October 2. Here's a brief FAQ on the financial crisis:
How did this happen?
It was an inevitable result of what people used to call "usury". If money borrowers have to pay back more than they borrowed, then you have 1) a constantly increasing money supply, which must collapse because nothing can increase forever, and 2) positive feedback loops in both wealth and poverty, and therefore a constantly increasing gap between the rich and poor, which also must collapse. In this particular case, the housing bubble and the lending bubble were desperate attempts by a giant pool of money, near collapse, to keep growing exponentially.
How can we prevent this from happening again?
One way would be to abolish interest, to build a culture and an economy in which it's never charged or collected. Better yet would be a demurrage currency system, in which concentrations of money tend to shrink over time, and wealth is constantly redistributed from rich people to working people without taxes.
So what's the best thing to do now, to recover from the present crisis? Is the bailout bill better than doing nothing?
No one knows, but everyone thinks they know.
What should Congress do?
Whatever they do, the economy is going to get worse. So it's in their long-term interest to say, "The people have spoken and we're going to let Wall Street burn." Then in a couple years they can say, "We listened to you idiots and look how much worse it is now. That proves we should never let ignorant populism sway politics, so next time, just shut up and let us make the call."
What will Congress do?
They will pass a bailout against public pressure. Then in a couple years the people will say, "You crooks didn't listen to us and look how much worse it is now. Ignorant populism Go!" What happens next depends on the character of the populist leaders.
October 6. Michael writes:
Lately, it's become a little bit annoying to see that you've been watching for The Crash so long, you automatically assume that any crisis is The Crash. The worldwide economic crisis now ensuing is not The Crash. Please stop being so jumpy.
Maybe I haven't said this explicitly enough: I do not believe in The Crash. The word "crash" is a bad metaphor, because it makes you think of a plane crash or a car crash, something sudden and physically catastrophic, and nothing like that has happened in history, except natural disasters like volcanoes and tsunamis, and local bombings. Even "collapse" is a bad metaphor. Imaginary systems like Bear Stearns can collapse in hours, and buildings can collapse in seconds, but the changes in your life will happen over many years and only look catastrophic in far hindsight.
And even if I agreed with the word "crash", I would still reject the word "the"! We can talk about "a" financial collapse, "a" famine, "a" war, "a" period of hyperinflation, "a" retooling of the tech system, "a" ruined city. Every event in history is unique, but "the" implies not a unique event, but a unique category of event. Goddammit, we are not at the end of history. We are always, always in the middle of history.
When our descendants look back 100 years from now, whatever they call the present adjustment, they will almost certainly say that it started with the financial crisis a few weeks ago, just as we say that the depression of the 1930's started with the stock market crash in 1929. When I say "this is what the crash looks like," I don't mean that we won't get any more changes, but that they won't come any faster than in the last few weeks, and that our world will never resemble The Road Warrior. We will not be fighting off roving hordes, but going through our lives adjusting to changes in the background, and in 20 years we'll look back and say "Wow, what happened?!"
October 5. This new Charles Eisenstein piece, Money and the Crisis of Civilization, is a deep explanation of the present financial trouble. To summarize:
Interest causes the total amount of money to grow over time, which means that either the quantity of goods and services also grows, or there is inflation. Throughout the industrial age, services have been "created" by taking activities that used to be done for free, like cooking and child care and entertainment, and pulling them into the realm of money. And goods have been "created" by conquering and exterminating nature and pulling its dead parts into the realm of money. Both processes have been slowing for decades, and lately the money supply has been forced to grow through speculative bubbles that do not even represent anything real.
Now it's all collapsing, and our best adaptation is to move as many goods and services as possible from the money economy back to the gift economy.
October 7. Backing up Sunday's money subject, this video, Money as Debt, goes into much more detail about how the custom of charging interest leads to an ever-increasing supply of imaginary money. Here's a Money as Debt transcript in .doc format.
