then shocked markets six months later by allowing the larger Lehman Brothers to declare bankruptcy. Then regulators immediately swerved again to take over insurer AIG and use it as a vehicle to rescue other financial firms.

Within days legislative drafts were circulating for a new bailout fund that would become the $700 billion Troubled Asset Relief Program. Throughout that fall of 2008 and into 2009, the government continued to roll out novel inventions to support particular players in the financial industry and beyond. Some firms received assistance on better terms than others and of course many firms, especially small ones outside of banking, received no help at all.

In the fall of 2008, Ben Bernanke chaired the Federal Reserve, Timothy Geithner ran the New York Fed and Hank Paulson served as U.S. Treasury secretary. Looking back now, the three bailout buddies have lately been congratulating themselves for doing a dirty but important job. They recently wrote in the New York Times:

Many of the actions necessary to stem the crisis, including the provision of loans and capital to financial institutions, were controversial and unpopular. To us, as to the public, the responses often seemed unjust, helping some of the very people and firms who had caused the damage. Those reactions are completely understandable, particularly since the economic pain from the panic was devastating for many.

The paradox of any financial crisis is that the policies necessary to stop it are always politically unpopular. But if that unpopularity delays or prevents a strong response, the costs to the economy become greater. We need to make sure that future generations of financial firefighters have the emergency powers they need to prevent the next fire from becoming a conflagration.

The authors say that their actions saved the United States and the world from catastrophe, but of course this claim cannot be tested. We’ll never get to run the alternative experiment in which investors and executives all have to live with the consequences of their investments. But Stanford economist John Taylor has made the case that massive ad hoc federal interventions were among the causes of the conflagration. On the fifth anniversary of the crisis he noted that in 2008 markets deteriorated as the government was taking a more active role in the financial economy, which may have contributed to a sense of panic:

…the S&P 500 was higher on September 19—following a week of trading after the Lehman Brothers bankruptcy—than it was on September 12, the Friday before the bankruptcy. This indicates that some policy steps taken after September 19 worsened the problem… Note that the stock market crash started at the time TARP was being rolled out… When former Treasury Secretary Hank Paulson appeared on CNBC on the fifth anniversary of the Lehman Brothers failure, he said that the markets tanked, and he came to the rescue; effectively, the TARP saved us. Appearing on the same show minutes later, former Wells Fargo chairman and CEO Dick Kovacevich—observing the same facts in the same time—said that the TARP… made things worse.

CNBC reported at the time on its Kovacevich interview:

TARP caused the crisis to get “much greater,” he added.

“Shortly after TARP, the stock market fell by 40 percent,” he continued. “And the banking industry stocks fell by 80 percent. How can anyone say that TARP increased the confidence level of an industry, when its stock market valuation fell by 80 percent.”

Perhaps the argument can never be resolved. What is known but is conveniently left out of the Times op-ed is an acknowledgment of the role that regulators played in creating the crisis by encouraging financial firms to invest in mortgage debt, to operate with high leverage and to expect help in a crisis. The Times piece includes no mention of Mr. Bernanke and his Fed colleagues holding interest rates too low for too long, or the massive risks at Citigroup overseen by Mr. Geithner’s New York Fed, or the mortgage bets at AIG approved by the Office of Thrift Supervision at Mr. Paulson’s Treasury Department.

Foolish regulators creating bad incentives was nothing new, though Beltway blunders had rarely if ever occurred on such a scale. What was of course most shocking for many Americans in 2008 was observing so many of their tax dollars flowing into the coffers of large financial institutions. For months both the financial economy and the real economy suffered as Washington continued its ad hoc experiments favoring one type of firm or another.

In 2009 markets began to recover and, thanks in no small part to years of monetary expansion by the Federal Reserve, stock investors enjoyed a long boom. But when it comes to economic growth and wages for the average worker there was no such boom, just an era of discouraged Americans leaving the labor force. And by keeping interest rates near zero for years, the Fed punished savers and enabled an historic binge of government borrowing.

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That federal borrowing binge was also enabled by the rescue programs. The basic problem was that once Washington said yes to bailing out large financial houses, politicians could hardly say no to anyone else. It was no coincidence that just months after enacting the $700 billion TARP, lawmakers enacted an $800 billion stimulus plan. So began the era of trillion-dollar annual deficits. Since the fall of 2008, federal debt has more than doubled and now stands at more than $21 trillion.

