Archive for November, 2010

Wikileaks and the Empowered Class

Secrecy has always been a hallmark of diplomacy.   So has spying.  In the game of high stakes power politics, the public face you show is often much different than the one you expose behind closed doors.    The one thing that governments friend and foe have in common is that they know this is the case.   They have no illusions that the public statements made by President Obama or Prime Minister Putin are somehow definitive or even true.   Insiders know secrets about world leaders which never get mentioned, and details about the inner workings of governments here and abroad.

That’s why I am not in the camp of the outraged in response to the latest Wikileak dump.  To hear US officials tell it, the leakers and those in charge of Wikileaks are anti-American, irresponsible amoral publicity hounds who, as Senator Lindsay Graham said “may have blood on their hands.”    Some have even branded Wikileaks an enemy of the state, and have called for non-judicial retaliation against Wikileaks founder Jullian Assange and others.

The truth, they believe, is for insiders to know.  The public is to get a sanitized and often false story, with the knowledge that in thirty years or so historians will get access to documents currently too sensitive to release.  The truth needs to be hidden for the sake of national security: the public just can’t handle the truth.

Yet this secrecy also enables powerful states and leaders to pursue policies and actions that shape our world and can lead to immense harm.    It prevents citizens from understanding and knowing what is being done in their name, and protects corrupt leaders from being held accountable.   Secrecy is the best friend of “big government,” allowing political leaders to say one thing while they’re doing another.   More than anything else, secrecy aids the ability of governments to control populations and deny liberty.    Without secrecy, government power is eviscerated.

That is why inside the halls of the State Department, Pentagon, Congress and White House there is outrage over the Wikileaks dump.   It threatens the power of the elite establishment to run their own game while giving the public only as much as they “need to know.”   This creates an “empowered class” – elites who know that they are on the inside and have a sense of both importance and power.  They possess knowledge others do not have, and ultimately see themselves as superior to average folk.   They rationalize their power by asserting they are protecting the citizens and allowing them to live their lives without having to think about the true nature of a complex and dangerous world.

The “empowered class” fancies themselves the protectors of democracy and the national interest.  They see themselves as having a clearer perspective about the world than most, and a more sophisticated sense of moral responsibility.  Yes, water boarding may seem wrong, but put in the context of the dangers we face and threats to the western way of life, at times it may be necessary.   Those who criticize are naive, uninformed, or lost in a cloud of idealistic wishful thinking.    The self-serving delusions of the empowered class hide everything from power orgies to quid pro quo deals and policy choices involving torture, war, and espionage.  Theirs is a high stakes, high risk game which must be kept as opaque as possible.

Wikileaks threatens that.   There is nothing inherently dangerous in the leak that came out, at least according to initial reports.     It does show a United States less able to manage world events than in the past, even if the Obama Administration has improved the US reputation abroad.  The United States clearly finds itself more isolated and easy to ignore than ever.    The leaks errode US prestige and power at a time when it is already being sorely taxed.

And yes, that’s embarrassing and makes it harder for US diplomats to operate.  Yes, foreign leaders may be less willing to secretly cooperate with the US if they fear news of that cooperation might be leaked.   Yet there was nothing surprising in the documents.   Most new information verified existing suspicions – the fact that Arab states are more worried than Israel about Iran getting a nuclear weapon should surprise no one.    Even “embarrassing” portrayals of foreign leaders fit what most people think – Angela Merkel is “rarely creative,” Libya’s Gadhafi is “erratic” and has a voluptuous blond Ukrainian nurse, Putin dominates Medvedev, and Afghanistan’s Karzai is weak and corrupt.   Well, all that is pretty obvious (though the Ukrainian nurse is a new).

That the US and South Korea are gaming out North Korea’s collapse may seem big news, but the shocking news would be if they were NOT doing that.   And who is surprised that China engaged in a kind of cyber attack on Google?   No, the documents were neither shocking, surprising, nor especially harmful.   Yet Secretary of State Clinton has a point when she said:

“Let’s be clear. This disclosure is not just an attack on America — it’s an attack on the international community.  “Such leaks…tear at the fabric” of responsible government.   There is nothing laudable about endangering innocent people, and there is nothing brave about sabotaging the peaceful relations between nations.”

It is an attack on the international community, but it does not tear at the fabric of responsible government.  It tears at the fabric of the power politics games enjoyed by governments for centuries.   It does not endanger innocent people, it informs innocent people and endangers government elites by showing how they operate.  It doesn’t sabotage the peaceful relations between nations, it exposes the secret deals and actions undertaken by and between national governments.

