Friday, June 18, 2010

Statism and Myth as a Tool of Survival and Perpetuation Part VI: Engineering Economic Outcomes Through Monetary Policy, Price and Wage Controls, Financial Devices, and Regulatory Malfeasance

Statism and Myth as a Tool of Survival and Perpetuation Part VI: Engineering Economic Outcomes Through Monetary Policy, Price and Wage Controls, Financial Devices, and Regulatory Malfeasance


"From now on, depressions will be scientifically created." 


— Congressman Charles A. Lindbergh Sr. , 1913, reacting the passage of the Federal Reserve Act.  


"When you or I write a check there must be sufficient funds in out account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money." 

Putting It Simply, Boston Federal Reserve Bank


"Whoever controls the volume of money in any country is absolute master of all industry and commerce." 


— President James A. Garfield 

"Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed."


— John Maynard Keynes, Consequences of Peace


"People who will not turn a shovel full of dirt on the project (Muscle Shoals Dam) nor contribute a pound of material, will collect more money from the United States than will the People who supply all the material and do all the work. This is the terrible thing about interest ...But here is the point: If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way.  It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People. If the currency issued by the People were no good, then the bonds would be no good, either. It is a terrible situation when the Government, to insure the National Wealth, must go in debt and submit to ruinous interest charges at the hands of men who control the fictitious value of gold. Interest is the invention of Satan." 


— Thomas Alva Edison (emphasis added).  


"The Federal Reserve banks, while not part of the government..." 


— United States budget for 1991 and 1992 part 7, page 10


"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations." 

— Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982

“A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the Nation, therefore, and all our activities are in the hands of a few men... We have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”


— President Woodrow Wilson, Senate Doc. 23, 76th Congress, 1st Session, pg. 100


“I am for the separation of state and economics.” 

— Ayn Rand, in an interview with Mike Wallace


“Government is no the solution to our problem. Government is the problem.” 


— Ronald Reagan


“Greenspan was a believer in Ayn Rand, a believer in free market.  A little bit curious for a central banker, because what is central banking? It’s a massive intervention in the market, setting interest rates.”


— Nobel Prize winner Joseph Stiglitz in the Frontline documentary The Warning

“I knew that I would have to swear not only to uphold the Constitution but also the laws of the land, many of which I thought were wrong.” 


— Alan Greenspan 


“He said something to the effect of, ‘Well, Brooksley, we’re never going to agree on fraud!’  And she said, ‘Well, what do you mean?’ And he said, ‘Well, you probably think there should be laws against it!’” 


— Frontline documentary The Warning, recounting the initial encounter between newly sworn in CFTC head Brooksley Born and Federal Reserve Chairman Alan Greenspan. 





Much of what we supposedly know as a free market approach to economics is in fact anything but.  The laissez-faire crowd, both on Wall Street and the various regulatory agencies which oversee Wall Street, are for a hands-off approach when it comes to profits and the often criminal behavior which produces such profits, but when  their behavior goes too far, and near economic collapse threatens to ensue, these same individuals clamor for the efficacy of government intervention. The intervention comes in several ways: 


  1. Regulators approach banks under the regulatory authority and encourage (or coerce, depending on how you view it) those banks to fund a bailout of a hedge fund or bank on the verge of collapse from its own failures, many of which involve fraudulent accounting, phantom profits which never existed legitimately and could not have been realized without fraud, and a failure of hubristic models which were supposed to minimize risk but instead only minimized the the ability of those who placed their faith in the models to perceive real risk. The failure of Long Term Capital Management and the subsequent bailout was an example of this sort of approach.  The problem is that liability, rather than being confined to the company under threat of collapse and its various partners, is spread further across the market, which increases investor exposure to potential risk. Due to the discreet manner in which such bailouts occur, and the limited information made available to the wider market of the specifics of such a bailout, investors cannot make an informed decision about what to invest in and what to short. Such a market is not free at all, as a blind man is in bondage to his lack of sight and the subsequent limits upon his life which occur as a result of his disability.
  2. Regulators, investors, hedge funds, banks, and the financial lobby as a whole launch a full on assault on Congress to encourage legislators to vote to release public funds for the purpose of backstopping private losses. Congress often goes along with the scheme for a variety of reasons; namely, the desire to keep the economy going along as usual.  A failure of the investment markets would lead to lower tax receipts, and very often a devaluation of the underlying products whose worth was artificially inflated during the good times.  Examples would include items directly linked to taxation like real estate (which bolsters local and state revenues through property taxes) and commodities like oil (which leads to excise tax revenue).  Tax credits for purchasing are offered, and in this way the economy never reconciles itself to any fundamental reality.  Simply enough, the economy remains unmoored from reality, valuations of homes remain artificially high, and real demand is papered over by the artificially generated demand of such buyer incentive programs. 
  3. Regulators, investors, hedge funds, banks, and the financial lobby a whole launch a full on effort above and beyond the Congressional effort, which involves independent agencies within the Executive Branch releasing funds in the form of backdoor bailouts and committing to guaranteeing toxic assets.  In this manner, a TARP bailout worth under $800 billion initially ballooned into a $23.7 trillion behemoth of a bailout in the form of loans, guarantees, and other assorted programs whereby private losses and liabilities were assumed by the public sector. These sorts of efforts, combined with the efforts outlined in option number two, combine create a ballooning of public debt and liability.  What is more, the advertised number of the public debt is very often less than the real number owing to the fact that the U.S. government does not use the very accounting standards it insists upon for private businesses.  What is more, the Federal Reserve often vastly increases liquidity, if only in electronic form, to lessen the exposure.  The inflation statistics are therefore minimized, because the liquidity only makes into limited circulation among those parties who need to reconcile their books to even.  However, the larger reality becomes apparent when the shuffling of currency becomes more widely known, as in the currency swaps executed by the Federal Reserve during the fall of 2008 and exposed by Representative Alan Grayson, one sees that the holding down of inflation (and very often a rise in the dollar, in the case of the aforementioned swaps to the level of some 30% over the time period in question) is entirely artificial.   In short, the money valuation is not real. What nominally occurs is a short term spike in the dollar, following by a precipitous decline, which in the case of the aforementioned swaps was some negative 20% net, leading to a loss of $100 billion for the Fed on the swaps and their execution.  However, the deeper reason to execute such swaps is to engineer perception where national debt and the bonds underlying such debt are concerned.  In short, those foreign investors and entities who receive our currency use it to buy our debt, receiving not only a premium in the form of interest but also the additional profit when the dollar loses value and their currencies gain value when the time comes to settle the accounts on the currency swap.  In this way, our government gets to have the mirage of sustainability, albeit at a $100 billion premium plus interest on the bonds.  There never was any real demand for our debt, but if you hand someone money to buy that debt, with the understanding of a $100 billion profit up front and interest over time on the debt itself, you can get your Treasury bonds and bills purchased at a feverish rate.  


Not one of the options above constitutes a free market or laissez-faire approach.  Each of the three is directly contingent upon government intervention, often to the point of government fraud where the currency and debt are concerned.  In short, rather than worrying about whether or not the returns of our private corporations and financial institutions are real and legitimate, we ought to be quite concerned as to whether or not the returns and performances advertised by our Treasury Department and the Federal Reserve are real.  The answer seems to be yes, but anyone with a rudimentary understanding of valuation and the role artificial stimuli and trades on the order of the aforementioned currency swaps play in such valuation could easily make the argument that the value of the dollar and the demand for Treasury debt are not real.  At the very least, the value and the demand are both contingent upon government intervention which includes vast losses for those agencies executing the underlying manipulations.  $100 billion, plus the interest over time on the Treasuries.  