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The expansion of government also included record-setting levels of regulation, which limited economic growth. A financial economy heavily distorted by federal housing policy was cast as the free market that failed, and decision-making affecting every industry was further concentrated in Washington.

Messrs. Bernanke, Geithner and Paulson make the case that they saved the financial system but failed to sell the public on the value of their interventions. It’s a sale that can never be made. Even if the bailouts hadn’t led to an era of diminished opportunity and skyrocketing federal debt, Americans would have resisted the idea that our system requires occasional instant welfare programs for wealthy recipients chosen by un-elected wise men.

The bailout buddies are now urging the creation of more authorities for regulators to stage future bailouts. The Trump administration should do the opposite, so that bank investors finally understand they will get no help in a crisis.

This column isn’t sure how many bailouts of financiers the American political system can withstand but is certain that such efforts will never be welcomed by non-financiers.

***

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Bank Bailout 3.0

I’d have to agree with this. As we’ve said all along, saving the banking system was necessary, saving the bankers was not. Now we’re set up for the next bailout of the financial elite. What a great casino this is: heads they win, tails we lose.

The bank bailout of 2008 was unnecessary. Fed Chairman Ben Bernanke scared Congress into it

By Dean Baker

This week marked 10 years since the harrowing descent into the financial crisis — when the huge investment bank Lehman Bros. went into bankruptcy, with the country’s largest insurer, AIG, about to follow. No one was sure which financial institution might be next to fall.

 

The banking system started to freeze up. Banks typically extend short-term credit to one another for a few hundredths of a percentage point more than the cost of borrowing from the federal government. This gap exploded to 4 or 5 percentage points after Lehman collapsed. Federal Reserve Chair Ben Bernanke — along with Treasury Secretary Henry Paulson and Federal Reserve Bank of New York President Timothy Geithner — rushed to Congress to get $700 billion to bail out the banks. “If we don’t do this today we won’t have an economy on Monday,” is the line famously attributed to Bernanke.

The trio argued to lawmakers that without the bailout, the United States faced a catastrophic collapse of the financial system and a second Great Depression.

Neither part of that story was true.

Still, news reports on the crisis raised the prospect of empty ATMs and checks uncashed. There were stories in major media outlets about the bank runs of 1929.

No such scenario was in the cards in 2008.

Unlike 1929, we have the Federal Deposit Insurance Corporation. The FDIC was created precisely to prevent the sort of bank runs that were common during the Great Depression and earlier financial panics. The FDIC is very good at taking over a failed bank to ensure that checks are honored and ATMs keep working. In fact, the FDIC took over several major banks and many minor ones during the Great Recession. Business carried on as normal and most customers — unless they were following the news closely — remained unaware.

 

The prospect of Great Depression-style joblessness and bread lines was just a scare tactic used by Bernanke, Paulson and other proponents of the bailout.

Had bank collapses been more widespread, stretching the FDIC staff thin, it is certainly possible that there would be glitches. This could have led to some inability to access bank accounts immediately, but that inconvenience would most likely have lasted days, not weeks or months.

 

Following the collapse of Lehman Bros., however, the trio promoting the bank bailout pointed to a specific panic point: the commercial paper market. Commercial paper is short-term debt (30 to 90 days) that companies typically use to finance their operations. Without being able to borrow in this market even healthy companies not directly affected by the financial crisis such as Boeing or Verizon would have been unable to meet their payroll or pay their suppliers. That really would have been a disaster for the economy.

However, a $700-billion bank bailout wasn’t required to restore the commercial paper market. The country discovered this fact the weekend after Congress approved the bailout when the Fed announced a special lending facility to buy commercial paper ensuring the availability of credit for businesses.

 

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Without the bailout, yes, bank failures would have been more widespread and the initial downturn in 2008 and 2009 would have been worse. We were losing 700,000 jobs a month following the collapse of Lehman. Perhaps this would have been 800,000 or 900,000 a month. That is a very bad story, but still not the makings of an unavoidable depression with a decade of double-digit unemployment.

 

The Great Depression ended because of the massive government spending needed to fight World War II. But we don’t need a war to spend money. If the private sector is not creating enough demand for workers, the government can fill the gap by spending money on infrastructure, education, healthcare, childcare or many other needs.

