The problem with everything is central control

I have been reading postmortems on the election, and it basically came down to a failure of media and political elites to get a read on the voting public. Basically, a small number of very powerful intellectuals operated in a kind of silo of information.

All the stuff I have read and watched about the 2008 financial meltdown comes down to a failure of large banks. A small number of very powerful banks, operated in a kind of silo of finance.

This country is a mess because of centralized control and centralized culture. It’s a mess because of intellectual laziness and emotional cowardice. It’s a mess because we rely on crumbling institutions to help us.

Centralizing seems natural and logical. There is an idea in economics called the economy of scale. Basically, a big operation (a firm, a factory, a project) has better purchasing power and is able to spread fixed costs over large numbers of units. In network topology, the Star Model is the simplest to manage, putting all the resources at the center. I tend to think about economics and computer networks as kind of similar.

One of the primary criticisms of the Star Network is the single point of failure. If the center of the network has any sort of problem, the whole network suffers. This is also a problem with economies of scale. A lot of electronic component manufacturing is centralized in Taiwan, in 1999 an earthquake caused a worldwide shortage of computer memory. It seems that any time there is bad weather in New York City, flights are delayed across all of North America. In 2008, trouble with undersea fiber cables caused widespread Internet connectivity problems throughout Asia. A lack of biodiversity in potato crops contributed to the Irish Potato Famine. Centralized control is prone to failure.

This isn’t just a business or a technology problem. It can also be a cultural problem. Centralizing stores of information leads to gatekeeping, where a point of distribution controls the access and dissemination of information. This may be for financial gain, in the case of television and cinema, or it may be for political gain, in the case of the White house press corps. Media outlets repeating what the white house said, and the white house using media reports to support its assertions is how the us ended up invading Iraq under false pretenses.

The diametric opposite of the Star Network is the Mesh network, specifically the Peer-To-Peer network. These models eschew ideas of economy and control in favor of resilience and scalability. Economy of scale eliminates redundancies because they are expensive. Peer-to-peer embraces redundancies because they are resilient.

Embracing peer-to-peer from a cultural standpoint means embracing individuality and diversity. Not just in a left-wing identity politics sort of way, but in a Victorian class struggle kind of way. It means eschewing the gatekeeper-esque ideas of mono-culture in favor of cultural and social diversity. Peer-to-peer culture is messy. It’s full of conflicts and rehashed arguments. It’s not a “safe space” where people of similar mindsets never encounter dissent. It’s a constant barrage of respectful and learning argument.

The cultural division in this country is a failure of our core values. It’s a failure of the right’s anti-intellectualism, and it’s a failure of the left’s elitism. It’s faith by many in crumbling institutions that are out of touch. It’s a failure of corporate media that forces us to turn to our social networks for news that discourages discussion and only seeks to confirm our individual biases.

I’ll be writing more about this opinion (and make no mistake, it’s just an opinion) in future posts. Hopefully it will foster some of the discussion that I am seeking.

Election Year Economics Are Stupid

I am no economist, but elections aren’t about economics, they are about rhetoric, which I know a little bit about. Political rhetoric is about narratives. In an election year, the narrative of fiscal policy is about reinterpreting the basic principles of macroeconomics in order to garner votes. The problem, as I see it, is that these narratives, these talking points, are passed off as solid leadership. All politicians lie, but this is different. These are carefully crafted messages that people follow. Messages that people believe.

Both liberals and conservatives are establishing the same narrative: that their side has all of the answers, and the other side is ignorantly wrecking the country. Both sides do this, make no mistake. This is why I don’t care for either. It doesn’t matter which side you fall on politically. If you give that premise one ounce of rational thought, you can see that that idea is -in a word- stupid. Why would a group, backed [presumably] by half the country, back a plan that would doom the very nation that they want to control? This isn’t about good vs. evil, or smart vs. stupid. This is about two essential pieces of a natural process: the need for business to make profits, and the need for a social safety net. Not only are these great ideas, they are also essential components of a healthy economy. They may actually help each other in the process: good social safety nets could mean more freedom for businesses.

Conservatives are pushing tax cuts at every turn in order to stimulate private industry. Liberals are looking to implement government programs to help people that they believe are being ignored by private industry. LOL/JK they’re just lining the pockets of their corporate cronies ūüôā

Private industry and social stability are both good ideas; there is nothing wrong with either idea. The problem is that both ideas are postured in such a way as to appear mutually exclusive. Tax cuts are inherently plutocratic, while programs to help those who need it are the fast track to communism. This has nothing to do with actual plutocracy or communism and everything to do with political posturing.