What is more, through such manipulation our understanding of the real value of the dollar is clouded.  Inflation is nothing more than what dishonest and fraudulent regulators and overseers say it is.  It has no connection to real market forces.  Inflation is instead directly dependent upon the manipulation of the market by regulators and central bankers.  To say that this is a free market is to engage in a willful lie, for there is no intellectually honest way to argue that such machinations are part and parcel of free markets.  


To insist on reforms abroad in developing countries which would enable such deceit and subterfuge to the be the rule in their markets is to spread the pox to countries who are attempting to climb out of poverty.  What is more, because those countries do not comprehend the arrangements being made, we are ensuring their perpetual bondage.  We hold out the promise of aid if they agree to slit their own throats by adopting our regulatory and central banking model as their own. 


A free market would have collapsed our economy completely decades ago.  To be quite precise, it is that portion of the market which retains some semblance of freedom which reveals the rot at the core of our private and public enterprises.  At some point, someone will bet against what they rightly perceive to be bad investments.  They are not wrong to do so, but our regulatory apparatchiks would tell you that such free expressions and independent assessments of our debt and our markets are to be avoided at all costs.  If anything, they must only occur under controlled circumstances, where those speculators who are engaged in such practices are doing so with the sanction of banks and hedge funds who are directly connected to the Federal Reserve.  As Charles Lindbergh, Sr. noted, “From now on, depressions will be scientifically created.”  


And they are.  The Federal Reserve has evolved a means of increasing liquidity to fund rises in the markets and decreasing liquidity to hasten decreases in the markets.  Every major upturn and downturn of the past three decades corresponds directly to Federal Reserve manipulation of the interest rates.  The money isn’t real. It’s manufactured out of thin air, and just as easily vaporized by the fiat of the Federal Reserve.  Success is determined by the whimsy of men and women who arbitrarily decide to inflate the currency at one turn, and failure is determined by the whimsy of those same men and women who arbitrarily decide to deflate the currency at another turn.  


This manipulation is the sole explanation for how insolvent institutions can survive beyond the point of their natural expiration.  The simple reality is that Wachovia, Citigroup, Bank of America, and many of the nation’s largest banks should have been dissolved and would have been dissolved without the Federal Reserve’s intervention. Far from rescuing the system from a collapse, the Federal Reserve merely delayed the collapse and preserved the conditions and attitudes which led to the insolvency so that they could lead to larger overextensions at a later date.  


Resurrection occurs only after death.  A patient who is clinically dead but is made to twitch as though alive through electrodes which provide shocks to his muscles is not really alive.  Should the dead be interred into the ground, their remains will inevitably give rise to new life at a later date as they are reduced to nutrients.  As it stands, we have zombies stalking the landscape seeking to strip others of their viability and vitality through the same failed practices of the past.  What is more, they are doing so with funds handed to them by public agencies and the Federal Reserve, funds which they could not have raised any other way.  Aside from captive regulatory agencies and a corrupt central bank seeking to preserve itself, no one would lend to such banks and financial institutions. 


But in the mythical statist version of such items, we have individuals who on the one hand decry government intervention in the markets when it comes to the prevention of fraud through honest financial reporting while simultaneously decreeing government bailouts as a necessary evil.  Let’s take a look at Sarah Palin, during her infamous interview with Katie Couric: 


Katie Couric: If this doesn't pass, do you think there's a risk of another Great Depression?


Sarah Palin: Unfortunately, that is the road that America may find itself on. Not necessarily this, as it's been proposed, has to pass or we're gonna find ourselves in another Great Depression. But there has to be action taken, bipartisan effort—Congress not pointing fingers at this point another, but finding the solution to this, taking action and being serious about the reforms on Wall Street that are needed.


Note that Sarah Palin carefully hedges against endorsing the TARP bailout as it currently existed, while simultaneously arguing that Congress should act without explicitly saying what Congress should do, apart from “not pointing fingers at this point another.”  Ladies and gentlemen, I give you the definition of modern leadership and modern political dissent.  You say something without saying anything, and you never once outline what you would do as an alternative to what is currently under proposal.  In the case of Sarah Palin, we can fairly say that she didn’t know what to do.  She shared that feature with most of Congress, whose members no longer read the bills they vote upon before they pass them through both houses and send them to the President for his signature, so that these unread bills can be the law of the land.  


One thing that everyone can agree on is the need for some false sense of bipartisanship or non-partisan reconciliation, so as to avoid having to acknowledge the shared guilt which goes with any examination of the root causes of an economic crisis.  We’ll gloss over the fact that the tendency for financial deregulation began in the early 1980s under Ronald Reagan if we’re Republicans, and if we’re Democrats, we’ll ignore the fact that we avoided a second Great Depression for nearly 70 years with the protections of Glass Steagall, which were systematically dismantled at the close of the Clinton Administration with the Commodities Futures Modernization Act and Gramm Leach Bliley.  That’s right, under the Clinton Administration, which gave us Robert Rubin and Larry Summers, both of whom stymied then CFTC chairman Brooksley Born in her efforts to regulate over the counter derivatives.  


The problem wasn’t that the government was looking to stifle the market for such instruments; instead, it was that the government knew nothing about such instruments at all. Derivatives were not traded on exchanges, nor were they traded among equal partners who understood the devices.  Very often, the bank creating the derivative understood it well enough to fleece their customer, who didn’t understand the derivative at all, as in the case of Proctor & Gamble, which found itself on the receiving end of a “shitty deal” long before Goldman Sachs entered into its now infamous Timberwolf deal.  


Proctor & Gamble entered into a derivative contract with Bankers Trust on January 20, 1993 (  The goal was lower Proctor & Gamble’s finance charges, so that it might borrow money at cheaper rates.  Later that same year, on November 2, Proctor & Gamble agreed to enter into a leveraged derivative product in addition to its earlier derivative deal back in January.  Additionally, Proctor & Gamble further entered into another leveraged derivative deal on February 14, 1994.  By February 22, problems had emerged.  Interest rates began to tick upwards on February 4th, which increased Proctor & Gamble’s interest rate payments to Bankers Trust by February 22 to some 4.5 percentage points above the commercial paper-rate on the November 2, 1993 deal. This resulted in a projected cost of $40 million, which Proctor & Gamble asked for a more detailed explanation of from Bankers Trust, who then informed Proctor & Gamble that the cost projections were based on a proprietary model.  


Proctor & Gamble claimed that they had not been told that their interest payments would be determined by such a model, which was exclusive to Bankers Trust and stood apart from market rates.  Bankers Trust claimed that the model had been explained to Proctor & Gamble in an October 1993 conversation where Proctor & Gamble had been told how to calculate interest on the November 1993 deal.  But in a taped conversation between Bankers Trust employees about that November deal, the following was recorded: 


Employee 1: ``Do they [P&G] understand that? What they did?''


Employee 2: ``No. They understand what they did but they don't understand the leverage, no.”


Employee 1:  ``But I much do you tell them. What is your obligation to them?''


Employee 2:  ``To tell them if it goes wrong, what does it mean in a payout formula...''




As the above conversation continued, the two employees noted that when Proctor & Gamble entered into an options trade as part of one of its derivatives contracts, Bankers Trust paid Proctor & Gamble half of what the trade generated.  Essentially, the bank defrauded its customer out of proceeds and capitalized on the fact that their failure to disclose the sum involved would mean that Proctor & Gamble as a client would not know the difference.  What is more, the employees indicated that they had formed intent and conspiracy with regards to future actions along the same lines, as  one of the employees stated to the other: “This could be a massive future gravy train (ibid).”  