You might have heard the thought experiment where we're all on an island using a fixed number of coconuts for money, and if we start lending coconuts at interest, we create imaginary coconuts so it's impossible for all the debts to be repaid. To make the simplest possible example, if there's only one coconut, and I lend it to you on the condition that you pay me back two, we now have two imaginary coconuts and only one real coconut. You can't pay me back two, so instead you pay me back one and become my slave.
Multiply that by billions, and it's still not as bad as the real situation, because once we have a system where someone can make money merely by lending, we get lending institutions that don't just lend the money they have, but money they don't have. The really big fake money is created not as interest, but as fake principal to enable the creation of more debt/slavery. Inevitably, the supply of real stuff cannot match the exponential growth of money/debt, and the financial system collapses. And the foundation of the whole nightmare is the rule that if you loan someone money, they have to pay you back more.
The video gets a bit foilheady at the end, with an obviously mythical quote from David Rockefeller to the Trilateral Commission, and the naively pessimistic assumption that if the bank-masters own all our stuff on paper, they own all our stuff for real. They have to enforce their claims of ownership, and I think they've already passed the limit of how much ownership they can enforce.
October 8. Thanks Rob for helping me clarify my thinking on interest. I came up with another island-coconut story that makes the point better: Imagine an island with three people, Morgan, Chase, and you. Each of you has ten coconuts. Morgan and Chase agree to hold each other's coconuts and pay interest to each other, and you think that's silly and just keep your coconuts under your bed. Eventually, through compound interest, they have accounts worth hundreds of coconuts, while you still have only ten. Of course, if they try to withdraw their coconuts, the system collapses, so to make it more stable, they use pieces of paper that represent coconuts, and later they don't even use paper, but just keep a ledger of how many coconuts everyone supposedly owns. They agree to rules where they can lend each other even more coconuts than they have in paper money, so they can grow their money faster, until there are tens of thousands of symbolic coconuts. Meanwhile you still have only ten, and now if you want to buy stuff, it's going to cost more than it did before. Probably you will have to sell your actual coconuts to Morgan and Chase to afford to eat.
Adam sends an interview he did 15 months ago with Richard Douthwaite on debt-based money. Douthwaite says it's not interest that creates the growing money supply, but a system in which you need bank loans to get money into circulation. It's true that the payment of interest is now only a minor part of the growing money supply, but he misses the deeper issue: without the idea of interest, the custom that borrowers pay back more than they borrowed, banks would have no incentive to loan money, and banks as we know them would not even exist. They might exist as secure storage lockers for valuable assets, and you would pay them a fee to hold real stuff, instead of them paying you a fee to turn your fake wealth into more fake wealth. With zero or negative interest, lending would be done only for charity, not for profit, so there would be a lot less of it.
Douthwaite suggests reforming the system so that money is created by government spending, and banks can still loan money at interest but they're not allowed to create money. The deeper principle here is that it's possible to have interest without runaway growth, but only if the amount of debt is kept in equilbrium at a low level. To me this seems dangerous and half-assed. As long as you have the custom of interest, you have powerful institutions that want to become more powerful by breaking out of equilibrium and creating more and more money as debt, and it's only a matter of time before they change the laws to permit it. It seems safer and simpler to have laws, customs, and social taboos that forbid any lender from ever getting back more than they lend.
Here is Eisenstein's chapter on The Currency of Cooperation, which cites several historical examples of demurrage currency systems, in which concentrations of money go down in value over time, not up. One he doesn't mention is the Brakteaten system in medieval Europe, where every year the government recalled all the coins, took a cut of the metal, and issued new coins with what was left. Because it was costly to hold onto money, people spent it to make enduring physical things like good furniture and cathedrals, and there was relative peace and prosperity.