I’m sure Secretary Clinton believes her words; the empowered class has come to believe their own story: secretive games are necessary, and they are protecting the public.    This self-serving rationalization of secrecy is as prevalent on the left as on the right.    Yet there is reason to believe it to be misguided.  While some information would be dangerous or harmful if made public, in general it’s better to shine light on the actions of governments, even if creates embarrassment.   If world leaders feared that their statements and actions might become public knowledge, they’d have to behave more responsibly.

Yes, I know.  Those in the empowered class would say I don’t understand the sensitivity of the issues at hand, and lack appreciation for the delicate balance diplomacy requires.   I understand that argument, and in many instances it’s valid.  But overall, the moaning and groaning from the empowered class is less about the public good than the fact wikileaks threatens their power and insulation.  That’s a good thing.   So Wikileaks, thank you!

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Grab the Christmas Spirit!

On Thursday Americans travel to be with family and/or friends to celebrate the most traditional of American holidays.   Most people will roast a turkey, have potatoes, veggies, pies, and various family delights.   The stores are closed, and even the most secular of families will talk about giving thanks for what they have.   Most families will take out the Christmas decorations, ready to celebrate “the holiday season,” where the Christmas values of peace, love, and goodwill overcome greed and selfishness.

One need not be Christian to appreciate the Christmas spirit, expressed in everything from Ebenezer Scrooge’s visit of the spirits of past, present and future to, George Bailey’s journey in It’s a Wonderful Life and even the Grinch’s heart expanding as he hears the Whos celebrate joyfully even after he stole their Christmas loot.    The Christmas spirit reflects a belief there is something more important than material possessions and the daily grind.   Love, connection to others, and a sense of the spiritual combine to point to a more joyful and meaningful mode of living.   The eternal trumps the temporal, ethical values trump self-interest.

Yet the day after Thanksgiving the stores open early — in major cities sometimes at Midnight, but even in moderate size towns often 4:00 AM or so — so that shoppers can get the best bargains of the year, so called Black Friday.   There are usually stories of violence — shoppers being trampled as they rush to get bargains, people fighting over the last of a specially priced item.

Then for the next month malls will be full, kids will be adding to Christmas wish lists, and likely feel deprived if they don’t get most of what they wanted.  Stress will grow as people try to churn out Christmas cards as an obligation, juggle Christmas party schedules, deal with the shows and activities planned for the kids, and try to get that shopping done.   The music, lights and smells of the season will distract from the stress, and provide moments of relaxation, but for too many people the next month will be devoted to chores associated with the holiday.

Peace on earth, good will to men. “Yeah, yeah, but I have to shop, get this package to the post office, and damn, we got a Christmas card from them?  Sigh.  I think I have one more I can send out.”    Kids will be talking about, counting, and focusing on their presents.  “Why does he have five more presents than me, it’s not fair!”  It’s the most wonderful time of the year.   Yeah, for the retailers!   For the small shops in the mall!

A savior is born in Bethlehem.   Jews, Muslims, agnostics, atheists, Wiccans and others might smile and nod, but don’t get meaning from that.   Christians might, but many will simply nod, “hey, that’s the true meaning of Christmas, but I have to go get supplies for our party…why’d we invite so many people…”

Yet one does not have to be Christian do celebrate and appreciate the joy inherent in the Christmas spirit: Love for others, good deeds, giving without needing to receive, forgiveness, family, friends, and connections.  The Christmas spirit appeals to the part of ourselves that rises above self-interest, and sees meaning in core human values rather than the daily routine or material possessions.   What irony!   The Holiday most focused on our better selves has become the most stressful and materialistic time of the year.  Instead of learning the value of sacrifice and sharing, children shout “me, me, me” and fantasize about the stuff they’ll get.   The first day of this season, the day after Thanksgiving, we embrace raw consumerism in the extreme — “you are what you own, and today you can get great deals!”

What if people decided to reject that and grab the Christmas spirit instead?   For Christians the answer is right there — the teachings and traditions provide a guide of how to steer clear of crass consumerism and materialism.   For those of other faiths similar core principles apply — religions around the world grasp the core values underlying ethical human existence (even if extremists sometimes subvert that message).  And for the rest of us, the spirit applies too — peace, love, good will, and a faith that there is something more to existence than just electro-magnetic “weak” field energy, quarks, leptons, bosons, and gravity.   If not a God, that “something more” can be love, can be spirit, can be values.   If one cannot bring oneself to believe in something, then imagine — imagine the best each of us can be, and the best for humanity.    The boundary between faith and imagination is blurry, and perhaps non-existent.