Presenting your set of goals, however noble, as superior to those of the other side is deliberately ignoring half of the problems that our nation faces. We face a need for employment, which comes from businesses, and a need for a strong social safety net, which comes from taxes. People need to work so that they can pay taxes. Businesses need to profit so that they can employ workers and pay taxes. What’s more, pitting the interests of business against the interests of the population is at best a waste of already finite resources, and at worst a recipe for societal collapse.

Economies rely on two forces: supply and demand. These forces are often represented in the political narrative as business and consumers. The problem with this narrative is that the market is actually made up of two interdependent cycles where businesses and consumers fulfill the roles of supply and demand at various stages. These cycles depend on each other to keep repeating. The people who participate in these processes perform different functions in the cycle. Even if you own a company, you still have to go home and buy things. Even if you earn only minimum wage, you are still selling your time and energy for a wage.

In the graphic above, you can see where businesses and consumers are both buying and selling to each other. There are different markets where consumers supply and businesses demand, only to have the roles reverse. This is a good representation of the interdependence of these two cycles. If you are a business, you are working to turn your resources (raw materials, production capacity, energy) into profits. If you are a consumer, you are looking to turn resources (land, labor and capital) into income. If consumers don’t have income, they can’t buy stuff from businesses and they cannot invest in businesses. If businesses cannot make profits, they cannot employ people. If this balance is upset, no one can pay taxes. Conservatives would have you believe that Americans sacrificing in order to keep private industry going is the way to keep the country going. Liberals would have you believe that government programs financed by corporate taxes will keep the country going. Both parties are right at some point in the economic cycle, and they’re both wrong at the opposite end.

Capitalism works when everyone acts in their own rational self interest. Political rhetoric focuses on “self interest” at the expense of rationality. Election Year Economics is the antithesis of rationality. Pitting consumers against businesses is irrational. Businesses are employers. Employees are customers. If people can’t work, they can’t buy your crap. If you aren’t buying crap, there are no jobs. Expecting the government to care for you is irrational. Subverting the democratic process to avoid taxes is irrational. The politics of fiscal policy is the politics of irrationality.

You see, while markets cycle clockwise and counterclockwise, the economy itself cycles up and down. Things go well, the economy grows, and then it runs out of steam and contracts. This is natural. The contraction not often pleasant, but it is natural. Expansion and contraction is unavoidable. The purpose of the government in this process is not to keep the cycle perpetually expanding. That is impossible, and believing it to be possible is irrational.

The role of government in the business cycle is to even out these natural ups and downs. This is where Monetary Policy should come into effect. It should keep things from expanding out of control, and then soften the blow of recession. The government does this during expansion by limiting the money supply (Federal Reserve conspiracies notwithstanding) and during contraction by providing a social safety net. During times of recession, the government increases spending, cuts taxes, and programs like unemployment benefits and other forms of assistance keep people buying until things pick up again. These are good things that get people votes on both sides.

During times of expansion, however, conflict arises. At the other end of the business cycle, the government needs to control the supply of money to keep the economy from overheating and then crashing. It does this by raising interest rates, raising taxes, and by reducing government spending. Higher interest rates encourage saving and discourage risky investing, lending, and borrowing. Higher taxes create a budget surplus that can later be used for benefits programs. Reduced government spending encourages maximum employment in the private sector and efficient allocation of funds. These are good economic decisions, but they are bad political moves. High taxes and interest rates draw the ire of Wall Street and its conservative votes. Reduced spending affects public institutions and their liberal votes. The goal is for the government should be to create a budget surplus and then use it to jumpstart the economy during downturns. This is politically painful for both the left and the right, and it costs votes. That means no one on either side wants to do it. When you run a business one fiscal quarter at a time, and when you run a nation one election at a time, good fiscal ¬†and monetary policy become a sort of leaky roof problem. You can’t raise the funds you need when everyone is unemployed and broke, but you don’t need social safety nets when everyone is employed.