There is no plausible story where a series of bank collapses in 2008-2009 would have prevented the federal government from spending the money needed to restore full employment. The prospect of Great Depression-style joblessness and bread lines was just a scare tactic used by Bernanke, Paulson and other proponents of the bailout to get the political support needed to save the Wall Street banks.

 

This kept the bloated financial structure that had developed over the last three decades in place. And it allowed the bankers who got rich off of the risky financial practices that led to the crisis to avoid the consequences of their actions.

 

While an orderly transition would have been best, if the market had been allowed to work its magic, we could have quickly eliminated bloat in the financial sector and sent the unscrupulous Wall Street banks into the dustbin of history. Instead, millions of Americans still suffered through the Great Recession, losing homes and jobs, and the big banks are bigger than ever. Saving the banks became the priority of the president and Congress. Saving people’s homes and jobs mattered much less or not at all.

 

Dean Baker is senior economist at the Center for Economic and Policy Research and the author of “Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.”

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Generalists vs. Specialists

Specialization has led to great economic gains over the course of civilization. But specialization as such is an economic imperative, not a humanistic or evolutionary one. Evolution, as this article argues, may strongly favor the generalist capabilities of a species. And it rewards individuals with its humanistic benefits, if not in material gains.

As an unrepentant generalist across many disciplines, I especially appreciate the intangible benefits and payoffs (if not the monetary tradeoffs!).

I’m reminded of the academic distinction: a generalist is somebody who knows nothing about everything, while a specialist is one who knows everything about nothing.

The Generalist Specialist: Why Homo Sapiens Succeeded

By Gemma Tarlach | July 30, 2018 10:00 am

 

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Being a generalist specialist, a unique niche, is the hallmark of our species, say researchers — and the reason Homo sapiens (left) are still around but other hominins, including Neanderthals (right), are not. (Credit: Wikimedia Commons)

Some animals are jacks of all trades, some masters of one. Homo sapiens, argues a provocative new commentary, are an evolutionary success story because our ancestors pulled off a unique feat: being masterly jacks of all trades. But is this ecological niche, the generalist specialist, the real reason our species is the last hominin standing?

When paleoanthropologists and archaeologists define what makes our species unique, they usually focus on our use of symbolism and language, as well as our skills in social networking (long before Facebook) and technological innovation. Those arguments for human exceptionalism have been challenged in recent years, however, as researchers have uncovered evidence that other members of the genus Homo, notably Neanderthals, were capable of similar cognitive processes, from artistic expression to producing fire at will.

But maybe, say two researchers, we got it wrong. What defines our species, and has allowed H. sapiens to survive and even thrive after all other hominins went extinct, is not about making better stone projectiles, or networking, or sprucing up the cave walls with a little ochre artwork. We’re the last hominins on Earth because we’re really good at adapting to a huge range of environments, including the extreme.

Over The River And Through The Woods (And The Tundra, And The Desert…)

To make their case, researchers mapped out the likely ranges of archaic members of the genus Homo according to current fossil, paleoenviromental and archaeological evidence. Being a fan of the scientific method, I think it’s worth noting here that this map almost certainly will change as new finds turn up. But for now, working with the best body of evidence we’ve got, it’s clear that early H. sapiens, once they left Africa, seemed to explode across the Old World, moving into territory previously occupied by one or at most two other hominin species.

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A map of the estimated ranges of archaic members of the genus Homo, spanning the period H. sapiens emerged in Africa and dispersed across the rest of the Old World, roughly 60,000-300,000 years ago. (Credit: Roberts and Stewart, 2018. Defining the ‘generalist specialist’ niche for Pleistocene Homo sapiens. Nature Human Behaviour. 10.1038/s41562-018-0394-4)

To be clear, there is good evidence that other hominins called extreme environments home. Denisovans appear to have adapted to high-altitude life in Central Asia, for example, while diminutive H. floresiensis was at home in equatorial island rainforests. It’s been argued, heatedly (no pun intended), that Neanderthals were high-latitude specialists. But only H. sapiens turn up in all of those environments. What might not be immediately evident from the map is that early H. sapiens dispersal wasn’t just about setting foot on a new continent; it was also about moving into new and often extremely challenging environments, from deserts to arctic climes, from treeless, high-altitude plateaus to dense tropical rainforests.