The Christmas spirit is truth, even if one can doubt the story it is built around or the religion that gave us this holiday.   That spirit can be tapped to defy the stresses, material excesses and greed that too often subverts this time of the year.  And it’s here.  Inside of us, in the songs, movies, and ideals expressed this time of year.  Grab the Christmas spirit!  Share it.   Make this a season of joy rather than greed.   Let love and human connections trump selfishness and consumerism.    A family snowball fight always beats a day roaming the malls.   And maybe, just maybe, we can enter 2011 renewed rather than spent, focused on values rather than stuff, and thankful for our family, friends, and the life we’ve chosen to lead.

Yeah, we still have to shop, send out cards, and endure children demanding “add this to my Christmas list.”   At our weakest moments stress will be ready to pounce.   I nonetheless believe that a focus on the true spirit of Christmas can make this a season of joy rather than anxiety.  Happy Holidays!

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Europe’s Century?

Now a days its trendy to be skeptical of the long term future of the EU or the Euro.  A crisis in Greece followed by a crisis in Ireland, whispers about possible financial contagion to Spain, Portugal and possibly Italy, and it appears the Euro is wobbling.   Alarmist (and wrong headed) squeals about “Eurarabia” and the spread of Islam, demographic trends that show an aging European society, and soon gloom and doomsayers are pronouncing Europe all be done for.    Nothing could be further from the truth.

Some of these doomsayers are the usual suspects wanting Europe to fail.   British Euroskeptics have been seeing conspiracies and catastrophes for decades, and many on the American right have been predicting that the “welfare state” mentality in Europe will doom it.    During the heady real estate bubble, Americans gloated that we had found the secret to long term economic growth — deregulation and limited government — and that the rapidly growing low unemployment economy of the 00’s was proof.

In fact, Eurocritics have gotten so used to assuming that Europe was in decline and America remained the indispensable power that despite the recent financial collapse and US debacle in Iraq, many cling to that illusion.   The reality is that not only is Europe not only still viable, but it may be on the verge of returning to the role as the leading world region.  The 21st century may be Europe’s century.

There are two primary reasons why Europe has positioned itself well for the next century: 1) a realistic understanding of the problems they face; and 2) a principled approach to globalization at moves away from myopic self-interest.

The issue of global climate change is one where these two come together and have already yielded substantial benefits for EU states.  First, unlike in the US, the discussion about climate change has not been hijacked by a well funded propaganda machine designed to denigrate, belittle and attack those wanting to take action.   Rather, the climate change scientists are being listened to, the evidence assessed, and they recognize that while there is always uncertainty, the risks are so great and the evidence so substantial that it would be irrational to do nothing, or wish the problem away.

In the US, unfortunately, the issue has become ideological, with many people equating support for action on global warming as a “left wing socialist agenda.”   Scientists are accused of graft, supposedly cooking data in exchange for government grants.   Emotive attacks and derision, repeated on a variety of media fronts, have moved the US public away from an honest consideration of the science to emotion over the politics of the issue.

In 1992 at the Rio Summit, the Climate Change Convention was signed, pledging that developed states would reduce their carbon emissions to 1990 levels.  The process was further refined by the 1997 Kyoto Protocol to that agreement, which went into force in 2005.   The US refused to participate.  The result:  The EU achieved the desired result, reducing emissions to below 1990 levels.    To be sure, the fact that the year after the fall of the Berlin Wall was chosen helped, but nonetheless the rise in technology and the effectiveness of the effort to reduce emissions is astounding.  It also provides proof that this can be done without hurting the economy.

In fact, by sticking to realism (and principle) the EU has positioned itself for a major economic advantage in the fields of alternate energy and anti-pollution technology.   These are the fields most likely to radically increase in demand in the coming decades, especially as China tries to switch towards alternative fuels and cleaner burning of coal.  EU companies are at the forefront of this new technology, and will likely profit handsomely from the Chinese market alone.

Meanwhile in the US, not only have carbon emissions increased by 20% since 1990, but we’re only now starting to pick up the pace again on alternative energy.   With the EU pushing for a decrease of 30% of carbon emissions by 2020 (regardless of what others do), and governments very involved in supporting R&D, the chances are very good that the EU will maintain and even expand its lead in this important market.

