Benefits of a more just system

First let’s imagine fixing a few of the big problems of our present systems.

Suppose we fixed the business cycles, the cycles of boom and bust that have been happening for hundreds of years. These cycles involve a period of calm and more or less stable business activity. Then gradually business activity picks up in one or a few areas — for example housing or commercial real estate. Prices rise, employment increases, credit, money increases. The process accelerates. More and more houses are built. The prices rise faster. More labor may be needed than is available further driving up labor costs and prices. More and more credit may be extended. People get the feeling that they need to buy a house as soon as possible before the prices increase beyond what they can afford. Some people speculate (gamble) by buying property with the hope of soon selling it at a higher price and making big profits.

In the real world (as contrasted with mathematical theory) nothing can keep increasing forever. The process can run out of labor, raw materials, buyers of new houses, credit and money can be limited for various reasons. Something will slow the process down and actually reverse it when more and more people see that there is a bubble occurring and realize it is deflating. Prices drop, fewer houses are being built, workers are laid off, credit is limited further, buyers hesitate, the speculators try to sell as fast as they can. All these decreases feed off each other to speed up the decreases. So the bubble pops, there is a bust, a crash. This is the boom and bust cycle.

It may be hard to believe but these kinds of cycles have been occurring for hundreds of years. They seem to be inherent in our economic systems. Yet economists, bankers, business people claim to be surprised whenever we have a crash. After every crash they claim that they now understand the problem and that they have fixed it so it won’t happen again. But it does. The cycles keep repeating. This is another proof that economics as presently understood and practiced is baloney.

I doubt if anyone has “the” answer to the boom/bust cycles. According to the grand theories, the static, the equilibrium models, booms and busts do not exist; they never occur. Yet they are characteristic of the systems we have had for the last several hundred years! From what I have read, these boom bust cycles may result from any or all of the following: the system’s emphasis on all individuals always making more and more money, unrestrained credit, charging interest on loans, emphasis on perpetual growth (no growth can continue indefinitely), the money system itself (with the hodge-podge of illogical self-contradictory ideas about the money supply, restrictions applicable to the days of a gold standard which do not apply today but which still seem to be fervently believed by some people today — see Modern Monetary Theory (MMT) and “Stabilizing an Unstable Economy” by Hyman P. Minsky. Since the theories are bunk, we have to try some things that have not been tried before.

Both the boom part and the bust part of the cycles seem to be self reinforcing processes. It would seem that we need to add to our systems some governors like Watt’s steam engine governor which slowed down the steam engine when it went too fast and which allowed it to speed up when it went too slow. Or maybe an economic thermostat.  Surely our economic experts can come up with some automatic economic stabilizers we could try. Or is it that they don’t want to do anything that would limit moneymaking during a boom?

But what would it be like if these cycles could be squashed — slow down or stop the boom before it can get too big and then there would be no crash, only a gentle slowing down. Then employment would be more steady. People could plan their futures better. Not as many people would suddenly be fired. People would be more confident about being able to get a job when they finished school. Businesses could plan better. Prices would be more stable. In general the system would be more stable. You would think that with all the emphasis economists put on stable states and equilibrium models that they would actually try to do something effective to automatically damp down these destructive business cycles.

More stability gives people more confidence. Doubts about what crazy things the system is going to do next discourage planning, discourages action, discourages investments in productive activities, and it increases speculation. A variable and chaotic system discourages people from educating themselves because they can’t imagine what their future will be, they wonder whether the things they might learn will prepare them for an available job. People will have less trust in the system; they will live more in the present; there will be less incentive to discover, invent, or create new things. Loss of your home, your property, your job often lead to hopelessness, depression, physical and mental illness, loss of or decreased social interactions, hostility, anger, sometimes violence, sometimes crime. People are more negatively affected by a loss than they are positively affected by an equal gain (Daniel Kahneman’s loss aversion). So our erratic system causes much unnecessary suffering. And it wastes human resources.

An unstable system holds back human development. A more stable system promotes human development.

OK, for now let’s assume we have fixed the business cycle. Next, what would it be like if we could eliminate unemployment once and for all.