Now, even if we have a rapidly growing debt-based money supply, we can still have the appearance of stability as long as the amount of monetized real stuff keeps up with the amount of money. Eisenstein covers this in Money and the Crisis of Civilization, but I'll cover it again. Scott writes:
Your coconut example is very good. Here is how it can work out without ending in slavery. Mr. Coconut-bags gives Coconut Farmer Joe one coconut and demands two back. Farmer Joe plants the coconut and gets a crop of eight coconuts, he gives two back to Mr. Coconut-bags and keeps six to plant next year. In the real world money can be loaned out and wealth can be created. I could loan someone paint and a canvas and she could make a painting and trade it for paint and a canvas and some rice and pay me back with interest and still profit.
The problem is, for real stuff to keep up with the money supply, more and more stuff that was previously outside the realm of money has to be dragged into it. Every year Farmer Joe has to cut down more of the rain forest to grow more coconuts, until there's no rain forest left. And more and more of the activities we used to do as part of the gift economy, like art, have to be done as part of the money economy. And when we start running out of stuff to monetize, we have to create new paid activities that are neither useful nor fun, like many office jobs, or the military-industrial complex. We have to manufacture false needs, like leaf blowers, and design products to wear out sooner. Eventually, the supply of stuff people want to buy falls behind the supply of money, and prices go up. For a while, the rising prices can be diverted into speculative bubbles, like housing, but when those prices are corrected, the imbalance has to go somewhere else.
Now, there's still one way out: aggressive bankruptcy, where we simply cancel debts and declare that all the excess money goes back into the thin air that it came from. This is roughly what ancient civilizations did with the Jubilee tradition. And I'm not sure, but I think the recent bailout bill was a decision to dissolve the debts not by canceling them, but by diluting them with inflation. The coming hyperinflation will be blamed on the government printing more money, but the reason they're printing more money is, first, to prevent a panic when everyone tries to turn their electronic money into paper money, and second, to inflate away their own debt. And both problems were caused by the increasing supply of imaginary money caused by a debt-based money system.
October 10. Chicago Sheriff refuses to evict people. And then: Blackwater Contracted to Evict People in Foreclosed Homes. Ha, that one is satire! But this kind of thing is likely to happen for real as tensions increase between the owners and everyone else. Local enforcers will go easy on people they see as their own tribe, and the higher authorities will want to bring in non-local enforcers. That's exactly how the Chinese government broke the Tiananmen Square protests.
The difference is that Americans who can't pay for housing will be a much larger group of lawbreakers than Beijing students who wanted democracy, and also much more dispersed. The police state can crush anarchist street protests and minority ethnic riots, it can protect the enclaves of the rich, and it can put a limited number of lower class people into "detention facilities", but it can't throw 100 million middle class people out of their homes, let alone put them in debt camps.
October 13. It occurs to me that the word "fascism" is confusing us the same way many words do: it has multiple meanings, but we blur them into one meaning because we have only one word. Consider Pinochet in Chile. He was a ruthless military dictator, operated death squads and torture prisons, and had his opponents assassinated. But he was never popular -- he needed to do that stuff to stay in power. And his total death toll is estimated at only a few thousand.
Now consider Hitler, who was one of the most popular leaders in European history. He didn't have to torture or kill anyone. His generals opposed the death camps because they were consuming resources the military needed. Hitler killed people not because his power required it, but because his power enabled it. And if you look at the details of the Holocaust, in books like Hitler's Willing Executioners, you see that Hitler didn't act alone -- he was the focus of a massive popular movement to gain power and kill, and the killers were driven by class resentment and hatred of intellectuals. From Witold Pilecki's Auschwitz Report:
In the beginning, a question was tossed by a striped man with a stick: "Was bist du von zivil?" [What were you in civilian life?] An answer like: priest, judge, barrister, resulted in beating and death.