That’s another point of realism: not letting ideology guide policy.    Many Americans are still enamored with the idea of “the free market does things right,” a now rather discredited ideology given the costs of not regulating the financial sector (see Greenspan’s confession).   Still, it’s a seductive and simple ideology, and speaks to traditional American dislike of government rules and bureaucracy.    The problem, of course, is that markets respond to demand now, based on current conditions.   Humans have the capacity to study and understand trends for the future, including the likelihood of increased oil prices and the danger of another energy crisis.

The Europeans recognize that, and work with markets (not against them) to prepare for a different kind of future.   The market won’t do this on its own, at least not at a pace that will give the EU a comparative advantage when the change comes.   A pragmatic embrace of a government efforts to adjust the market now will likely pay large dividends.

On issues of human rights and efforts to support development, the EU has a mixed, but generally solid record.   On environmental issues, the EU is a clear leader.  The core principle, inherent in the EU shift away from myopic sovereign self-interest, is that working together we can solve problems and create a more just, safe and sustainable world.  This embraces a role for global governance, as states and regions can reach agreement and cooperate to solve problems.

The problem in the US is delusional thinking combined with heavily funded political propaganda which manipulates public opinion to serve the interests of a moneyed elite.   They use very seductive ideas (the market can do it, government is bad, there is no need to worry about global warming, if you cut taxes problems will be solved, it’s all the government’s fault, etc.) to sell a “something for nothing” solution to our difficulties.   Cut taxes, cut government regulations, and everything will fix itself!  OK, that oversimplifies, but we have a public increasingly out of touch with reality, driven either by ideology or apathy.   Americans generally don’t realize how far and fast we’re falling behind.

The result is that slowly the US is fading as a world power.   China is rising, but given the intense problems China faces, including political instability (800 million still live in poverty) and oil price increases, the EU is in a unique position to be a bridge between civilizations, reflecting a core value in cross border cooperation and putting sovereignty aside for the greater good.   Muslims in Europe are modernizing, and can play a role in helping defeat extremist thinking in the Arab world.    The EU also has a generally good reputation internationally, while the US is seen as being militaristic, nationalist and arrogant.  This will also work in Europe’s failure.

The US can turn around this trend, but we first need to move away from myopic self-interest, we have to recognize that sovereignty in the age of globalization means we have to cooperate and be willing to build and participate in international law, and we have to reject simplistic ideology and emotive politicization of issues.   We can do this, but will we?

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Quantum Life: Birth and Pre-Birth

(Note, this is part 6 of a series called “Quantum Life,” in which I post the contents of a strange ‘guide book’ I found for a game called “Quantum Life.”  It is in English, which it calls a “Quantum Life language,” unable to capture all the complexities of the world as it really is.  I’m not sure where this book came from.):

Birth and Pre-Birth

The most traumatic aspect of playing Quantum Life is entering (being born) or leaving (dying) a round of the game (a life).   The reason is because between rounds players realize they are playing, even if full knowledge of their “real” selves is not retrieved (unless they choose to leave the game completely).

Before each life, a player goes over some key aspects of the planned life ahead, usually with a game counselor who can help recommend certain life choices.   While the purpose of any life is to improve game skills and move forward, over time groups of players form partnerships, whereby they help each other during play.   In pre-birth they will plan how their lives might intersect in a given round of play.   They may choose to be parent and child, meet and become friends, or become spouses.

It should be noted that all they can plan in advance is probabilities.  Once in the game players can make choices that disrupt those plans.  A woman might have an abortion, not realizing the child she was to have was to be a prominent aspect of that life.   A man might be tempted by leave a woman who was meant to be his spouse.   Players have back up plans.  If it is recognized that the planned pregnancy may lead to early termination, they may plan to try again with a pregnancy later in life.  If (usually guided by a game counselor) a couple recognizes one of them has a relatively high probability of rejecting the plan once in the game, they may plot later encounters, sometimes much later in life.

Game counselors are very good at measuring probability and looking at past lives to determine likely choices and build in back ups and fail safes to make it likely that most life plans will be realized in some way.    What appears during the game as coincidence, a chance encounter, or a lucky break may be the result of intense and complex planning between rounds.

Players also choose the time and place of their next life.   While time appears linear in the game, the fact that it is simply a complex program means people do not have to progress chronologically.   A life lived in 20th Century Asia may be followed by one in the early days of human existence.   Sometimes people choose that to take a break — early human life is exuberant and extremely sensual.   Others having lived a life of tragedy due to a lack of personal discipline may choose to go to an era of very strict social norms and rules in order to try to reintegrate discipline into the personality.  Others may try to hone traits.  A person lacking empathy for the poor may choose to have a life of abject poverty.    Groups of friends playing rounds together may also choose very difficult lives in order to play a role in helping a friend progress.