Let us review: we have Bankers Trust admitting that they understood Proctor & Gamble’s failure to comprehend the leveraging mechanism in their November 2, 1993 derivative deal, and we have an admission that Bankers Trust had defrauded its customer out of half of the proceeds from an option trade, with intent and conspiracy formed to repeat the same behavior for the future.  We further have both active and passive concealment, for as Proctor & Gamble’s banker, Bankers Trust was obligated to reveal both the pricing mechanism and to ensure that its client understood the leveraging mechanism.  Bankers Trust was also obligated to disclose the full profits from the options trade, but it willfully failed to do so in order to profit half of the proceeds unbeknownst to Proctor & Gamble.  All of this is sufficient to support a conclusion of fraud with intent to commit future fraud as well.  Proctor & Gamble was fully entitled to know. The fact that Proctor & Gamble did not know is evidenced by two key pieces of evidence: the admission of the Bankers Trust employees, and the fact that Proctor & Gamble entered into a deal with implications which anyone with a basic understanding of the deal at the outset would have fled.  Ignorance of the law is no excuse, but ignorance of a contract due to the concealment, non-disclosure, and misrepresentation of that contract by one party seeking to rip off the other party is an excuse.  It’s a tort, and it’s potentially a criminal act. 


But Bankers Trust disputed such conclusions, arguing that a note from Proctor & Gamble’s CFO Erick Nelson indicated that he felt the terms had been clearly explained (ibid). Of course he did.  Bankers Trust explained the terms fully and completely, at least insofar as the explanation conformed to their intent to way-lay Proctor & Gamble at a later date with skyrocketing finance charges.  Bankers Trust gave their client a full and complete limited explanation that excluded the truth in order to draw that client into a deal which would result in great losses and penalties should its client decide to withdraw from the deal.  Damned if they do, damned if they don’t.  You see, as in a casino, the house wins.  What’s more, the house in this case was skimming the winnings even before the deals went sour, as the disclosures about the options trade clearly indicated.  


What is more, if Proctor & Gamble should have desired access to the pricing model used by Bankers Trust to set the interest rates on their derivatives, they would have been (and ultimately were) denied access to the model on the grounds that it was proprietary.  Proctor & Gamble, and for that matter, any client of Bankers Trust with a derivatives contract, had no way of independently verifying Bankers Trust’s valuation of the interest. It is what we say it is, and whatever we say it is is what it is.  That’s the banker’s way.  It’s their world, and while it’s our money, they control its supply and therefore its valuation both through the direct supply and through their behind the scenes machinations with currency swaps and the like.  We have no way of verifying the value of the dollars in our pockets.  It stands to reason that when one more than doubles the liquidity in a country, the existing currency ought to be halved in value.  But according the Federal Reserve, inflation lies at below an annual rate of 2%.  How this is accomplished is of no real importance, because, as I noted above, the valuation is whatever they say it is.  That’s the definition of fiat money. 


When a central banker effectively says that he opposes laws against fraud and enforcement mechanisms to encourage the observance of those laws, we have no basis to believe in the truth of the market.  Every market force becomes subjugated and reined to the fiat determination of those individuals in the know on fraud, who routinely manipulate the market and generate vast profits in the interim which had no connection to reality whatsoever, but where merely the product of a perception manufactured by those engaged in the fraud, who are always smart enough by virtue of their foreknowledge to have a chair when the music stops.  


But for those average individuals who have no such vantage point, whose retirements hang in the balance, there is no chair when the music stops. There is only the promise of spending one’s golden years eking out a living after at a lifetime of saving for the eventuality of retirement.  Welcome, ladies and gentlemen, not to the free market, but instead to a market of nihilism, where supply and demand are no longer independent forces, where the Invisible Hand is gloved and deployed by central bankers and the interests they contend for.  Welcome to nothing but nothingness, where up is down and down is up and sense departs our world.  


We engineer economic outcomes, ostensibly to promote the greater good, but judging from the continuing concentration of wealth at the top of the economic latter, it is the narrow good which is cemented and affirmed time and time again.  We commit vast sums of money to meet crises which are arguably engineered so that those with foreknowledge can be rescued at the expense of our retirement accounts, our nation’s future fiscal security, and while they are made whole, the rest of us are told that the market has sorted us out.  We didn’t deserve what we’d accrued to begin with, because it was all fake and artificial, but our contemporaries in the financial sector get to keep their ill-gotten gains nonetheless and help themselves to our tax dollars to boot.  Our government borrows money which we will have to repay, which our children will have to repay, so that these men and women can be restored to their original position and then some.  


The market is neither free nor fair, and it wears the patina of legitimacy only by its association with ideologues who appear to be one thing by their professions but betray their true beliefs by their actions.  No libertarian, free market, economist would ever have taken the chairmanship of the Federal Reserve.  Alan Greenspan is not, nor has he ever been, a free market libertarian capitalist.  He speaks in tongues of gobbledygook obfuscation, and he did not understand what it was he was doing in any real substantive sense.  To the extent that he did understand, he was guilty of perpetuating the very antithesis of a free market in the form of intervention which he directed by his own hands.  He was, like so many of his allies and peers, a total charlatan and we were all revealed to be ignorant for having believed his nonsensical spoutings.  This man spent four decades advocating for non-interventionism in markets while spending his entire career intervening in the markets!  


Let’s review Alan Greenspan’s quotes for a moment: “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense... that gold and economic freedom are inseparable.”  Here you have the extraordinary specter of a central banker acknowledging that statists oppose a gold standard because of their sense that “gold and economic freedom are inseparable.”  Yet Greenspan made his career at the Federal Reserve as a champion of fiat money and its role in bolstering the state! He readily engaged and contended for the very system he decried!  


No matter, for as Greenspan said in another exchange: “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” That’s right, if the above cited quotes seem particularly clear, we have misunderstood what Greenspan said.  Then again, consider this bit of clear optimism: “The Fact that our economical models at The Fed, the best in the world, have been wrong for fourteen straight quarters, does not mean they will not be right in the fifteenth quarter.” Of course not.  What qualifies those models as the best in the world? Their ability to rebound to correctness in the fifteenth quarter after fourteen straight quarters of error?  


Now consider that the two previous quotes were part of the same remarks.  The former came after the latter.  It is then that you understand that Greenspan’s peculiar genius was due not to his competency in matters of economics, but rather due to his genius with language, in spouting the incomprehensible, abstruse, and muddied remarks which were so often his trademark way of addressing Congress.  The fact that the economy grew under Greenspan was not a testament to his genius, for the growth was never real.  It was instead manufactured from fiat monetary supply.  


Over the course of some 30 years, our GDP grew from $5.2 trillion to an astonishing $15 trillion.  Of course, the metric used to measure that growth, the dollar, was devalued by some 64% in official inflation.  What this means is that our real growth over that thirty year period in real dollars was just $650 billion.  We went from $5.2 trillion to $5.85 trillion in real, constant, 1980 dollars.  Still think Keynesian economics is wonderful, that fiat money is anything other than charlatanism?  We didn’t triple our GDP.  Real wealth gains came not from central banking activity, but in spite of it.  Were it not for productivity gains, we would be in the poorhouse today precisely because of the ruinous inflationary based policies of our central bank.  Only by the counteracting force of increased productivity were we saved from the hell reserved for us by the incompetence of our central bankers and financiers.  