When internet pundits cry that America is becoming fascist, they're thinking of Pinochet-style fascism, and they're looking at stuff like domestic deployment of soldiers and harassment of dissidents. Sure, that could get worse, but the more frightening danger is Hitler-style fascism, and we're seeing the seeds of it at Sarah Palin rallies. When Naomi Wolf says that Palin is being groomed as a puppet leader by shadowy elites, she's confused by the imprecision of the word "fascist" -- if we get a right wing rabble-rousing Leader, that's a fire nobody can control.
October 15. 18 minute video on bonobos. They have now learned from humans to make stone knives, to light fires, and to use written language. And the most interesting thing is how they learned. Imagine how much smarter we would all be if schools worked like this:
"We found that the most important thing for permitting bonobos to acquire language is not to teach them. It's simply to use language around them, because the driving force in language acquisition is to understand what others that are important to you are saying to you. Once you have that capacity, the ability to produce language comes rather naturally and rather freely. So we want to create an environment in which bonobos like all of the individuals with whom they are interacting, in which they have fun, and in which the others are meaningful individuals for them."
October 16. Nature loss dwarfs bank crisis. The idea is that forests do stuff for free, like gather and filter drinking water, and sequester carbon, and provide food, and if we cut them down then we have to spend money building and managing things that duplicate those functions. This goes back to last week's subject, that a growing money supply forces a growing monetization of stuff that used to be free. If the financial system uses debt to create more and more money, and the guardians of the giant pool of money don't want it to be dissolved by inflation, they have to replace forests with farms and filtration plants, just so the quantity of stuff in the realm of money is keeping up with the quantity of money.
Here's a link Donald sent a few weeks ago about Ecological Economics. The idea is that we need to retool the whole field of economics to account for what we get from nature, what future generations will get from it, and how our actions help or harm it. I suspect that we have barely begun to count the services that nature provides. One the BBC article doesn't mention is that trees capture water that would otherwise flow back to the ocean, and they transpire it back into the air, and that water vapor makes new clouds that carry water farther inland -- so cutting down a forest can make a desert downwind!
A deeper issue is that humans are in trouble if we can't see the benefits of nature without putting them into numbers. Maybe in 100 years businesses will use an equation showing how proximity to wildness reduces depression and makes workers more productive, but I would rather be in a culture where we don't need equations to know how to live.
An even deeper issue is that ecological economics is still valuing the nonhuman world in human terms, instead of on its own terms. It's like you're saying to your mother, "You know, I was going to kill and eat you, but I've just realized that I derive selfish benefits by keeping you alive."
October 17. Lately I've been thinking a lot about framing. First, on Adam's recommendation, I read a few chapters of George Lakoff's book Don't Think of an Elephant. Lakoff explains how the right wing took over America through a calculated redesign of the frames people use to think about issues. One example is the phrase "tax relief", which creates a frame in which taxation is an affliction. Imagine how much better it would be if politicians talked about medical insurance payments or housing costs as afflictions that could be eliminated, and talked about taxation as a patriotic duty. But it doesn't work to just stand up and say that. The power of a frame is that you can get into one by not thinking, but then you have to think carefully to get out.
Once you learn how to see frames, you start seeing them everywhere. Other political frames include the idea that abortion is about the life of the fetus, or that it's about the autonomy of the mother; that rich people earned their money or that they stole it; that American military intervention is about helping or about bullying; that torture produces necessary information or false confessions; that this world is a place of dangerous conflict or cooperation. One of Lakoff's key conclusions is that a tone of angry conflict, from either side, strengthens the frame of conflict and thereby strengthens the right.
Some of these frames are weak and flexible like saplings -- when pressed, anyone will admit that some rich people earned their money and some stole it, but later we all go back to our default assumptions. Some frames have transparent walls -- both sides of the abortion debate are aware of the position of the other side, and just think it's wrong. And some frames are strong, brittle, and opaque like dark glass. You can't see outside them, and any light from outside them seems silly or impossible, but once you break out, the frame is destroyed.