All-tax-cuts-all-the-time is bad fiscal policy. All-government-spending-all-the-time is also bad fiscal policy. If the government can’t raise funds by taxing, it has to raise them by borrowing (from China!) which is also bad fiscal policy. In this process, we as the electorate have to understand where we are -as a nation- in the economic cycle. I guess this would be a good place for the media or the education system to help the process, but media is a private industry where celeb gossip is more profitable than macroeconomics, and education is a money pit for taxpayers.

Unfortunately, you can’t fit that message on a bumper sticker, and my Facebook feed seems to only have enough attention span for clicktivism.

The Culture of the Intelligence Community and the Chelsea Manning Debacle

This video is an interesting take on the Manning/Snowden leaks by Joshua Foust. Foust says that Manning’s actions jeopardized a number of diplomatic and military undertakings. It sounds very well reasoned.

Whenever the criticism of Chelsea Manning’s actions flows, the first question that I ask is “What operations were compromised?” followed up by “Tell me just one person, by name, who was put at risk.” I ask this because the leaked materials were 6 or more months old, and Wikileaks states that steps were taken to not endanger people.

I also ask what was compromised because most who criticize the leaks aren’t familiar enough with the materials to have a an answer (certainly not me). I am also fairly confident that no one except for a few high ranking members of the intelligence community can actually answer that question definitively, and those few are not authorized to answer. Such is the nature of state secrets. The logic of our government and military is that we should just take their word for it that they have to operate in secrecy and with impunity because it’s for our own good. This is the crux of the issue: with no sharing of information, how are we to verify these claims? This is also why a national dialog cannot be had on the subject. The Executive Branch¬†is simply unable to level with the American people about the things that they do to keep us safe, and about the things that they keep us safe from.

We, the American people are worried about our Constitutional rights to privacy, to free speech, our rights to due process under the rule of law, and in the case of Muslim Americans, our freedom of religion. The Executive Branch has been steadily over reaching and possibly abusing its power to surveil and detain, and thereby eroding our Constitutional rights under the guise of national security.

Having heard countless talks by federal types at places like Defcon, I have heard over and over again that our concerns are unfounded. The gist of most of it is that there are countless active threats, of a non-specific nature, that cannot be named. While I don’t think that the Executive Branch is lying to us so that it can hurt us, it would be very naive to say that there aren’t budgetary, political, and career management pressures on it to exaggerate the scale of the threats that we face. It is also naive to think that while the Executive Branch means well, there are those within it who would abuse these powers. This is why leaks and whistle blowing are so important, because the military, the intelligence community, and federal law enforcement agencies are bound by law to not discuss these matters.

My argument isn’t that there should be no such thing as national security. Of course there should be. My argument is also not that state secrets are by nature evil. Of course they aren’t. My argument is that there are laws in place to support the mandates for secrecy by the Executive Branch. These laws make a candid and honest discussion about what they are doing and why¬†impossible. The act of facilitating an this sort of discussion is, by design, against the law.

Just because the conversation is illegal, doesn’t mean that it’s not still the right thing to do. Obviously the laws that prevent the conversation have to change, but some of those laws, particularly those that govern surveillance, are actually state secrets as well. If the laws themselves are secret, how are We The People supposed to work to change it?

This is why leaked documents and whistle blowing are important. I call it the “Watchmen’s Dilemma.” In business, there is a phenomenon called the “Innovator’s Dilemma” where a new idea will make a current product or business model obsolete, and so established businesses and markets have make a tough choice: do they endanger their established and profitable businesses with a new innovation, or do they keep doing what works for them, only to lose their share of the new market?

When it comes to national security, the culture of secrecy creates a similar dilemma. Should the Executive Branch (the watchmen) continue to keep the American people in the dark, thereby increasing the public’s mistrust? Or, does the Executive Branch level with the American People, and sacrifice some or possibly all of its advantage when it comes to protecting American interests? It’s a tough decision.

At one point in the video, Foust talks about how the NSA doesn’t have access to the content of our telephone calls, and then sort of glosses over the intelligence significance of mobile phone metadata. Faust is ex-military intelligence and has probably heard of traffic analysis. As a hacker and veteran who served with military intelligence my entire active duty career, I know a little about traffic analysis, but I am including a video of someone who knows significantly more about it than I do, particularly with regards to intelligence services and mobile phones. The video tells the story of how American operatives took a Muslim cleric captive, most likely as an extraordinary rendition. When you consider how much of the story can be told with just mobile phone metadata cross referenced with a paper trail, it makes me want to get a tinfoil hat¬†and become Amish.