We didn’t need bailouts.  We needed a government with the courage and intellectual honesty to allow banks and corporations to fail.  The truth of derivatives, and of all the various financial innovations which often emanate from the financial sector, is that they represent not wealth but phantasms.  In truth, we have at last count some $1.14 quadrillion dollars in derivatives in circulation according the Bank of International Settlements.  The structure of these devices varies, from the OTC derivatives like the ones structured by Bankers Trust for its client Proctor & Gamble to the Structured Investment Vehicles, or SIVs, first pioneered by Citibank in the late 80s.  The net purpose of these devices is quite simple: to provide accounting and financing flexibility apart from reality, both in the market and where balance sheets are concerned.  


Companies utilize OTC derivatives to lower the cost of borrowing by trading on the value of some underlying commodity or asset, but in truth, if one cannot achieve a favorable rate of interest, perhaps one should be taking a long hard look at one’s fiscal practices and one’s ratio of debt to assets.  The more likely view of a country or a corporation which seeks to enter into a derivative contract is this: due to its profligacy or its financial mismanagement, it has achieved a state where outside sources of finance look upon it with some concern and desire to charge it a greater rate of interest commensurate with the greater risk involved in extending credit.  A derivative is a way around this, as it can be structured to provide an immediate reduction in interest, at least initially; or as it can be structured to defer debt to some later date, as in the case of Greece and its derivatives contracts with Goldman Sachs.  


Anything, everything, all to avoid having to reconcile oneself, one’s company, and one’s country to the idea that a fundamental reordering of fiscal priorities is in order to correct the obvious systemic flaws which a higher interest rate would indicate are real and present.  Higher interest rates indicate higher risk, and higher risk is associated directly with an undesirable and unwise level of indebtedness or fiscal profligacy.  The fact that Proctor and Gamble had $5 billion in long term debt outstanding at the time it entered into the derivatives contracts with Bankers Trust would seem to bear this idea out ( 


This runs counter to the fiduciary obligation companies have to their shareholders, in that it enables executive teams with clear cut records of non-performance and bad fiscal policy and debt accrual to delay the day of reckoning into the future; while ensuring that the day of reckoning will be much more severe and punitive when it does arrive, owing to the unique quality derivatives possess in the form of proprietary pricing models which almost always guarantee a higher finance charge when the bill does come due.  


Simply put, any company which enters into a derivatives contract with a bank where the pricing models are proprietary and therefore protected from independent examination and verification is abdicating its responsibility to shareholders and going against their interest.  A company which does this exposes its shareholders to higher costs in the long run to avoid having to confess to its true financial indebtedness in the short term.  It’s a bad deal for shareholders, in that their dividends and the overall capitalization of the company they’ve invested in are placed at risk; while their executives continue to claim greater bonuses based on the mirage they construct with the help of derivatives where profitability is concerned.  


The only ones who benefit, truthfully speaking, are the executives who maintain the appearance of profitability simply by deferring the bill to a later date, and the reality is this: by doing so with a derivative contract, those executives guarantee that their shareholders will face a far higher rate of interest with implications for the share price and capitalization of the company.  


Where countries are concerned, their failure to maintain a sustainable fiscal policy by running deficits well above redlines and accruing debt at a suicidal pace decrees that they will face the political implications of their actions when their citizens realize that their elected government has driven the country off of a cliff.  Politicians and the bureaucrats entrusted with a country’s fiscal policies and debt management seek at all turns to defer and delay the bill of today to the future.  Derivatives offer them a means to do just that, albeit with a very real and likely risk of vastly higher rates of interest at a later date which will paralyze their ability to budget for items like pension obligations, social programs, defense budgets, and the provision of police and fire services.  In short, the state will be unable to deliver on those guarantees and promises made to pensioners and citizens who look to the state to provide police services and utilities infrastructure.  


There is some argument to be made that by offering derivatives to states in such circumstances, banks and the interests they represent are guaranteeing the day will arrive when a debt crisis will make it all too necessary for citizens to consent to privatization and reforms which in normal times they would have never agreed to implement.  Make no mistake, the banks and the interests they represent will be positioned to take full advantage of such eventualities.  This is how democratic states are undermined, and eventually forced into the role of the debtor as defined by Proverbs  22:7: “The rich rules over the poor, and the borrower is the slave of the lender.”  


The state exists to acknowledge the wishes of its people, to defend their rights and contend for their prerogatives.  When it fails to do so, or when its fiscal management has become so detrimental to the interests of its citizens that it is no longer able to fulfill the purpose for which the state was established, the state has lost its reason to exist.  


States inevitably address the threat of inflationary monetary policies which arise when they try to inflate their way out of a debt crisis in one of two ways: by imposing price controls, or by engaging in complicated financial transactions which enable the central bank to misstate an official rate of inflation which denies the market based rate of inflation.  The latter means is how our own Federal Reserve could double the monetary supply without halving the value of the dollar.  The former means entails shortages, as price controls only serve to effect the price of a good while virtually ensuring that no one will supply that good at a rate of return which entails their going into the red on the arrangement.  You may only have to pay a certain amount for a food item, but what is the use if it cannot be procured? 


What is more, while inflationary monetary policies entail more attractive exports, the reality is this: there is a point at which manufacturers and growers of those exports cannot yield a meaningful rate of return in their own domestic currency.  They are thereby paralyzed.  They cannot generate a profit, and whatever wages they pay to their workers are, like the profits generated in the domestic currency, not worth the paper and ink used to print the money.  


As always, myth is the means by which the state attempts to perpetuate itself, and the state has traditionally been quite successful at framing the way in which its actions have been portrayed.  The asinine way in which economics has been enlisted to provide some patina of academic and intellectual legitimacy to the state’s actions is evident when one simply reads an economic treatise, say, that of John Maynard Keynes, whose approach to economics has come to dominate our era: "If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth, would probably become a good deal greater than it actually is (pg. 116 Keynes, General Theory of Employment, Interest, and Money" 


Let us review: the most influential economist of the 20th century is advocating a state filling old bottles with banknotes, burying them in defunct coal mines, and only then leaving it to private enterprise to dig the notes up by hiring people to labor with shovels.  Why not merely give the people the money, which, since the state is funded directly with their taxes, would be more efficient?  I know, we could give the people their money back in the form of a tax break which would cut out the government entirely and enable them to spend and invest as they saw fit according to their own demands and needs, as opposed to the folly of expending money and resources to bury the money at a suitable debt in a coal mine (whatever a suitable depth is...) only to then turn around sell businesses and shareholders the lease which would grant them the privilege of digging their own money up!  And since the capital wealth of the community is the same at the beginning-that is, the money buried does not increase upon its excavation-one might readily argue that by investing it in an enterprise where it might multiply through profit, which then generates further investment, is a vastly superior idea to that of Keynesian economics and its approaches.  


At the heart of Keynes’s error is the idea that labor and capital theories of wealth could somehow be synthesized into one cogent theory.  Labor does not constitute wealth.  See India before outside capital investment, or China before the same for proof of this basic economic reality.  Capital investment would suffice to achieve everything Keynes advocates, only without the involvement of a government and the wasteful expenditure of capital involved in burying money.  


The fact that this illustration is not the sum total of Keynesian approaches does not change the reality that it is a direct quote from Keynes which he himself advocated as a way of increasing employment.  The folly of such an approach is obvious to anyone with a brain and a pulse.  The folly of a central bank manufacturing money out of thin air and then charging a Treasury for the privilege of circulating that manufactured money, when only the Treasury’s guarantee renders the money worth anything to begin with, ought to be obvious as well. It’s all absurd.  


