Tuesday, January 21, 2020

America in decline

An American friend, who shares my views on global politics, diplomacy and foreign policy but not on economics or fiscal and monetary policy, recently wrote:

“I agree that the US is in decline. In theory I believe it can come back, but it is getting harder all the time (and the recovery process more painful). If Trump or Biden are elected this year I will give up on the US as it will not recover to a meaningful degree (if at all) in my lifetime.”

Here is the substance of my response…

Whoever wins the election, the country will remain divided. To an outsider, at any rate, the national symbols and myths no longer seem to be working to create the sense of cohesion which they once provided. America is not the nation it once was. I wonder if it is still a nation at all. (It remains a very powerful state, of course.)

In terms of comparative economic and military might and the diplomatic leverage associated with this, the decline is (I think) irreversible. This may not be such a bad thing, given the increasingly destructive nature of US foreign interventions.

The projection of US power has, at least since World War 2, been closely associated with, and facilitated by, the global role of the US dollar in trade and its status as a reserve currency. But the current US-based system is breaking down. This has implications for all countries, but especially for the US.

The Federal Reserve responded to the 2008 financial crisis by lowering interest rates and pumping hundreds of billions of dollars into the system. This was supposed to be a short-term emergency operation. But the expansionary policies continued. A precarious economy increasingly dependent on government spending and a financial system increasingly dependent on cheap credit led the Federal Reserve (and other central banks) to suppress interest rates by any means possible, including by injecting money directly into the financial system through the purchase of securities from commercial banks and other financial institutions (i.e. quantitative easing). Such policies have facilitated and encouraged further borrowing and malinvestment on an unprecedented scale. The problems are now systemic.

Price signals, which are key drivers of any functioning market, have become so distorted that they can no longer be trusted. Fixed-interest securities, shares and many other financial instruments appear to be massively overvalued. Government and central bank interventions are largely to blame for this but other factors – such as the rise of index funds and other forms of passive investing – have contributed to the problem.

I see it as extremely significant that attempts made in recent years by the Federal Reserve gradually to raise interest rates towards more normal levels and to wind back quantitative easing have failed. In both cases, the Fed has reversed course.

In the event of another financial crisis occurring, what would happen? Interest rates are extremely low and central bank options are limited. Defaults and/or falling equity prices would destroy large amounts of paper wealth. In the short term, this could lead to a period of dollar strength but – if the actions of the Federal Reserve in recent times are any guide – the money-printing would be stepped up. This could easily lead to serious inflation and an undermining of international confidence in the dollar. Of course, no one can predict exactly how (or when) the endgame will play out but there is little doubt that the US dollar’s days as world reserve currency are numbered.

Before confidence – and properly-functioning markets – can be restored, bad debts need to be recognized as such and written off. Zombie banks and zombie companies must be exposed and either allowed to fail or taken over. But, because of the extent of the problems, the system itself – the entire post-Bretton Woods, USD-based system – is now irredeemably compromised. There is no easy way out.

Though it may appear otherwise, my basic sentiments are not – and never have been – anti-American. I am not a US citizen but I love and value many features of 20th-century American culture. Many of these features are exemplified and live on in individual Americans even if they are no longer reflected in contemporary social structures and institutions.

The old ways are dying, the old institutions are gone or changed beyond recognition. Even so, I hold to a hope similar to one I have expressed regarding older European and British traditions: namely, that what is good in what has been lost will eventually be rediscovered and find new (and perhaps more enduring) forms of expression.

Tuesday, October 8, 2019

Investment decisions; geopolitics

In a letter to a friend I briefly outlined my current investment situation and strategy. It's important, I think, to maintain a steady and realistic perspective on the general situation in financial markets both for practical, investment-related reasons and also for understanding current affairs. Politics, economics and finance are inextricably intertwined.

It helps me to state my general position explicitly from time to time. Obvious facts can be vitally important yet they are often overlooked...

I am in a position where I am forced to bet on how the future pans out in terms of economies, interest rates and currencies. I find myself (for reasons I won’t go into) almost entirely in AUD cash. This is my starting point, for better or for worse. AUD is weak against the US dollar. So I am waiting for something to happen (stock market crash or bond yields spiking or AUD rising against USD or other assets becoming cheaper in AUD terms) so that I can make a move with some confidence that I am not being suckered by a fake market.

Nobody knows when things will blow up. But blow up they must given the absurdly high debt levels and low or negative interest rates which are causing massive malinvestment, destroying savings and pensions and destroying the faith that people once had that price signals and so on could be trusted to reflect actual economic realities.