Nevertheless We Persisted

It’s the “unique ecological plasticity” of our species that’s our defining trait, argue the researchers, and it’s what gave us a leg up on surviving, whether moving into new territories or adapting to changing climate conditions. While this conclusion may seem obvious to us now, it’s only been possible to reach it thanks to the flood of new evidence that’s revised the timeline of human evolution and dispersal.

The new research has shown our species evolved earlier than once thought (our start date is now at least 300,000 years ago) and spread beyond Africa sooner than expected: Consider, for example, the first H. sapiens fossil found in the Arabian Peninsula — once thought inhospitable to early humans — and described earlier this year, or a H. sapiens partial jaw from Israel that’s 177,000-194,000 years old.

The key to proving their hypothesis is correct — and to understanding how this ecological plasticity arose in our species — will be acquiring not just more evidence of a H. sapiens presence at different sites, but also strong paleo-enviromental data, particularly in Africa where the earliest H. sapiens lived.

In the meantime, the researchers have coined a novel niche for the intrepid early H. sapiens: the generalist specialist. The team looked at the ecological niche profiles of specialists, such as pandas, and generalists, like the trash panda (aka the raccoon). They concluded that H. sapiens’ unique generalist specialist niche allowed early members of our species to adapt to, and specialize in, living in wildly different environments.

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Pandas are considered specialists because all individuals utilize a single food web. Raccoons, on the other hand (paw?), are generalists adept at exploiting whatever food web they can find, as anyone who has left an unsecured trash can out at night probably knows. Our species has often been considered a generalist, but the authors of today’s commentary propose a new ecological niche for us: the generalist specialist, with different populations capable of adapting to and specializing in a wide range of environments and resources. (Credit: Roberts and Stewart, 2018)

While occupying the unique niche of generalist specialist will no doubt appeal to fans of H. sapiens exceptionalism, it’s unclear that it provides what the researchers describe as a “framework for discussing…how our species became the last surviving hominin on the planet.” Specialists tend to face extinction, for example, only if their specialized ecological niche is wiped out — or they are out-competed by an invasive species. Ahem.

Networks and Hierarchies

This is a review of British historian Niall Ferguson’s new book titled The Square and the Tower: Networks, Hierarchies and the Struggle for Global Power. It’s interesting to take the long arc of history into account in this day and age of global communication networks, which might seem to herald the permanent dominance of networks over hierarchies. That history cautions us otherwise.

Ferguson notes two predominant ages of networks: the advent of the printing press in 1452 that led to an explosion of networks across the world until around 1800. This was the Enlightenment period that helped transform economics, politics, and social relations.

Today, the second age of networks consumes us, starting at about 1970 with microchip technology and continuing forward to the present. It is the age of telecommunications, digital technology, and global networks. Ours is an age where it seems “everything is connected.”

Ferguson notes that, beginning with the invention of written language,  all that has happened is that new technologies have facilitated our innate, ancient urge to network – in other words, to connect. This seems to affirm Aristotle’s observation that “man is a social animal,” as well as a large library of psychological behavioral studies over the past century. He also notes that most networks may reflect a power law distribution and be scale-free. In other words, large networks grow larger and become more valuable as they do so. This means the rich get richer and most social networks are profoundly inegalitarian. This implies that the GoogleAmazonFacebookApple (GAFA) oligarchy may be taking over the world, leaving the rest of us as powerless as feudal serfs.

But there is a fatal weakness inherent to this futuristic scenario, in that complex networks create interdependent relationships that can lead to catastrophic cascades, such as the global financial crisis of 2008. Or an explosion of “fake news” and misinformation spewed out by global gossip networks.

We are also seeing a gradual deconstruction of networks that compete with the power of nation-state sovereignty. This is reflected in the rise of nationalistic politics in democracies and authoritarian monopoly control over information in autocracies.

However, from the angle of hierarchical control, Ferguson notes that failures of democratic governance through the administrative state “represents the last iteration of political hierarchy: a system that spews out rules, generates complexity, and undermines both prosperity and stability.”

These historical paths imply that the conflict between distributed networks and concentrated hierarchies is likely a natural tension in search of an uneasy equilibrium.

Ferguson notes “if Facebook initially satisfied the human need to gossip, it was Twitter – founded in March 2006 – that satisfied the more specific need to exchange news, often (though not always) political.” But when I read Twitter feeds I’m thinking Twitter may be more of a tool for disruption rather than constructive dialogue. In other words, we can use these networking technologies to tear things down, but not so much to build them back up again.