States would have us believe that by giving us our money back, or by giving us money which the state does not have to give without borrowing owing to its overspending, the state and its officials are doing us a real favor instead of piling up indebtedness for us to repay at a later date.  The state essentially would have us believe that it is doing the population a real service by taking from the rich to pay the poor.  But since the poor buy the products and services provided by the rich, so how are accounts changed in the long run?  You’re simply taking a shovel to the deep end of the pool to hurl water over your shoulder in the hopes that the shallow end will somehow become deeper.  It’s a fool’s errand.  Anyone who believes in Keynesian approaches to economics or in the current economic model so in vogue today throughout the world is not qualified to hold any office where their opinions might have bearing on the economic futures of other people.  


Let’s review the reality of Keynesian approaches and the Federal Reserve: both ostensibly exist to promote stability and full employment.  In nearly a century since the Federal Reserve’s founding, we have had 21 economic downturns in 105 years.  That’s stability?  Exactly when did we achieve full employment over that same time span?  


As for the myth that we achieved something great by employing Keynesian approaches during the Great Depression, let us review: at the onset of U.S. entry into World War II, we were at 15% official unemployment.  At the outset, we were at 15% official unemployment.  We had the same rate of unemployment at the end of World War II that we had at the beginning of World War II.  What was so great about Franklin Delano Roosevelt’s economic management?  According to Franklin Lane, Roosevelt’s friend and Woodrow Wilson’s secretary of interior, “Rooseve

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Wednesday, June 16, 2010

Statism and Myth as a Tool of Survival and Perpetuation Part V: Towards Perfectability and Utopia or, Aiming for the Stars and Winding Up in Gutters and Gulags

Statism and Myth as a Tool of Survival and Perpetuation Part V: 

Towards Perfectability and Utopia or, Aiming for the Stars and Winding Up in Gutters and Gulags


“...and it should be possible to design a world in which behavior likely to be punished seldom or never occurs. We try to design such a world for those who cannot solve the problem of punishment for themselves, such as babies, retardates, or psychotics, and if it could be done for everyone, much time and energy would be saved.”


-Skinner, B.F. Beyond Freedom and Dignity pg. 62.


“Can wicked rulers be allied with you, those who frame injustice by statute? They band together against the life of the righteous and condemn the innocent to death.”


-Psalm 94:20-21, English Standard Version


The great difference between freedom as a positivist understands it and freedom as a naturalist understands is quite substantial.  Positivists view freedom as “...a lack of resistance or restraint (56 Skinner, Beyond Freedom and Dignity),” and they try accordingly to erect great and substantial barriers to such a concept in the form of laws to guide behavior and punishments for a failure to conform to such laws.  For a positivist, freedom from freedom is the end to which he works.  In short, a man must enter into a sort of voluntary bondage, what B.F. Skinner referred to as “automatic goodness,” and what T.H. Huxley did see as objectionable: “If some great power would agree to make me always think of what is true and do what is right, on condition of being some sort of clock and wound up every morning before I got out of bed, I should close instantly with the offer.”  


For the naturalist, freedom is defined more as the power to determine for oneself which action or course to undertake, with the understanding that actions and courses have consequences which must be borne as a result of their implementation.  Rights and morals do not stem from codes, but codes arise as man attempts to organize into statute or screed what he has come to observe in the course of his undertakings, that which works and that which does not work being the inspiration for his prohibitions and encouragements.  It is important to the naturalist that men should find their own way through personal experience, though many naturalists often surrender to the impulse of the positivist by insisting upon codified or written means of behavioral guidance and sanction.  


The law is impotent depending on one’s expectation.  For the naturalist, the law is quite potent in that it does two things: it identifies a particular behavior as a tort or crime and it prescribes a process to occur in such an eventuality.  For the positivist, the law must produce some ideal state, some utopia.  Not surprisingly, positivists are often disappointed.  In the name of greater freedom from the chaos and disorder that positivists see as freedom, a positivist will establish ever more strident restraints upon human behavior until he at last arrives at totalitarianism; that theory or approach which regulates every moment of a man’s life and tells him what his course will be at every turn, much like T.H. Huxley’s above-quoted example in which he desires to be wound up by some great power like a clock every morning in order that he may be automatically and totally good.    


For the positivist, the great debate is over whether or not such robotic goodness is in fact goodness at all, or whether it is some mindless behavior which, due to the removal of free will and self-determination, cannot qualify as moral behavior at all.  For the naturalist, the issue is whether or not such a destination is even possible. It isn’t. The most totalitarian societies have had crime.  Societies which strive to produce automatons inevitably produce deviants by provoking their sons and daughters to wrath with heavy-handedness.  The positivist believes that we are always one innovation or discovery away from a breakthrough which will enable the end of man’s problems in a particular area.  He speaks of Theories of Everything, Laws of Everything, and the End of History.  


He is a dreamer who dreams of the end of dreams, or at least the elimination of their usefulness to man.  He has but one dream: the achievement of everything in one broadstroke.  The positivist is that broken man who, in his constant optimism for a better tomorrow, looks sorrowfully upon the day as being somehow worse than the days already passed, no matter how ahistorical his position might be.  We have all encountered the acolytes of apocalypse who insist that the world is growing worse by the day, that immorality and disease, wars and rumors of war, the birth-pangs of a groaning Earth, are all multiplying at an alarming rate which threatens the extinction of mankind and the world as we know it.  These acolytes are both religious and secular.  


The truth of our history is this: it is getting better all the time.  We are able to feed more people with less input, but the apocalyptic positivist notes ruefully how better “sanitation and better medicine have made the problems of population more acute,” or how “war has acquired a new horror with the invention of nuclear weapons, and the affluent pursuit of happiness is largely responsible for pollution (Skinner 1).”   He is a man who find the thread of discontent in any happy news, a fatalist who believes that man must be controlled or managed according to the way that he and his peers see as optimum for human life, and he and his peers are arrogantly precocious enough to believe that they can know what that optimum standard is in its completeness and its entirety.  


Drop the positivist in the Middle Ages, and she will find that wandering through the countryside unescorted as a stranger in a strange land is the first step towards an increased risk of sexual assault.  To some degree this is true today, but we have our high risk areas and neighborhoods, and most of us can exercise good sense and take precautions to reduce the risk of harm to ourselves.  The positivist male who is dropped into the Middle Ages will find that while better medicine and sanitation do not lead to any threat of overpopulation, the lesser medicine and sanitation of that time do threaten to lead to human extinction in the form of the plague.  Either way, the positivist will be happy to note that there are crises to be noted there in much the same way as such crises can be noted here.  


The greatest cause of peace in human history has been the development of nuclear weapons.  The problem is not the excess of such weapons; it is the fact that all countries do not possess such weapons in abundance.  Invasion and foreign aggression would be things of the past if such weapons were proliferated through every nation in the world community.  Nuclear weapons are the greatest deterrent to statist aggression ever developed by man. Are they dangerous? Most certainly.  Can they destroy our world? Absolutely.  Their awesome destructive power for both the state that initiates their use in conflict and the state that responds in kind renders it virtually certain that neither side will use the weapons or initiate lesser forms of direct conflict.  


Instead, that portion of the world which does not retain such weapons becomes a great chessboard, as the countries which possess nuclear arsenals carve up spheres of influence in indirect conflict with each other.  The side effect of nuclear weapons which has been less than positive has been the denial of nuclear weapons to those states who have traditionally suffered subordinate status in the world, and such states have had to endure their territory and prerogatives being  trampled in order that nuclear states might conduct their conflicts in a proxy manner.  Nuclear weapons enable and even proliferate a kind of power projection by those states who possess nuclear arsenals over those states that do not possess such arsenals.  The positivist is incapable of understanding that the proliferation of nuclear weapons would virtually guarantee diplomacy rather than warfare as the means of settling statist disagreements.  In point of fact, universal nuclear armament would likely negate the practical need for standing armies.  