Many companies are on credit-fueled life support: no prospect of ever turning a profit. That’s in large part why the powers that be have to keep interest rates low. If they rise the non-viable companies go bust. Many corporate bonds become worthless, etc.. And zombie companies are not a small percentage of the total these days. Banks are especially vulnerable.

The same logic applies to individuals and families with big mortgages or other debts. Rising rates will cripple them financially as residential real estate prices fall.

And, of course, governments are heavily indebted too. If rates go up, more of the budget must go to service that debt.

US authorities apparently want to weaken the dollar to stimulate exports etc.. The danger is that at some point the dollar will just suddenly start to lose purchasing power as other means of international payment come on stream.

Confidence in the system is rapidly eroding. There is a growing general realization that the current monetary and financial system is failing but it is impossible to know what exactly is going to replace it. Or when.

US policy on the Middle East (and the Far East) is driven mainly by economic and financial factors – and always has been. (Oil. The dollar.) As the petrodollar system breaks down, there are clearly increased risks of conflict between major powers.

Wednesday, October 2, 2019

A case study in noncommunication

The first move was tentative. He “just wanted to pick up on a tangential point” regarding what I had been saying. But this was merely a lead-in, a toe in the water.

Joe Smith was responding to a mildly polemical piece that I wrote recently for The Electric Agora.

“I was simply making a correction to your claim that tabula rasa was specifically an Enlightenment view,” he explained in a comment.

The offending passage was in a section in which I suggested that the current internecine battles between progressive factions might be due to “deep-seated contradictions and flaws within certain forms of progressive and radical thought.”

One of the possible sources of trouble which I listed was (as I put it) “the Enlightenment view of the mind as infinitely malleable, a tabula rasa, a blank slate.”

And I think it can be argued that such notions were in fact adopted by radicals and reformers in the 18th and 19th centuries and played an important role in the 20th century also, both in the social sciences and in political activism.

My interlocutor seemed more interested in the scholarly history of tabula rasa than in its popular manifestations or in the more general idea of malleability (which is what I was obviously focused on).

It was a bit of a surprise, then, when his scholarly intervention about a “tangential point” rapidly morphed into a full frontal attack.

“I’m afraid,” he confided in his second comment, “I just found much of your essay overall to be a somewhat vague scattershot of poorly argued ideas, and felt compelled to jump in."

Of course, this feeling of compulsion which led him to “jump in” had nothing whatsoever to do with the fact that I had been hewing to a political line which was not to his liking.

“I guess the problem I’m having,” he ventured, “is understanding the points you are trying to make in your essay. I tug on one point, and a whole string of free-floating premises begin to unspool. For instance, you make an assertion about how certain strains of anti-realism have during the last century become bound up with political and ideological considerations without specifying which strains of anti-realism and which ideological considerations, or how they are connected… You then bring up progressivism within the context of hostility towards science and rationality, misuse of abstraction, tabula rasa, the impossibility of objectivity or truth, and the problem of ‘theorizing society’ [not my phrase, by the way], again without a connecting argument running through these. And no specifics, apart for [sic] a mention of Sonia Zawitkowski and standpoint theory. I’m left wondering what you mean by progressive, which progressive ideology, and whether “moderates, radicals and reformers” [again the quotation marks are misleading] all fall under the category of progressive, or if progressive falls somewhere within these on a spectrum?”

To tell the truth, reading this description (garbled as it is) prompted me to re-read the essay just to make sure that the fairly clear and straightforward ideas I had intended to communicate were reflected in the text. They were. I’m not saying there is no scope for disagreement (there always is when you talk about values), but in this case there is little scope for misunderstanding, I think.

Joe Smith thought my “worry” (as he characterized it) concerning the loss of confidence in the objectivity of science and scholarship was unwarranted, arguing that – given the social nature of science – the idea that it (or any other human institution presumably) could ever represent an ideologically neutral space was “a rather dubious premise to begin with.” What’s more, he insisted, the very meaning of objectivity has changed over time.

I had, of course, explained my side of the argument, why the question of objectivity is important. But this is not the sort of thing you can make a knockdown argument about, one way or the other. One’s view is inevitably going to be affected by personal perspectives on the nature of science and the nature of human knowledge more generally.

But I won’t attempt to deal with all the details of the exchange or with the substantive issues which were discussed. The essay and comments are there for anyone to read and interpret for themselves. My focus here is really on patterns of communication.

