Friday Night: Chris Hedges and Jonathan Haidt on Corporations, Liberals, and Conservatives

"Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones.

The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature.

The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education).

It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

Albert Einstein, Why Socialism? 1949

While I agree with Einstein's diagnosis of the systemic flaw in market capitalism, which can be addressed by regulatory actions prohibiting monopolies and the abuse of power, I have to note that his follow on endorsement of central planning and socialism makes the same Utopian leap of faith about the natural goodness and rationality of human nature that the proponents of free market capitalism make.

The first video is part of an interesting discussion between Chris Hedges and Jonathan Haidt on the financial crisis at the 92nd Street Y.

Haidt is a psychologist who is doing some fascinating work in examining human values, and has done some interesting testing in the differences between liberals and conservatives, which is included in the second video.

I have to note that Haidt assumes what seems to be a normal distribution, or perhaps rather a distribution of normality, that does not seem to take sociopaths and psychopaths into their proper account. And more generally there is an element of the irrational that seems to introduce the occasional random act into human behaviour that runs contrary to the values of otherwise rational people.

 Like economists, the psychologists sometimes crush the individuality of the person to fit their models a bit.

The concept he presents is not entirely new. Such approaches to human values, including testing not for political preference but for a wider range of measures, go back to the 1970s at least, using six dimensions of perceived value called Order, Physical, Emotional, Scientific, Social, Enterprising. It had some remarkable applications in vocational and therapeutic testing. And there have been other such tests and measures, often with four or five dimensions.

I would also make a distinction between ends and means, between moral values and politics.  For my way of thinking moral values are ends we may hold, and politics, which is what Haidt is describing, are the means to achieve those ideals.

 What Hedges is saying is that we have lost a sense of values, 'the sacred,'  which has been sacrificed on the altar of commerce, led by the high priests of a destructively anti-human economic, almost to the point of psychopathy. And that is the source of his concerns.  And I think that is why he and Haidt talk past one another a bit.  Haidt talks about what he can measure, whereas Hedges is thinking at a level above that.

Hedges also references the way in which people's values can be twisted and manipulated by lies and even propaganda, so that they do things that are unintended and even irrational, outside of their normal value system, as in the objectification of the individual by the stereotype.  Haidt seems to miss that, as it is crushed out of his model.

Haidt's talk is nonetheless thoroughly enjoyable, and his development of his ideas highly entertaining. And you may even go and take his online test, and see how you stack up as a conservative and a liberal and what that really implies. I drew some insights from it, and you may do so as well.

Gold Daily and Silver Weekly Charts - Another Turn in the Downward Spiral

Gold and silver have broken out, as the weak employment report and the debacle in Europe have renewed 'investors' expectations in additional monetization by the ECB and the Fed. I say 'investors' in quotes because there are no investors anymore, only speculators and gamblers.

However, to say that this may end badly is an understatement.

Intraday commentary on the Non-Farm Payrolls report and the state of the economy is available here. It is not particularly upbeat, but it is not downbeat either. Rather, the forecast is for greater uncertainty, and therefore, risk.

"Efficient market theory is a fraud, and further deregulation is little more than a license to steal. It is no coincidence that the gap between the wealthy few and the public is at levels not seen since the last Great Depression. This is the mark of a very unhealthy kleptocracy based not on merit but on position, power, and payoffs.

The corruption in the system acts like a huge tax on the real economy, diverting resources, labor, and investment away from productive activity and towards monopolies, cartels, and the fraudulent accumulation of wealth through the manipulation of financial assets, making money from money.

There will be no sustainable recovery until there is substantial, genuine reform of the financial and political systems, both of which have been tainted by big money and corporate power promoting a very narrow and self-servingly destructive agenda.

Agree or not, things will continue to get worse, even if in a long, dwindling cycle of decay and despair, until change comes. And it will come, one way or the other. And the longer it takes, the more volatile the outcome."

I am not sure how far they can take the equity markets in expectations of more QE. But at some point, even if it is after that QE arrives, the markets will begin to sell off, slowly at first, as the focus on the candy delights of monetization turn back towards the decline in earnings and median wage, and the malaise that will continue to grip the broader economy.

This *could* be masked by a bout of serious inflation, if not hyperinflation, but I still do not see that actually developing yet, except perhaps as a precipitous series of devaluations and the resetting of the global monetary system, with a commensurate redistribution of paper wealth as occurred in the Soviet Union on its collapse.

But the risks are great, with many exogenous variables, and so any forecast that one can offer is bound to be diminished by uncertainty.

Whatever may happen, there should be little doubt that this generation will be tested in unfamiliar ways, at least to them, but with many analogues and similarities in modern human history.

SP 500 and NDX Futures Daily Charts - Divergence

There was a bit of a divergence between the tech heavy Nasdaq 100 and the more financially weighted SP 500. The stodgy Dow Jones Industrial Average was largely unchanged.

This is indicative of today's market action which was driven by expectations of more monetary stimulus from the Fed and the ECB, feeding into the banks, and trickling down to the real economy.

Intraday commentary on the Non-Farm Payrolls report here.

Once the QE comes, I expect the market to begin selling off as the focus turns once again to slack earnings, weak employment, and more revelations of financial fraud. The elections may provide a temporary diversion, bread and circuses.

Pictures From A Non-Farm Payrolls Report

I did not see anything untoward in any of the factors which I check, including the seasonality adjustment and the birth-death model adjustment.

The unemployment rate is a fairly useless measure, as it continues to improve by dropping people from the labor force. The Labor Participation Rate is much more relevent. This shows a continuing decline to the lowest level in three decades.

The median wage is also a critical indicator too often overlooked.

The bottom line is that the US is continuing in a weak and somewhat fragile recovery following a financial catastrophe of a magnitude not seen since the late 1920's.  The result could have been much worse in the US.   If Hoover's principles had been applied once again to the US economy, things would have been very dark this time around indeed.  People overlook this.  They might still get another chance to see how destructive economic malpractice can be.  Europe may take a run at it.   The UK appears to be willing to have a go.

The current situation is not enhanced by the deadlock in Washington, particularly with the hard line obstructionism in Congress. We may as well call it that, because that is what it is.

Efficient market theory is a fraud, and further deregulation is little more than a license to steal. It is no coincidence that the gap between the wealthy few and the public is at levels not seen since the last Great Depression. This is the mark of a very unhealthy social economy, with a few big winners and lots of losers, a kleptocracy based not on merit but on position, power, and payoffs.  These distortions born of the will to power are always doomed to failure, and sometimes spectacular.

The corruption in the system acts like a huge tax on the real economy, diverting resources, labor, and investment away from productive activity and towards monopolies, cartels, and the fraudulent accumulation of wealth through the manipulation of financial assets, making money from money.

There will be no sustainable recovery until there is substantial, genuine reform of the financial and political systems, both of which have been tainted by big money and corporate power promoting a very narrow and self-servingly destructive agenda.

Agree or not, things will continue to get worse, even if in a long, dwindling cycle of decay and despair, until change comes. And it will come, one way or the other. And the longer it takes, the more volatile the outcome will be.