More advanced players often undertake very difficult lives both to meet the challenge of succeeding (overcoming fear and being content) in horrible conditions, or to act to motivate others.   A player may be born as a child with a terminal disease in order to help the parents learn life lessons, for example.   In the game it’s impossible to know the exact background of a person simply due to their conditions.   Not only might the same conditions be chosen for very different motives, but the choices made during the game might alter the kind of life expected.   All birth points have a myriad of possible directions for that life, with each decision point widening the possibilities of life-experience.  Even well planned lives can end up going in a much different direction, sometimes helping the player develop, sometimes setting the player back.

Once the purposes and plans for a life have been made, the process of “forgetting” begins.  The player enters an hypnotic state wherein the connection with the greater Whole is hidden.    How this is done is impossible to explain using a Quantum Life language like English, and can only be done with the willingness of the player.   Once the connection is hidden, the player enters the game as a small, helpless baby, requiring attention and love from other players to survive.   This puts the player into a mode of pure instinct and information gathering, helping enhance the hidden nature of the connection with the greater Whole, and making the new game environment intriguing and overwhelming.

Yet in those early days the nature of thought/mind development allows communication between players setting up that person’s plan and experience.  This communication continues at sub-conscious levels throughout life, though rarely does any player notice or suspect they are in such contact with other players.     Also, some novice players enter the game with the goal of only spending days, months or a few years in a given life, not feeling ready for the whole experience.   Indeed, the first time out as a human is almost always for less than a couple weeks, most players don’t venture into aware childhood until at least their fifth or sixth “life.”

As vocal and cognitive skills in the Quantum Life world develop, the connection to others becomes further buried in consciousness.   Often this comes out as imaginary friends or images for the children (which some cultures take very seriously, often recognizing that it is a kind of communication), but usually the weight of the Quantum Life reality presses hard on the player, who becomes so immersed in and curious about the new environment that by age three the game world is simply reality. At that point a player has fully entered the game, and play becomes more complex.

The process of  “being born” is feared by many new players, though within the game players ironically tend to fear death!  It is traumatic, but the overwhelming sensations overtaking a new born make it generally painless.    It is not remembered during a life, and afterwards players recall it as a fog combined with a mix of sensations and emotions they could not identify or fully control.   Players early on form bonds with parents, and the sense of love and caring (or despair and rejection) dominant early life experiences, and have an impact on later life experience.   Perhaps the most important lesson for players to learn is that part of the game is to help new players enter life, and that requires connection and bonding.   Otherwise, it’s harder for players to stay focused.

By age 2 or 3, most players are fully in the game and ready to start engaging certain skills and capabilities to make the most out of the game.

(I’ll stop copying the manual for today — I’ll try to find time to post more of it in the near future, between my normal blog posts).

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Ideas vs. Matter

What is the stuff that makes up reality?    Is our reality constructed primarily by ideas, with thoughts being actualized as physical experience?  Or is reality made up of matter, stuff that combines to form the world we experience?

As anyone who has had a dream where you have become aware that you’re dreaming can tell you, dream reality seems real and “external” to the self while one is in it.   It operates under different rules, of course, but that simply means its a different reality.   It is possible that our reality is a kind of dream too.   Moreover, quantum physics gets so weird at the subatomic particle level that nothing in science gives any particular reason to favor a materialist explanation of reality over an idealist one.

Of course, in our daily lives the world appears to be material.  It seems external to us, imposing its form on our minds, meaning that ideas follow matter rather than vice-versa.   Yet this could be illusory.    From Plato’s “Allegory of the Cave” to films like The Matrix and lucid dreams, there are many ways to imagine that what seems to be an external material world is really something else.

A pragmatist would look at this question and likely say “what does it matter?”  If you can’t tell whether or not it’s a world of ideas or a world composed of matter, then why even worry about the question?   Whether its your ideas or the nature of reality that causes a body to fall to its death if it jumps off a cliff, they key conclusion is the same: don’t jump off a cliff.

However, the two different approaches open up very different causal mechanisms.  If ideas are the stuff of reality, then changing how we think affects what happens in the material world.  At an extreme, an idealist version of reality would see ones’ experience in the world as reflecting one’s subjective state — you externalize the internal.   Or it may not be so subjective, we could be experiencing something reflecting group consciousness.   For British cleric Bishop Berkeley, reality was simply God’s dream.  We make the rules in our dreamscapes, God makes the rules in his.