As a Twitter co-founder confesses:

‘I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place,’ said Evan Williams, one of the co-founders of Twitter in May 2017. ‘I was wrong about that.’

Rather, as Ferguson asserts, “The lesson of history is that trusting in networks to run the world is a recipe for anarchy: at best, power ends up in the hands of the Illuminati, but more likely it ends up in the hands of the Jacobins.”

Ferguson is quite pessimistic about today’s dominance of networks, with one slim ray of hope. As he writes,

“…how can an urbanized, technologically advanced society avoid disaster when its social consequences are profoundly inegalitarian?

“To put the question more simply: can a networked world have order? As we have seen, some say that it can. In the light of historical experience, I very much doubt it.”

That slim ray of hope? Blockchain technology!

A thought-provoking book.

 

 

 

 

 

 

 

 

 

 

 

 

Pondering National Governance

This is a recent article published in the NY Times. To make any sense of our answers to this question requires some ideological and historical clarity. [Blog comments]

Is the United States Too Big to Govern?

By Neil Gross

May 11, 2018

Last month the Pew Research Center released a poll showing that Americans are losing faith in their system of government. Only one-fifth of adults surveyed believe democracy is working “very well” in the United States, while two-thirds say “significant changes” are needed to governmental “design and structure.” [Because nobody really knows what these words mean, or they don’t agree among the many meanings, polling results are questionable indicators.]

The 2016 election is one explanation for these findings. Something is not right in a country where Donald Trump is able to win the presidency. [Well, that’s a selective value judgment – one could easily substitute in the names Hillary Clinton or Bernie Sanders. The point of a democratic society is that the people get to make those decisions and the people agree to abide by them or revolt. Are the people revolting against themselves or against their political representatives?]  

But here’s another possibility: What if trust in American democracy is eroding because the nation has become too big to be effectively governed through traditional means? With a population of more than 325 million and an enormously complex society, perhaps this country has passed a point where — no matter whom we elect — it risks becoming permanently dissatisfied with legislative and governmental performance. [There’s an implicit assumption here that the original intent of the founders is that some central authority should “govern” the affairs of the population and manage the national interest (“traditional means”?). This is probably half true in that a national interest must be represented as the sum of its many parts. We have a Federal government. What was not intended was an all-powerful Federal government.]

Political thinkers, worried about the problem of size, have long advocated small republics. Plato and Aristotle admired the city-state because they thought reason and virtue could prevail only when a polis was small enough that citizens could be acquaintances. Montesquieu, the 18th-century French political philosopher, picked up where the ancient Greeks left off, arguing for the benefits of small territories. “In a large republic,” he wrote, “the common good is sacrificed to a thousand considerations,” whereas in a smaller one the common good “is more strongly felt, better known, and closer to each citizen.” [I suspect Dunbar’s number is at work here.]

The framers of the United States Constitution were keenly aware of these arguments. As the political scientists Robert Dahl and Edward Tufte noted in their 1973 book, “Size and Democracy,” the framers embraced federalism partly because they thought that states were closer in scale to the classical ideal. Ultimately, however, a counterargument advanced by James Madison won the day: Larger republics better protected democracy, he claimed, because their natural political diversity made it difficult for any supersized faction to form and dominate. [With Federalism and the separation of powers and overlapping jurisdictions, I think the founders split the difference here.]

Two and a half centuries later, the accumulated social science suggests that Madison’s optimism was misplaced. Smaller, it seems, is better. [This is a false and impossible choice. When complex networks grow too large, they break-up into smaller, more manageable pieces, but these smaller entities are vulnerable to competitive pressures. This is true in industrial organization, economic and financial markets, and digital and social networks. It also applies to social choice and governance. The founders’ idea was to create a coordinated network of states, counties, and municipalities to manage affairs at the appropriate jurisdictional level. National issues are the sole responsibility of a Federal government balanced by parochial interests. This would secure the strongest union to guarantee citizens’ rights and freedoms. As that task grows in complexity, the need for decentralization and coordination reasserts itself.] 