First Steps

In the step by step evolution revolution, what might be some of the first steps? There are many, many  possible first steps we could take in moving away from our present system towards the just distribution we want. We should not spend too much time debating which of several possibilities is the best one to try first. Think about it, analyze it, yes. But remember there is no perfection. There is no way to know which of several possibilities is best. We cannot accurately predict the future in detail. (See Kahneman’s chapter “The Illusion of Validity”.) There is no grand theory to guide us. We have only our goals to guide us. The only way is to try something that seems like it would move our systems in the direction we want. If, after we make the change (in our laws, in the way our system works) we look at the result after some trial period. If the modified system is closer to our goals, keep the change; if it is not, or if there are negative unintended consequences, then reverse that change and try something else.

Here are some possible first steps.

Change our unemployment insurance system so that when people are unemployed they get more money if they go to some school to improve their skills and knowledge.

Go back to a free education system for all people through college and graduate school.

Limit credit creation since unrestrained credit creation by banks seems to be a root cause of cycles of booms and busts, bubbles and crashes.

Separate commercial banking from financial speculation (gambling with other people’s money).

Limit the level of allowed derivatives. No more derivatives of derivatives of derivatives …  No more CDO’s squared, etc.

Devise and implement a system for electing legislative representatives that does not depend on candidates spending (or others spending for them) large amounts of money.

Eliminate victimless crime laws.

All time in jails and prisons to have an education component, say, eight hours per day developing useful skills and knowledge.

All education to include significant components for developing interpersonal communication skills, developing improved thinking, eliminating precursors to the various mental illnesses such as phobias, paranoia, depression, etc.

Pay people a livable wage to educate themselves to a level that allows them to be productive members of our societies as if educating oneself were work, since it is work.

Change the money system. Adopt Modern Monetary Theory (MMT). Governments speed up research and development of non-carbon emitting energy production. Tax carbon emissions.

Break up large corporations. Beyond a certain size corporations become less efficient. When they are too large they are dangerous, too powerful, destructive of the well-being of others, uncontrollable, the leaders can’t possibly know what all the parts are doing, and they have the same deficiencies as communistic systems — they are too complex for central planning to work, they are subject to looting by employees, executives, and others.

Tax excessive inherited wealth out of existence or down to some reasonable size. Heirs surely don’t do anything to “deserve” their inherited wealth.

Reestablish the rule of law.

Establish a practical concept of just law whereby courts could declare laws or parts of laws unjust and thereby nullify them. Laws would be unjust if they mainly benefited select individuals or groups and harmed the people as a whole or the system as a whole. The details here would be critical, but the idea does not seem impossible.

Require Congress to declare war per the Constitution and to reauthorize each war in each country yearly. War would mean any military, covert, or other activities carried out by any agencies of the government whose intent is to capture, detain, torture, physically harm or kill people or to destroy other people’s property.

I could go on and on, but this is enough for now to give you some ideas about how we might begin to change our systems to move them closer to our goals of a just distribution system. Remember each of these is a possible first step. Some are bigger steps than others. And of course other people have good candidates too. There are many good ideas. We might try several at a time, but we must be careful because if we try to change too many things at once, we run a greater risk of negative unintended consequences (or maybe some positive unintended consequences). And if the outcome is good, we may not be able to separate out the effects of each action. So we shouldn’t try too many at once. Then after some period of time when we have had enough time to verify that the changes made have moved our systems toward the just distribution goal, we can evaluate, estimate, analyze, guess, a second step and then try it for some period, etc. Maybe the evaluation period will be built into the law — for example the laws to try a step might be written to expire after two years, or five years, or whatever seems reasonable; and if the step wasn’t successful, don’t renew the law. Thomas Jefferson suggested that all laws expire after twenty years. That still might be a good idea.

Step by Step Revolution

Why do we have to have a step by step revolution? Are there other ways that would work? When we look at our present systems, we see that they need to be changed in many ways. Look at just a few of the ways our present systems are making things worse for people instead of better. Unemployment is high and not coming down quickly; in many countries it is increasing; and in a second economic downturn it will be getting worse. Economic crashes are occurring more often and they are getting bigger. We expect inflation, but maybe there will be deflation first. The near future, the next few years, seems unpredictable. Will there be another crash and another great depression? Those who are employed don’t know how long their jobs will last. Young people wonder why they should go to college when there may be no jobs for them when and if they graduate. College expenses have been increasing faster than inflation and students must take out loans that they will not be able to pay back for many years. The housing market has been messed up in multiple ways and no one has much confidence that owning a house is a good deal any more. Environmental degradation and destruction continue unchecked. New wars continue one after another. The banks which caused or hastened the crash continue essentially unregulated. In any case they always find new workarounds for any regulations. They violate our laws, local, state, and federal and are not punished, whereas ordinary people, the 99%, are arrested, charged, convicted and imprisoned for minor victimless offenses. The politicians and government officials are bought and paid for. Our democracy has been hijacked. Many people mindlessly absorb ridiculous propaganda from the TV and have no clue how they are being used by the rich. And the government/corporation complex operates in secret and is taking away our rights, our freedoms, slowly, one at a time, so we don’t notice.