To a materialist, what one thinks matters only insofar as it affects action.   A more optimistic person may take a risk or be more resilient, and that might make a difference.    Yet at base we are victims of fate, with fate being the material cause and effect which could bring unforeseen disease, disaster, or despair.  Ideas and positive thinking might help us bear the burden of a material world where we control only a small portion of our destiny, but they can’t halt the forces and substances in motion in the world.

If one decides to view the world from a materialist perspective, one sees the self as an entity — and if one is honest to oneself, an insignificant entity — in a world of forces and elements that act without regard to the human.   Moreover, other humans are in similar conditions, evolved forms of life designed to compete for scarce resources and try to survive as a species.  Such a world is filled with pain and danger, and most obnoxious of all — death is inevitable.   In the grand course of time we have a small bit to fill, and what we do will be forgotten, perhaps far more quickly than we imagine.  To find joy and meaning in this sort of existence is difficult.   It is far more likely that the flames of envy, greed and despair will engulf us, or that we’ll become depressed by how hard it is to be appreciated and recognized.

From the materialist perspective, the current age is bizarrely contradictory.   We have material opulence, but we’ve jettisoned the traditions, customs, and religious beliefs that protected us from the meaninglessness of existence.   Myth, dogma, and custom could unite a community and create an illusion of meaning, enough to make this existence tolerable.   We embraced the power of reason and it has given us material opulence alongside tremendous psychological obstacles to happiness.

The idealist perspective makes possible a very different outlook, but one with its own problems.  First, if ideas create reality, then the “stuff” of the world isn’t important, and it’s not all that clear if death is a permanent state.   After all, we awaken from our dreams but dream again the next night.   What if this life is like that?  If we’re in Plato’s cave, we have only the shadows to go by, we do not truly understand the greater reality, except perhaps by looking inside ourselves.

If ideas are the stuff of the universe, then we may actually be masters of our own existence.   Reality may be unfolding in a manner that our minds shape, even if subconsciously.   The positive side of that perspective is that it liberates us from death and gives us rather than the force of nature control over our fate.  Of course, the negative side is that if we’re responsible for our successes, we’re also responsible for failures — is the rape victim, the genocide victim, or a person who suddenly loses his or her job in a recession to blame for what happened to them?   To be sure, that’s the same issue that often trumps religious thought — would a loving God really allow all this?

If we view the world through a materialist lens, we have little control over our destinies and they may have no meaning, but at least we aren’t to blame when we’re victimized.  If we use an idealist lens there is a chance at meaning and control — and even eternal life — but we might end up “blaming the victim.”

I’ve convinced myself that the stuff of reality is ideas, with matter being a symbolic representation of the ideal.   Is it a “dream of God,” are we part of some pantheistic ideal, grasped by Plato,  Plotinus and Berkeley?   Do Eastern religions and their notions of karma get closer, with desire being the source of all human pain?  I don’t know.  I don’t think a radical subjective notion that each reality is wholly self-created makes sense — as entities we share a world, so I suspect ‘blaming the victim’ is also misguided.

Of course, I may be grabbing onto this for the same reason someone might refuse to entertain the idea his or her religion might be fantasy: it gives me a sense of control, contentment and hope.   A materialist might smile and say, “you have your fantasy, your myth, I hope you feel better with it.  I prefer to deal with the reality that life is insignificant and my time here slight.”   Yet, of course, neither materialism nor idealism can be proven accurate, it’s simply a call each of us can make if we choose to think about such things.  Perhaps wishful thinking motivates my perspective, but the level of uncertainty is such that we can’t say one perspective is more probable than another.

What I find odd — and maybe telling — is how our culture privileges a materialist world view and denigrates an idealist perspective.   The former is associated with reason and reality, the latter with new age mysticism and fantasy.   Ultimately, though, each is an interpretation of a reality which operates by rules and laws whose source remains unknown.

And I do think there is one very logical reason to reject radical materialism.  The question “why is there something and not nothing” contradicts the possibility of the world being simply a material “accident” with no deeper meaning.   The only way that there should be something rather than nothing, is if there is something meaningful beyond the world of appearances.   That logic seems inescapable, the existence of a world means there must be something more, something not purely material.   God?  Spirit?  Ideas?    Something like Plotinus’s “The One?”   No one knows,  perhaps we can’t know in this world.  But we can believe.