There are clear economic and military advantages to being a large country. But when it comes to democracy, the benefits of largeness — defined by population or geographic area — are hard to find. Examining data on the world’s nations from the 19th century until today, the political scientists John Gerring and Wouter Veenendaal recently discovered that although size is correlated with electoral competition (in line with the Madisonian argument), there is no association between size and many other standard measures of democratic functioning, such as limits on executive power or the provision of human rights. [Another question raised here is what exactly we mean by democracy. Strictly democracy means government by the people, but popular democracy is a narrow offshoot of that definition. IT also begs the question of what a government by the people is trying to accomplish. Our founders made it clear they thought it was life, liberty, and the pursuit of happiness.  Note: the pursuit of happiness, not its guarantee.]

In fact, large nations turn out to have what the political scientist Pippa Norris has called “democratic deficits”: They don’t fully satisfy their citizens’ demands for democracy. [Again, what is that demand? Is it coherent?] For one thing, citizens in large nations are generally less involved in politics and feel they have less of a voice. [Are they unable to secure life, liberty and pursue happiness or do they just not like the results?] Voter turnout is lower. [Low voter turnout could mean that voters are happy with the status quo, or don’t believe voting matters to their individual fates.] According to the political scientist Karen Remmer, smaller-scale political entities encourage voting in ways large ones can’t by “creating a sense of community” and “enforcing norms of citizenship responsibility.” [Perhaps because they enjoy more intrinsic rewards to participation. This would suggest more localized control over politics.] In addition, small countries promote political involvement by leaning heavily on forms of direct democracy, like referendums or citizen assemblies. [This is a feature of scale. Direct democracy on a large scale can empower the tyranny of the popular majority because the effects are so far removed from that majority.]

A second problem is political responsiveness: The policies of large nations can be slow to change, even if change is needed and desired. In a book published last year, the sociologists John Campbell and John Hall compared the reactions to the 2007-2008 financial crisis in Denmark, Ireland, and Switzerland. These three small countries didn’t cause the crisis; a homegrown Irish housing bubble notwithstanding, the shock wave they dealt with came from America. But though the countries were economically vulnerable, Mr. Campbell and Mr. Hall observed, this vulnerability fostered unexpected resilience and creativity, generating in each nation “a sense of solidarity or ‘we-ness’” that brought together politicians, regulators, and bankers eager to do whatever was necessary to calm markets. [Again, a sense of “we-ness” is one of scale. Cultural homogeneity helps.] 

With the United States lacking the same sense of shared fate and vulnerability, American policymakers could organize only a tepid response, which helps explain why the recovery here was so slow. This theory sheds light as well on developments in environmental and social welfare policy, where it is increasingly common to find a complacent America lagging behind its smaller, more innovative peers. [Complexity plus centralization leads to sclerosis, which is why centralizing authority in a large, diverse, pluralist society make be unworkable.] 

Finally, largeness can take a toll on citizen trust. The presence of a wide variety of social groups and cultures is the primary reason for this. Nearly all scholars who study country size recognize, as Madison did, that large nations are more socially heterogeneous, whether because they represent an amalgamation of different regions, each with its own ethnolinguistic, religious or cultural heritage; or because their economic vitality encourages immigration; or because population size and geographic spread promote the growth of distinctive subcultures; or because they have more differentiated class structures. [Agreed, which is why encouraging a large diverse population of the virtues of multiculturalism may actually be a detriment. I believe the original idea, or at least the one that prevailed in past influxes of cultural groups, was the melting pot of gradual, voluntary assimilation.]

It isn’t inevitable that a large amount of social variation would undermine trust. Well-governed societies like Canada address the issue by stitching diversity and multiculturalism into their national identities. Yet in the absence of cultural and institutional supports, heterogeneity and trust are frequently in tension, as different ways of life give rise to suspicion and animosity. Without at least a veneer of trust among diverse social groups, politics spirals downward. [This characterization of Canada seems counter-intuitive. Stitching ethnic diversity and multiculturalism into a national identity means that national identity must be based not on ethnicity, race, or diverse cultures but in a national identity based on universal principles and social contracts. In other words, on something called patriotism and fealty to the larger community, subsuming ethnic, racial, and cultural differences.]

The challenges of American largeness are here to stay. The task now is for individuals, civic organizations and institutions to commit themselves to building stronger communities and a renewed sense of shared responsibility and trust among different groups. Within the constraints of our nation’s size, we can create conditions for as much democracy as possible. [So, we converge on the idea that it is inevitable we decentralize power and assume the responsibility of self-governance? What then is the real political conflict of interest?]

Neil Gross is a professor of sociology at Colby College.

How the Enlightenment Ends

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