In all truth, the positivist likely does realize this, but he refuses to acknowledge it. His existence depends on inequality as the basis of coercion.  Those who have nuclear arsenals can dictate to those who do not.  This inequality as the foundation of statist coercion is what the positivist covets.  It is what he requires as a practical means of constructing the world which he desires.  So long as his side has the bomb, he has no real objection to make.  But the moment his lessers develop such a capacity, the positivist decries nuclear proliferation as a destabilizing force in the world, and it is no wonder: the proliferation of nuclear weapons means that formerly subordinate states gain the power to reply in the negative to positivists.  The positivist can no longer dictate or decree to such states as to how matters will be.  They gain their say so about such matters the moment they enter the nuclear club.  


Without nuclear weapons in both the Soviet Union and the United States, the world would likely have undergone a third world war with great implications for all people.  As it stands, the war that emerged was largely fought through proxy states and theaters, and casualties were greatly minimized as a result.  Eventually, the excess of militarized command economics brought down the Soviet Union.  Empires are difficult to maintain in perpetuity.  


It never once occurs to the positivist that men must learn in the free market of behavior what works and what does not, nor does it occur to the positivist that men can or should die as a result of their wrong choices.  The positivist seeks at every turn to interrupt or delay natural consequence.  He is the individual who in times of economic crisis does everything to salvage the unsalvageable by pumping vast liquidity into a failed company, never once considering that the expense of intercession may outweigh the benefit of the company’s continued survival.  He also fails to consider the negative precedent that such continued survival establishes: you may act in a way that is fatal repeatedly and wantonly, but someone will always interrupt on your behalf to save you from the fate of your own making.  


Ironically, the positivist who has this attitude towards a large corporation lacks such an attitude towards his fellow man: if that man is suffering a mortal or terminal illness, the positivist tends to weigh the cost versus the benefit and can very often decree that is it cost negative to offer a treatment.  This is of course in times of illness, but in terms of human action, the positivist seeks to rehabilitate the man who wantonly harms others and their property. He wrings his hands in agony as he considers punitive action versus rehabilitative action in penal codes.  He seeks to interrupt and check consequence.  A criminal can still be saved; a law abiding citizen afflicted with a terminal illness cannot be saved. The efficient allocation of resources and intervention efforts must be directed towards the salvageable: the company or individual who deserves to perish or suffer as the natural consequence of their actions is saved from the full measure of that consequence; while the individual who through no fault of their own develops some chronic medical condition or likely terminal illness has a low possibility of survival and thus can be rightly denied treatment and therefore condemned to certain death.  Such is the moral calculus of the positivist and such is his idea of progress and efficiency. 


The postivist is full of vim and vigor for such Devil’s calculus; indeed, he is often the individual in any room or conversation who prides himself on the ability to suspend empathy in order to maintain what he perceives as objectivity.  The suspension of empathy, and the subsequent dissociation from rational relativity which such a suspension of empathy yields, often gives rise to the nonsensical realities of our world.  We spend $28,000 a year on average to incarcerate career criminals and violent sociopaths in climate controlled comfort with access to healthcare and legal representation, but a law abiding individual whose doctor prescribes an expensive treatment will often run into a review board at his insurer that denies the treatment on the grounds that is experimental and unproven, when that same treatment would readily be given to inmates by a state loathe to run afoul of litigious prisoner rights advocates.  


This is not freedom at all. Freedom is self determination, free of coercion or aggression, coupled with the responsibility to accept the consequences of exercising freedom.  Such an understanding contains within it the natural prohibitions on excess that positivism seeks through statutes and greater regulation: individuals are subject to the implications of their own actions without exception or limitation, and thus are more likely to censor their own behavior accordingly.  By removing such limitations and establishing exceptions from the consequences of one’s own actions and excesses, positivists do not prove themselves to be practitioners of some progressive notion of mercy: they are in fact advocates of allowing men to think that failing behavior is working behavior, and as such, the positivist, or as he likes to be known, the progressive, is a blind sadist whose unintentional skill at cruelty is unrivaled.  


By further condemning men in no-fault situations such as the development of some chronic disease that is potentially terminal, progressives show themselves to be anything but progressive: they are in fact advocates of regression.  The same man who would bristle at the denial of care to an inmate will not hesitate to conceive that medical resources are finite and therefore must be rationed to a regular individual who works hard and enjoins himself to moral or legal behavior.  In this way, the good among us are culled while those who wantonly pursue lives of harm to others and their property flourish and survive under the tender mercies of positivist progressives.  What a world this is, that we should be reduced to the olden days of casting the infirm, the sick, and the unwanted unfortunates outside the city gates and the protections of the laws within, so that they might perish away from us and be the problem of the savage world outside of our supposedly civilized one.  In the meantime, our piteous criminals are held in climate controlled cells, afforded access to comprehensive medical care, legal representation, and three squares a day.  Who says crime doesn’t pay more than law abiding indigence? 


Those of us who are not misers do not hesitate to recognize that with incarceration comes the assuming of certain responsibilities like food and board, as well as clothing and medical care.  We also insist that when an individual enters into a contractual agreement with an insurer, the insurer should not be able to wriggle out of honoring his end of the agreement on technicalities.  We insist on something novel that positivist progressives claim as their own but rarely deliver in practice: equality before the law.  Our world is the better world when we are allowed to implement it, where the lives of the lawbreaker and the law abider are both equally valuable and equally worthy of preservation.  We do not ration the sanctity of life, nor do we impose conditions and exceptions upon said sanctity.  


We may not aim for the unattainable world in which crime vanishes and everyone wears white with identification numbers tattooed or subcutaneously implanted on chips, but we do value human life and recognize the basic obligation we have as our brother’s keeper.  We aim for what is possible; acknowledge that which is likely even when it is perhaps undesirable, and we plan for such contingencies as the likely and the possible with laws, understanding that the law doesn’t deter or prevent crime, but merely serves to identify crime and outline a process by which crimes can be tried and punished, so that each of us are equal before the law.  We don’t aim for Utopia, but we do manage to avoid Dystopias. 


In those bastions of progressivism and positivism and leftism, where individuals are so much more enlightened than those of us who cleave to quaint notions like the sanctity of human life as an absolute, things like voluntary euthanasia morph from self-determination over when one’s life ends into a medical professional determining your end without your consent or input.  We know that this has happened. 


Researchers in Belgium interviewed 248 nurses who admitted to assisting a patient in committing suicide.  Of course, 120 of the 248 also admitted to the fact that there was no patient consent. That’s important, because it clearly undermines the notion that euthanasia is at the patient’s discretion under Belgium’s assisted suicide programs.  The researchers also noted the likelihood that under-reporting occurred, given their desire to avoid criminal charges for overstepping the boundaries of Belgium’s euthanasia laws, which require patient consent.  Of course, the medical profession being what it is, the researchers then exculpated the nurses in question with the following: “It added that many [of the nurses] were probably acting according to their patient’s wishes, ‘even if there was no explicit request (’” How high is the probability that someone who didn’t request to die wanted to die in a country where asking to die is perfectly legal?  What objective criterion do we have to ascertain what the wishes of the deceased were to know how probable it was that the nurses in question were acting according to the wishes of the patient rather than, say, a hospital administrator looking to clear beds for budgeting purposes?  