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Irish Woes and the EU

Do a google search on “Irish economic success” and you’ll find a lot of articles and stories about Ireland as the success story of Europe, turning around an economy that was one of the most troubled in Europe back in 1970 to one with stellar growth rates and low unemployment as the new century began.   Those stories end about 2007, when the Irish economy started to slow.   Even then, the attitude was that thirty years of growth had catapulted Ireland into one of Europe’s elite economies; a few tough years are normal given the business cycle.   Now, however, Ireland stands at the brink of economic disaster.  Bond yields have soared to nearly 8% and Ireland is literally running out of money.

Since they are part of the Eurozone, they can’t simply “print money” (so-called quantitative easing), so they’re in a bind.   Ireland’s unemployment rate is now 14%.    They economy is in a downward spiral, the foreign investment that helped their boom is now fleeing.  Ireland stands at the brink of default, hoping for a bailout from the EU.   The EU did bail out Greece, but in relative terms Greece is a small economy.   Moreover, though that bailout seems to have worked, the political backlash, especially in Germany, was immense.

The problem for the EU is that while it remains inconceivable that the Euro will fail or the EU will break up, the union is not popular with its citizens.    For the first time youth satisfaction with the EU is low, historically the young have been the most supportive.    Overall only about half of EU citizens feel the organization is benefiting their country.   Now, that doesn’t mean they want to dismantle it — that is the stuff of fantasy for Euroskeptics and conspiracy theorists — but new initiatives to spend taxpayer money to “save Ireland” will harm any government that supports such a move.    So what next for Ireland and the EU?

The EU could decide to bail Ireland out despite the political risks.  This could even lead to governments supporting a bail out being voted out of office, and reward Ireland’s economic mismanagement.  To be sure, at the time it appeared Ireland was doing the right thing, mimicking the kind of economic boom the US was having.    The real estate market was soaring, and investment income increased rapidly.   Ireland was leveled by the same tsunami that hit the US 2008, with considerable contagion from the US.   Still a bail out would be an acknowledgment of the difficulties of having a common monetary policy with diverse fiscal policies and internal regulations.

So what would happen if the EU let Ireland fail?   What if Ireland went bankrupt?   The cost would not borne by the taxpayers, but rather by the bond holders.  Unfortunately, these bond holders are primarily European and especially British banks, which themselves would be put into crisis by such a move.    This could ignite a financial catastrophe throughout Europe.   Moreover, what about Portugal and Spain, two other problem countries?   Russia already has announced its not buying any more Spanish debt, and many analysts say its only a matter of time before those countries go into crisis.

If the EU let Ireland fail, the message would be loud and clear: the EU is not going to bail out economies in a financial crisis.   That would immediately initiate a sell off of Spanish and Portugese bonds, whose yield rates would rise as investors would see them as far more risky then they currently do.   At that point, Spain and especially a small country like Portugal might need to consider leaving the Eurozone — they’d want the monetary tools to handle their crisis that the ECB (European Central Bank) is not extending.

In other words, despite the political unpopularity of bailing out Ireland, not doing so has greater systemic risk — a potential banking crisis and new crises in Spain and Portugal — and perhaps even Italy.   Bailing out Ireland will be hard to stomach, especially for the Germans, but might send a signal to holders of Spanish and Portugese bonds that the EU and the ECB is not about to let member states fail or go become bankrupt.  Germany’s finance minister did suggest bond holders had to share the cost, one of the reasons bond yields have increased so rapidly.  But that’s better as part of a long term reform, not an ad hoc response to crisis.

Euroskeptics often get giddy about the idea that the Euro will fail.   That’s not going to happen, at least not unless things get much, much worse.   The costs and complexity of undoing the Euro are immense, and the risks are huge.   Moreover, it’s not like the dollar is in an essentially strong position.  High US debt (public and private) and the large growth of the money supply due to quantitative easing and low interest rates should be producing an extremely weak dollar.     Yet the Euro still costs $1.35, historically a good exchange rate.    This gives the ECB room to pump liquidity into the system to try to ease the economic burden.   With inflation low, the ECB still do a lot, even if it can’t do what Ireland’s central bank would do if there were no Euro.

So expect a bailout of Ireland — and of Spain and/or Portugal if necessary.   But also expect this to lead to a complete overhaul of the European financial system in 2013, when major reforms are planned.   This crisis has shown a weakness in the Euro-model, and the dangers inherent in unifying economies of such diversity.  But it’s less a deadly blow than an important learning opportunity, both for the EU, and the states in trouble.   Moreover, this should halt a rapid expansion of the Euro eastward, as bankers and politicians in both East and West need to be sure that when the Euro expands dangers of crises like these one are minimized.