I could go on, but too much of this listing of what is wrong with our present political and economic system can lead to defeatism, inaction, gloom, and mental depression.

With so much that needs fixing, we could crudely conclude that we must overthrow the whole thing —  get rid of it all at once, once and for all, and replace it by some better system we build from scratch. That may sound good but it won’t work for several reasons.

If we should get rid of the present system, what is the new system that we would replace it with? We just described in a few previous posts that the grand economic theories don’t work. And nobody can design a whole new economic and political system from scratch. We could not possibly know how such a newly designed system would work unless we could see it actually working. All such systems can only come into existence through evolution — they are built up from what came before, they are built by changing, by adding to, or deleting something from, what already exists, one step at a time. Real human systems are too complicated. That’s why no grand theory can describe or explain them. That’s also why we can’t just overthrow our present political and economic system all at once. It’s too complicated. Everything is interconnected with everything else. We are all interconnected with everyone else. That quasi-mystical idea that “all is one” has a real world practical meaning. If we were to destroy our present systems all at once, we would all starve.

So we don’t really have a choice. We must proceed step by step modifying our present systems. This will still allow the possibility that the system that results after many, many careful steps may be quite far removed from any economic system we now know. In other words we can still make big, significant changes and as a result arrive at a much different system than we have now. We can have a big revolution accomplished through multiple small directed evolutionary steps — steps that through trial and error bring us closer to our revolutionary goal of a just distribution of the human necessities.

There are many problems with our present systems for which, right now, we have no, or very few, ideas as to how to fix them. You will notice that I sometimes consider just our “economic systems” and in other places I write “economic and political systems”. This is because the economic and political systems are different although in practice they are inseparable. The evolutionary revolutionary process described above suggests that we use the democratic process to change our laws at each step. But how can we change the laws to produce systems that move us closer to our goals if our democratic processes have been captured by the elites, the rich, the 1%, the zealots for the present failed systems? There are some ideas out there, but I haven’t explored them enough yet to say anything now.

Also it will be helpful to examine some possible first steps. And it will be helpful to discuss the benefits for all of us if we should develop systems that bring us close to our just distribution goals.

 

 

Speeding up Cultural Evolution

In previous posts I have discussed deficiencies in human thinking as described in Daniel Kahneman’s book “Thinking, Fast and Slow”. The discovery and explanation of these deficiencies can reinforce pessimism. We might conclude that human thinking is so messed up that we are doomed to failures, confusions, mistakes that it’s a wonder we ever do anything right. Our economic theories are mostly crap; our democracy has been captured by the 1%; wars continue. Our understanding of human thought and behavior is wrong. Why bother to try to change or improve anything. Since our thinking is full of errors, confusions, illusions, delusions, conceits, and unwarranted optimism we would be foolish to try to fix anything that isn’t working or is working poorly.

If unwarranted optimism is bad, unwarranted pessimism is much worse since unwarranted pessimism leads to inaction, depression, and even death.

So how can we be optimistic after reading “Thinking, Fast and Slow”? We can be optimistic because we can see it as part of the larger process of cultural evolution. Groups of humans more or less working together — families, tribes, clubs, associations, corporations, towns, cities, states, nations, all organizations — change and evolve their social and individual behaviors by discovering, generating, assimilating new ideas through doing science and art and other social and individual activities. We invent new things, we make inspiring movies and videos, we speak and write stories and novels and poetry, we create images, symbols, illustrations and paintings. This is the process of change and evolution of human groups and of human cultures in general. Evolution is more than just change. Evolution builds on what came before. Change could be anything. The way cultures change is by building on what they already have. Thus cultures change through evolution.