I like to focus on these kinds of frames, and many of them are components of the big frame we call "Civilization": the idea that you have to pay money to occupy land, which depends on the frame that land can be owned; the idea that if you borrow money, you have to pay back more; that the economy must grow; that more is better; that improvement is built into history; that history is linear; that nature is a resource; that everything can be quantified; that the best way to work is by pushing yourself; that owning more stuff is good; that the world is here for us to impose our will on it.
You would think that breaking out of one frame would make it easier to break out of another. But what happens instead is that "seeing the light" gives us such a strong feeling of reward, that we become fixated on our new Truth like we never were on the old truth. This is how cults recruit members, and it explains why some atheists and vegans and conspiracy researchers are so militant. Here's a great Salon article, The Certainty Epidemic, arguing that our sense of knowing, of being right, is an illusion, an emotion masquerading as a rational thought.
Luckily, before I uncovered any Big Truths, I read Charles Fort, who describes a universe in which everything we "know" is a lie created by excluding anomalies, and the anomalies lead us on, from one provisional truth to another, eternally.
October 18. This forum thread about squatting has some good comments, plus links to a short wikiHow page on How to Squat in Abandoned Property, and an online version of the 20 year old zine Survival Without Rent. If anyone out there is a squatting specialist and a good writer, there is a huge opening for you to write a book, and I'll donate my copy editing skills.
October 24. Video of Howard Zinn on Obama, with a transcript at the bottom. Basically Zinn argues that Obama can guide big changes if the activists who put him in office keep pushing. And he nails Nader on strategy:
Well, you're not going to break the paralysis of the two-party system within the party system. In other words, you're not going to break it in the electoral system by putting up a third-party candidate whose showing will inevitably be pitiful and will therefore only be a demonstration of the weakness of the movement outside of the electoral arena. If you choose to go into the electoral arena, you'd better go in with strength. If you're going with weakness, you are not doing a progressive movement any good. To me it is a waste of Ralph Nader's energy to throw himself into the electoral process, 'cause his energy is best used by building a movement, by doing what he has done for most of his life very effectively, reaching out to millions and millions of people who will not vote for him but who really believe in his ideas, and help him to organize those people so that whoever is elected as president will then have to face a constituency, a citizenry which demands change.
October 25. One argument I didn't cover in the Obama essay is that we should withhold our votes as a political statement, because voting legitimizes the system. I would respect this as a tactical argument, except that if you look closely, the tactical angle doesn't hold up. Suppose we can organize a mass popular movement to not vote, and suppose it's extremely successful, so that voter turnout goes down by 90%. But then each remaining vote is worth ten times what it was before! The fewer people who vote, the more incentive there is to vote, so the movement is stalled by negative feedback. And the remaining voters will still elect politicians who will still do the same stuff -- or do worse, if the non-voting movement targets progressives and leaves right wingers as a majority. The only thing you've accomplished is to create a large majority of citizens who don't believe in the government. But we already have that! And it makes things worse, because giving up on government leads to a weaker government that can't stand up to predatory private interests, which further erodes faith in government. Lewis Black had a great rant a couple weeks ago: if we're the best country in the world, we should have the best government in the world.
So how do we do that? Not by disengaging from voting, but by combining smart voting with other actions. The reason more Americans aren't taking their political action beyond voting is not that they think voting is enough. It's much more complicated. I think it's because FDR's reforms, plus the material wealth in the 1950's, made Americans financially secure enough that they forgot how to do tactical actions like the Flint Sit-Down Strike. And then in the sixties, mass actions were reborn as symbolic and cultural, which alienated most of the public and enabled Nixon to forge an alliance between cultural conservatives and the super-rich. Since then, almost every "direct action" has been symbolic and therefore indirect, and has strengthened the right wing by feeding the culture war. One exception was the WTO in Seattle, where protesters physically blocked delegates and enabled the less developed countries to gain more negotiating power. But the authorities immediately adjusted by bringing overwhelming force to economic summits, while activists kept doing the same thing, so protests became exercises in masochism.