Just as the EU turned out to be far more exposed to the US financial crisis in 2008, any financial meltdown in Europe would cross to our side of the Atlantic.   That means the US has an interest in making sure the IMF helps the EU deal with this.  In a globalized economy, myopia is deadly.

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$4 Trillion in Debt Reduction?

President Obama’s commission, chaired by Erskine Bowles (D) and Alan Simpson (R) has come forth with a dramatic call for cutting debt by $4 trillion over ten years, starting in 2012.   Most of the savings come from spending cuts, while about a quarter come from tax revenue increases.   The ultimately goal would be to target both taxes and spending at 21% of GDP, a very low figure compared to the rest of the industrialized world.

So far, Democrats have sounded more negative towards the report, but its not clear how Republicans will react to tax revenue increases.  Moreover, cuts include defense spending cuts and other politically tricky targets.   The retirement age for social security would increase, and there is bound to be considerable debate over the various provisions.   The bottom line is that meaningful cuts won’t happen without controversy, and with power being shared, no political party will get to ram through their own version of what should be done.

President Obama can seize this report and call to enact it, grabbing the fiscal high ground for the 2012 election.  The challenge to the Republicans will be if they mean it when they say they want to cut the deficit and debt.   But given that we’re in a recession, is it good to undertake ambitious spending cuts?

First, the cuts start in 2012.  There’s a possibility we’ll be working out of the recession by then (if my bearish predictions are wrong) and if that’s the case it’s the perfect time to cut spending.  In fact, if the economy is improving, the cuts may be easier to stomach than it now seems.

More importantly, I’ve been mulling over the arguments in favor of stimulus.   Everything is different in a globalized economy.  Stimulating the economy used to be a relatively simple affair: you increase demand, which leads suppliers to put people back to work to satisfy this new demand.  That starts a chain reaction of growth, as these workers then increase demand for other goods.

But now the world is a global market, and economic stimulus might not benefit ones’ own economy (just as tax cuts might end up being used to purchase foreign goods).   What we really need is direct infrastructure improvement with an eye on keeping the country productive in the 21st century, but the stimulus that we had didn’t really do that job.   Moreover, stimulating the economy when demand is low may also be counter productive when debt is high and credit remains cheap.   I’m not just talking government debt here, but private and corporate debt as well.  The problem has been inflated demand (consumerism) for the twenty to thirty years before this crisis hit.   This crisis emerged from an overstimulated economy.

So decreasing debt seems a smart thing to do, especially if we land at a sustainable balance of taxing and spending.   I don’t think too many people would consider 21% of GDP a high level of government spending, after all.    This also comes as President Obama meets with world leaders at the G-20 conference, trying to argue that China, Germany and Japan can’t expect to maintain such large trade surpluses with the US.    The debt reduction plan may produce a jolt of strength in the dollar, which goes against what I was arguing in the last post.   Yet that could help pressure China to allow the Renminbi (or Yuan) to revalue against the dollar.   There are reasons a stronger currency may be in China’s interest as the global economic system rebalances.

I feel a bit of schizophrenia in my posts, bordering from talking about this as a global depression and a civilizational crisis for the West, to seeing some positive signs and thinking maybe the rebalancing can be done successfully.   This blog not only records my predictions, but also shifting moods.   When I think a lot about energy/oil, as well as the dangers of global warming, I veer into a more pessimistic view towards the future.  If I try to contemplate how the world can deal with such massive debt — heavy debt in the entire west, from Japan to the EU to the US — it becomes easy to imagine a deep and lingering recession.

Yet if oil really doesn’t peak until 2030, and if the worst predictions of global warming are exaggerated, then signs of gradual debt reduction (private and public) and economic restructuring seem to indicate the landing could be softer.  Don’t get me wrong — we won’t see the consumerist orgy of the 00’s return, nor will the US remain the dominant world economy.   There will be a shift in economic and political power away from the US towards a multi-polar world.  That is something Americans will have to learn to accept.

We also need to come to grips with the fact that the financial crisis represented really a giant fraud, as big investment bankers siphoned billions of money from innocent investors by packaging up mortgages into bonds (and then those bonds into other bonds, etc.)     Even the investors who failed ultimately still pocketed millions during the boom years, and those who lost had been told they were in secure investments.   They choose AAA bonds for security, not out of greed.  We have to have a regulatory structure so investment is honest and does what investment is supposed to do, and not simply be legalized gambling.

Proposing cuts and passing them are two different things, and we’ll see where this plan goes.   But it does appear that there is a serious effort in the US to restructure government taxing and spending to cut debt and develop a sustainable blueprint for the future.   That to me is a good thing.

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