There are good reasons why we limit government power and take a dim view of those who exercise powers that they do not legitimately possess: it’s called abuse, and we’d like to avoid abuse.  We could die as a result of it.  But such powers and the exemption from accountability which typically come as the result of statism are designed specifically to increase government power at the expense of self-determination.  In short, these laws are specifically designed not to prevent injurious behavior to the public good, but rather to prevent what the sovereign on his own perceives as injurious to the public good.  


These sorts of laws, laws against individual choices which by themselves cannot be shown to constitute any form of aggression against others, are key to the positivist goal of perfectability.  Our state would gain in its quest for perfection if only we were to criminalize miscegenation and prevent the degradation of the races, or if we were to foist sterilization on the weaker individuals within our stock, or if we were to criminalize the ingestion of drugs and ban the sale or manufacture of alcohol.  These conceptions are in keeping with the positivist conception outlined by T.H. Huxley; namely, that individuals can be wound up like clocks every morning with the knowledge of the various prohibitions placed upon choice by the state, and the individual thus informed will proceed to enjoin himself to whatever right behavior is prescribed by the state.  This is utter poppycock.  


To begin with, it is not criminal to fall in love with someone outside of your own race.  It is a matter of free choice and individual preference that is laudable, for it entails individuals looking beyond appearance and race into the inner character of the individual whom they choose.  Such an act is not injurious to the public interest; on the contrary, it is quite compatible to the public interest, for it demystifies race and promotes the humanization of individuals despite their racial and cultural differences.  When I was a high school student, I was deeply indoctrinated in my household as to the innate evil and insidious desire of homosexuals to convert heterosexual young men such as myself to their proclivities.  This homosexual conspiracy was said to be all pervasive.  My own father advocated public stonings and executions of homosexuals.  


I departed for college steeped in this reinforced belief.  And then I encountered a homosexual, albeit a closeted one.  He was a recent Army veteran attending college on the GI Bill.  He taught me how to play cards, instructed me in shooting whiskey, and he was the friend I went to for counsel upon breaking up with my first girlfriend.  I even roomed with him and another friend that summer in a house.  Afterwards, we moved into the same apartment complex with different roommates.  It became apparent that he was gay after mutual friends stumbled across the proof of it in the form of his computer diary.  My friend never acted in a manner consistent with the supposed homosexual agenda.  What is more, upon encountering other homosexuals, few if any of them ever had designs on forcing any issue with me or anyone else.  

The point is that getting to know actual homosexuals completely changed my mind about homosexuality and gays.  They were merely people.  Everything that I had previously seen about them, this notion that homosexuals were cross-dressing, style and interior decor obsessed, feather boa adorned, dilettantes who cavorted around on stilts in and out of pride parades was clearly wrong.  Most homosexuals I knew were not promiscuous individuals, and those who were were not any more or less promiscuous than a good many heterosexual men I knew and associated with in college.  


These barriers that statism puts up to choice and behavior have little if anything to do with protecting the public from injury and everything to do with promoting stereotypes and prejudices, with inculcating an unfounded mystique on the part of the colored person, the homosexual, or the Semites amongst the perceptions of the larger population.  The statist needs an enemy to blame at all times for his own failings and shortcomings, and when the economy tanks, it’s the fault of sodomites and Jews rather than a ruinous monetary policy and the fiscal profligacy of elected representatives.  God is judging us for tolerating the Asiatic and homosexual; as opposed to our own accounts taking the natural turn which inevitably occurs when states overspend and over-borrow.  


The sovereign decrees such states of being and the choice to associate with individuals in these states of being as criminal not because it is truly injurious to the public good, but because it is helpful to the statist ideal of preserving the state from accountability for its own failings by dissociating blame to those individuals who are colored, gay, or Jewish and the individuals who supposedly undermine the strength of the state by their voluntary association with such people.  This reasoning is diseased and utterly false, and it is the codification of bigotry and hatred into statute which is truly injurious to the public good.  


It inculcates within individuals a capacity to view gays, coloreds, and Jews as somehow lesser before the law and lesser before humanity, and as such, it promotes the idea that whatever we do to them is not the same as what we do to us.  Whites in the early 20th century would never have conceived of lynching a white man for sleeping with a white woman out of wedlock, but they would readily mandate such punishment for an interracial couple, or at least the male or colored portion of that couple.  It is dangerous, and it promotes and inculcates within a population a dangerous and insidious tendency towards vigilantism.  


In the name of promoting perfectability, we arrive at barbarity and open lawlessness, where men lose their sameneness before the law, and the law loses its power to promote order and a uniform standard of decent and civil behavior.  What follows are pogroms, genocides, expulsions, and medical experiments upon individuals without their consent. To say that a man is lesser before the law is to invite his mistreatment by others acting on the notion that what they are doing to the man in question is not inhumane, for he is not fully human.  You might as well be experimenting or beating a horse or a dog.  It is to strip a human being of his humanity, and to strip his peers of their capacity for empathy or a sense of common humanity which might prevent them from acting in barbaric and abhorrent manner towards the colored, the Jew, or the homosexual.  


And what is more, this false notion of perfectability inevitably leads to the inverse, for whatever you acknowledge as the state’s power to act where others are concerned is by implication its power to act towards you as well.  When the reciprocity of perfectability comes, it comes in the form of affirmative action, which does not affirm anything other than old failed notions that individuals of color cannot achieve on their own without state interference on their behalf.  It comes in the notion of gender and sexual politics whereby our entire culture now portrays the women in advertisements as superior to the men, who sit indolently in their plush easy chairs and insolently reply to their wives’ superior logic.  Our interests are as follows: breasts, beer, and sports.  We are not the same individuals who constructed the Parthenon or the Hanging Gardens of Babylon, the Colossus at Rhodes, or who established a pantheon of literature and art which has stood the test of time to be classified as timeless.  In the positivist and leftist construct which is our dominant worldview, one cannot merely acknowledge the accomplishments of both men and women as indications of their common and equal claim to humanity and greatness; one has to denigrate one in order to raise the other.  


Humanity and human achievement are not mutually exclusive on the grounds of race, gender, sexuality, or any other classification.  To hell with anyone who claims that they are.  It is one thing to argue over whether Shakespeare or Sappho was the greater poet and author; it is abominable to argue that one was greater than the other on the grounds gender or sexuality. Men are conditioned by the pessimism of such logic to believe that our best days lie behind us, that “sanitation and better medicine have made the problems of population more acute,” as Skinner put it, rather than the reality that sanitation and better medicine have enabled more people to realize healthier families and better relationships within those families.  


This is not progress; it is false cynicism.  It is not unfounded optimism to suggest that our gains in productivity have enabled us to do more with less and to have more with less.  It is reality and achievement, and it is cause to celebrate.  Perfectability does not entail going backwards towards some optimum standard subjectively selected from the past of human history; it entails going forward to meet the future head on and improving upon the past so that more people can have more of the experiences which are so enriching to human life and human experience.  We will never arrive at perfection, for such a destination entails that there is nothing more to achieve or gain.  There is always room for improvement, and means to drive the benefits of advancement to people who previously lacked clean water, clean air, basic sanitation, an adequate food supply, and good medical care.  


The fact that improvement is not automatic, that difficulties arise on the path to the solving of a problem, is not in and of itself evidence that we should consider destroying or culling human life in order to solve the problem.  The measure of a solution is whether or not it can expand human and animal life, and not the cold efficiency with which it extinguishes one as mutually exclusive to the other. To the extent that we have regressed as a society, it has been the advancement of the positivist or the leftist (to me they are one and the same) with his false dichotomies and choices, his either/or, and his notion that the state must have the ability to restrict human action on the most intimate levels imaginable in order to limit some theoretical catastrophe.  I have no problem with prophylactics being available to any individual who wants them, but let the individual choose for themselves whether or not to utilize prophylactics.  Do not mandate family sizes at the state level.  