So what's the next move? Well, we're very lucky to have a presidential candidate who has trained a 50-state army of relatively autonomous community organizers, and who has shown willingness to negotiate and adapt. We elect him, and then we push him. And we push on fronts with cross-cultural popular appeal: canceling debts, redistributing "ownership" of land, and moving toward governments and cultures that continually dissolve and redistribute concentrations of wealth and power, so that revolutions and collapses are unnecessary. I think it will take at least a thousand years.
Another action, which has always been available to us, is withdrawing our participation, not from the public sector, but from the dark side of the private sector. We keep voting and paying taxes, but we buy food from local farmers instead of big agribusiness, we swap used stuff on Craigslist and Freecycle instead of buying new stuff, we favor small local business over big global business, we invest in skills and tools and friendships instead of stocks, we buy stuff on savings instead of credit, and we starve the corporate world into balance.
October 29-30. Interesting blog post on atheism and intelligence, concluding that low IQ is linked to religous belief because they're both caused by a third factor: poverty.
Now we have to be careful with language. For one thing, "intelligence" can mean a bunch of things, and IQ only measures one of them. I think the rising human IQ is good, but there are also good kinds of intelligence that we may be losing as we get more modern.
The deeper problem is that our very concepts of "poverty" and "wealth" are deceptive. In industrial civilization, "wealth" means you have so much material stuff and power over others that it's hard to not become evil, and "poverty" means a position of desperate scarcity that forces you to obey, and "middle class" is a hybrid of the two. None of these are normal or healthy. We don't have a social class that is free, unstressed, and materially poor, or even a non-derogatory word for people who try to live that way. But eventually we're all going to have to live that way to stay in balance.
And this is a good time to learn that way of living. With economic collapse and resource depletion, it's too late to lift everyone into the industrial-age middle class. But we can help each other out of bad "poverty" and into good "poverty" by learning to be comfortable at a lower level of material wealth, and learning to meet our needs without forced obedience. And the long game is to grow a new culture in which we live that way permanently, by placing strong negative feedback on accumulation of wealth and power.
October 30. Yesterday's Archdruid post, Arguments from Ignorance, mentioned two different kinds of thinking. One is "sitting down with the relevant facts, assessing them calmly, and then making a decision on that basis," and the other is "people start from the conclusion that appeals to their emotions and intuition, and then go looking for logical reasons to support the belief they've already chosen."
You could call these expansive thinking and contractive thinking. I like to call them scout thinking and warrior thinking. Warrior thinking has its place -- sometimes your emotions and intuition can sense things that your rational mind can't, and of course we never have anywhere near full knowledge. To some extent, every idea and theory and "fact" is like a shape we're seeing in the clouds, and sometimes you have to believe something to see it.
But the great advantage of scout thinking is that it constantly makes you smarter. When new information appears, the scout looks at the map, erases a line, draws another, and keeps exploring, while the warrior either rejects the new information for not fitting the map, or if it does fit the map, draws an existing line darker.
The scary people at Sarah Palin rallies are not really "anti-intellectual" -- they're intellectuals themselves in that they're obsessed with ideas. What they are is anti-expansive, anti-empirical, anti-reality. They seek to silence, by any means necessary, anyone who threatens their comfortable and compelling internal map of the world.
There's a new saying, "Reality has a liberal bias." But that's not quite true. What happened was that the movement that called itself "conservative" got stuck in warrior consciousness and lost touch with reality, veering off so far that now "conservatives" can only maintain their ideology through obvious giant lies. Meanwhile the movement that called itself "liberal" was put under such pressure, held to such high standards, that it could only survive by scrupulous integrity and honesty, by a (relatively) close alliance with reality.
The Democrats are like the Fremen in Dune: forced to live in such a harsh climate that they became superwarriors. Now they're set for a huge win, but they need to remember that their win belongs to empiricism and not to ideology.