Kahneman provides scientific facts about mistakes in human thinking he and other psychologists discovered by doing psychological experiments on groups of people living mostly in the last half of the twentieth century. Some of the mistakes in thinking he described may result from the physical structure of the human body and brain. Examples might be certain optical illusions and the fact that our memories do not store all the information about an event that we have at time of the event (see the cold hand experiment — Kahneman p. 381-383). A person might think that if a deficiency results from such structural factors that the error is then inherent to the nature of humans. But humans are adaptable. I am not saying that we can learn to store in our memories all the relevant information for the cold hand experiment (although I suspect we could with training), or that we can train our sensory systems to avoid sensory illusions. But we can, if are aware of dangerous situations, if we learn the categories of situations in which mistakes sometimes or often occur, then we can work around them, we can avoid them by thinking in a different way. As Kahneman said:

“The way to block errors that originate in System 1 is simple in principle: recognize signs that you are in a cognitive minefield, slow down, and ask for reinforcement from System 2. This is how you will proceed when you next encounter the Muller-Lyer illusion. When you see lines with fins pointing in different directions, you will recognize the situation as one in which you should not trust your impressions of length. …” — Kahneman p. 417.   

So Kahneman discovers and spreads the word about deficiencies in human thinking. This is not bad news. It’s good news. Now we know more about mistakes we often make and so we can correct these mistakes, work around them, or otherwise avoid them. This is progress. This is cultural evolution at work.

Most importantly, this new knowledge, as it spreads through the human population, will speed up cultural evolution since cultural evolution depends on human creativity which depends on human thinking, human choices, human decisions. So if we can learn to think better, learn to make better choices, learn to make better decisions, this will help us create new useful and beautiful things, help us create more humane and just social arrangements, improve our own individual behavior both with respect to ourselves (improved physical and mental health) and it will improve our behavior with respect to others.

There are many other things which have speeded up and which will speed up cultural evolution in the future besides just improving our thinking. Some are: cooperation, competition, care for others, maximal individual freedom, democracy, art, science, engineering, many human inventions such as writing, printing, mechanized farming and transport, mass education, computers, expansion of interpersonal communications (cell phones, the internet).

And for the future, to speed up cultural evolution, very shortly after now, maybe directed non-violent revolution — a pushed non-violent evolution towards a world whose economic and political systems will more justly distribute the goods produced by humans as a whole so that each individual person has the basic human necessities in order to live and thrive. These include food, clothing, shelter, education, health, maximal individual freedom consistent with the freedom and well-being of others, all in accord with the earth’s limited resources and preserving other life on earth.

This is not impossible. We can adopt this goal and work toward it. We will modify our economic and political systems carefully, one step at a time, always with the goal in mind, evaluating each step (did it get us closer to the goal, did it cause harm, did it have any unintended consequences). Then repeat, repeat, repeat. This is trial and error. But trial and error is mostly all we have here or in any other human activity. The grand, glorious theories have failed. Forget them. Maybe take some parts of them, some smallish principles, and see if we can use them to modify our present systems and move us closer to our just distribution goal. Since this is a non-violent evolution we must build upon what we know now. If some idea from our present systems would seem to bring us closer to our goal, use it, try it out, test it to see if it actually does work to bring us closer to our goal.

But look for new ideas too. Especially those which look likely to speed up our directed revolution.

Perhaps the very idea that there is some grand and glorious theory that can explain, model, and predict human economic behavior is itself a monstrous example of the Illusion of Validity. See Kahneman, chapter 20, “The Illusion of Validity”.

The very idea that such theories exist, or must exist, or could exist if only we could find them leads to a lot of wasted time and mental energy. Worse this idea is pernicious for at least two reasons. First is that the current candidates for grand theory are so wrong that they cause serious harm in the real world. Second, when people glom onto one such theory as the correct theory, the one and only true way, they cut themselves off from the possibility of change, and they try to cut everybody else off from the possibility of change and improvement too.

These are reasons why the revolution must not glom onto any grand economic type theories. Discard them all: Capitalism, Socialism, Communism, Anarchism, etc. (What other “ism”’s are there?). At most take pieces, smallish parts, maybe certain principles, certain ideas from any of them which look like they might make sense, might work in a new pragmatic framework that is being evolved carefully from our present system, and then adopt provisionally, check, test, evaluate, to determine if this old idea might actually work in our new evolving system to actually bring us closer to our just-distribution system.

Down with Grand Theories. The only test for any modification of our systems, any policy change, any new law, should not be does it conform to some theory, but rather it should be: Does it bring our systems closer to our just-distribution goals.