If there is one thing that is to be extinguished in order to ensure the perfectability or the progress of humanity, it is the leftist and the positivist worldview which decrees such solutions and such mandated limits upon human action and human choice.  We are at war, and the war is ideological.  There are two ways to wage this war: with the exchange of ideas and open debate, or with the waging of one final physical and coercive conflict between the two extremes.  On the one side, we have an ideal which insists upon the primacy of individuals, the sanctity of their lives, the intrinsic and innate dignity and worth they possess merely as result of their conception and birth; on the other side, we have an ideal which states that such dignity and worth is neither innate or intrinsic, but that it is negotiable according to race, gender, sexual orientation, or the subjective standards placed on the measurement of human intellect and achievement by academics who have more oft than not erred in their worldview as their programs of eugenics, alchemy, and various other pseudoscientific approaches would indicate. 


These programs and agendas were given the patina of legitimacy by their origin within scientific circles, circles which have as their antecedent the notion that the Earth was flat and rectangular and the geocentric model of our universe.  Science can and has been wrong, not merely in its theories, but also in its laws during given time periods within human history.  The urgency with which scientists insist on the implementation of some solution ought to be viewed with skepticism given science’s historical tendency to be captured by its patrons and directed not towards factually based views and solutions, but ideologically minded preconceived notions which are bolstered with shoddy academic work and selective sampling of data sets.  


Gulags and ghettoes have been built in the name of theoretical perfectability and necessity masquerading as the law of our existence, and today, we have a gulag of public perceptions constructed to denigrate, marginalize, and discredit through ad hominem anyone who challenges the positivist or leftist worldview which is taken as truth in an almost fanatically fervent and reverent way by the intelligentsia and those who view themselves as being in the know.  They are the heirs to the W.E.B. Du Bois school of thought which acclaimed Nazi programs to purify the supposed lessers from the supposed betters, with the pretension that a madman who would not acknowledge an achievement by Jesse Owens at the Berlin Olympics would somehow make an exception for someone of letters like Du Bois. Seriously, how illogical can positivist leftism be? 


What perverse logic is this that infects such thought processes, whereby the innocent are condemned to death and their unjust conviction and execution are legitimized through the law itself?  I’ll tell you what logic infects such thought processes and the results thereof: leftism, whose perverse moral calculus denies prescribed treatment to a law abiding citizen with a contractual arrangement between himself and an insurer on the grounds that the treatment is experimental.  The spirit of the contract is violated by the fine print letter of the thing.  


It is one thing to deny treatment to the uninsured, and though that is still barbaric and inhumane, it is nothing compared to the bad faith contractual stipulation which enables one side to occupy an elevated position in a contract that discharges them from the obligation to execute the very purpose under which the disadvantaged party entered into the contract!  These are the contracts and statutes which pervade a society given over to positivism, to leftism, and to corporatism, to any of the -isms who spring for the diseased root of such a logic which decrees that ends justify any and every means.  And yet, the proponents of such logic are disposed to call their means towards an unattainable end like perfectability progress no matter how many must perish on the way to nowhere. 

Contrast that with the naturalist position on the law, as postulated by Cicero: “However one defines Man, the same definition applies to us all.”  Let us have this debate, and frame it once and for all for the future of humanity, so that human beings may choose between the positivist and the natural camps as to which approach works for them.  Let us articulate it once and for all in these stark terms, and see what people choose as the foundation for their communities and societies going forward.  


The positivist cannot sustain the glare of light upon his position.  The leftist cannot withstand the scrutiny of objective measure, and neither can the corporatist.  It is only by controlling the framing of the debate, by establishing straw men and employing circular logic and ad hominem that the leftist position which is at the root of all of the positivist approaches to life and law can prevail.  Only by dividing us into camps of grievances and promising us redress through a reciprocal and vengeful statute which takes our perceived suffering and foists it onto those who are supposedly responsible for the injustice visited upon us and our forefathers can the leftist win the argument.  Only by appealing to the lesser impulses and petty, capricious portions of a man’s soul can the leftist win an argument.  


The problem has been that few if any on our side have been able to articulate the naturalist position in a way that delineates it from the positivist approach so starkly.  So pronounced has our inability to articulate our position apart from leftism that leftists now masquerade around as naturalists in theory while clearly functioning as leftist positivists in action!  Part of the issue has been the construction of ideas and philosophies which clearly hold effectiveness.  Left Hegelianism works not by virtue of its merit, but through its identification of that which is inferior within mankind: his pettiness, his ability to be reached through demagoguery, and his overall intemperance.  Thesis vs. Antithesis enables leftists to play both sides against their desired middle in order to gain the Synthesis which they covet.  This is the manufactured consent which I wrote of in an earlier section, and it contains the germ of every pernicious bit of theory ever envisioned by Machiavelli, Hegel, the Left Hegelians, and the Alinskyites. These individuals do not care about being right, nor do they believe that there are standards by which a result can be judged right or wrong.  They care only to win for their ideology, and they have no regard for the misery they inflict upon human beings.  


They are meritorious in one way only: the identification of those weak and degraded impulses within man such as spite and hatred which can be exploited to gain his assent to surrender his own sameness before the law for the promise of gaining superiority in the law.  As Orwell noted in his classic Animal Farm, some animals are indeed more equal than others in such an environment.  What these individuals fail to alert their subjects to is this: reciprocity is the inevitable result. There will be extreme backlashes with grave implications for future generations.  To the leftist and the positivist, this is of no concern: they are after their perfect world now, and if they can get it now, now is all that they have.  They may talk of a better future, but the reality is that they seek the immediate gratification of their ideological impulses and fanatical desires.  The promise of a better future is only made to gain the consent of those in the present.  


The time is fast approaching when the wheat will have to be separated from the chaff to ensure that the leftist is revealed; his disguise as the conservative, the classical liberal, the Democrat, the Republican, the Libertarian, or the neo-this, that, or the other stripped away until he is at last exposed as an individual who believes only in an ideological end and will resort to any means to achieve it.  He has not conviction but the end, some purported perfectability which can be achieved and implemented if only we commit to do whatever it takes, right here and now, without being sidetracked by concerns like the sanctity of human life and the legitimacy of the law, which is rooted in the nation that for the law to have meaning to free men,  it must regard them as being the same.  To the Leftist, these are incidental concerns to the End, and we must do whatever it takes to stifle any objection rooted in this irrelevant concerns.  We must erect gulags and ghettoes, camps with ovens to dispose of the mess, and the road to Utopia is strewn with such edifices and the necessary consequences of Leftism.  But at the end lies Heaven, a Heaven that is possible only if men surrender their temporal freedoms to arrive at the blessed Freedom conceived of by the Leftist.  


The naturalist cannot promise Heaven, but he can promise you that you will be treated like any other man and given the opportunity to make of yourself whatever you will utilizing your own unique gifts. He can assure you that your life will be valued and preserved with the same fervent enthusiasm reserved for the preservation of the lives of others, that a society built around human rights and founded upon the notion that the state acknowledges to acknowledge and defend human liberty will respond to an attack on the life and liberty of one of its members as though it were an attack upon all of its members.  I may not agree with what you say, but I will defend to the death your right to say it.  He can promise you progress through human effort and ingenuity, where better sanitation and medicine do not lead to your family being viewed as part of the problem of overpopulation, but as evidence of the achievements of better sanitation and medicine.  Life is to be celebrated and not rued.  This is the end for which we contend.  

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