I usually deal with negative comments in a courteous way, and I tried to be open and courteous with Joe Smith, taking the time and trouble to attempt to address the concerns he raised about the content of my piece. But (according to my reading of the exchange) he showed himself not to be interested in understanding the substance of what I was saying at all.

There was clearly a degree of pomposity in his assertion that he “felt compelled to jump in” because of the vagueness of my claims or the weakness of my arguments or due to my supposed lack of knowledge of intellectual history. As I suggested earlier in a sarcastic aside, there was also a certain disingenuousness about the claim.

But there is something else, something rather more significant, which can be discerned in Joe Smith’s comments. They reflect (as I read them, at any rate) a cultural trend which many have observed and commented on in recent years: a propensity to see other people as “friends” or “enemies” according to how they might align themselves with respect to preconceived ideological criteria, rather than as individuals.

Rightly or wrongly, I had the sense that Joe Smith was not really wanting to converse with me as an individual. Having identified me as “the enemy” he was determined to keep his distance as he engaged in a kind of ritualized academic combat. The goal, essentially, was to discredit my claims – which were not, strictly speaking, philosophical or intellectual-historical claims at all – by calling into question the depth of my knowledge of intellectual history and my ability to mount an argument in the standard philosophical style.

The irony is that, in criticizing an openly polemical piece for being written in a rhetorical rather than a scholarly way, he was deploying rhetorical methods himself, parading his philosophical expertise and projecting a scholarly persona for patently polemical purposes. There’s a lot of it about, I have say, and I may even have been guilty of this myself from time to time.

This brief exchange at a relatively obscure, intellectually-oriented site is significant only to the extent that it parallels other exchanges, to the extent that it reflects a trend, to the extent that it is part of a larger pattern. I think a strong case can be made that – in a wide range of contexts – individuals are now being seen and treated much more in terms of group membership than they used to be.

Moreover, the fact that the groups in question often tend to be ideologically defined (at least in a broad sense of that term) portends, I think, an extended period of cultural disintegration and social and political turmoil.

Friday, September 20, 2019

Accentuating the negative

I once claimed that all the best people are dead. Such an assertion, taken at face value, is little more than a rhetorical flourish or provocation. Just a little hyperbolic, you could say.

Compare and contrast the stated views of John Cleese. Informed by an interviewer in September, 2017 that he (Cleese) was “very, very old”, the actor responded:

I’m 77. It’s very nice being this old, because when you’re this old, you’re going to die soon, so you don’t give a [expletive removed in source]… I am not afraid of death. I was thinking about it a lot, because you do when you’re older. I thought: most of the best people are dead.

I have to admit that his “most” is more defensible than my “all”. Cleese added that there are today “a lot of really awful people” about, many of them holding positions of power and influence. Provocation? Yes. But at least half-serious also.

If we are to take such claims even half seriously, however, we need to see them clearly for what they are: judgments not so much about individuals but rather (because individuals are created by the culture which nurtures them) about cultural change.

Moreover, negative or positive assessments of our (or any) society’s cultural trajectory will inevitably be subjective because any given judgment derives from a particular value framework, one amongst many actual and possible such frameworks. And, although they may be objectively described, competing value frameworks cannot be objectively assessed (except perhaps in very broad, functional terms).

Given the assumption that the social, political, educational, professional and familial structures upon which the functioning, health and transmission of a valued culture depend are breaking down or mutating in dangerous or otherwise undesirable ways, negative conclusions about the present and immediate future can be confidently – and quite reasonably – drawn. How plausible (or implausible) such an assumption or set of assumptions might be is debatable, of course. Opinions on these matters will be heavily influenced by ideological views and moral priorities.

Documentation on the decline in educational standards and a concomitant loss of status on the part of teachers and academics is not difficult to find, however. Likewise documentation on the breakdown of the family. But interpretations of the data will inevitably differ, as will the scope and focus of individual concerns.

We are all confronted with – and react in different ways to – the same broad social, political and cultural realities. Strangely – or perhaps, given the binary nature of many of our thought processes, not so strangely – most of us take a clear position not just on particular issues but also on the general trend. It is perceived as positive or as negative; as indicative of general improvement or of general deterioration.

Driven by temperament and who-knows-what, as time passes and as more loved and admired figures topple into the grave, I naturally see my negative stance confirmed. It is not just that all the old family friends, my father, all but one of my aunts and most of my teachers are dead; so are the thinkers and writers and artists who mean most to me. More importantly, the sorts of values these people exemplified or at least aspired to have been replaced by other values entirely.

Because linguistic communication is based on shared assumptions and words have no fixed meanings, talk about alternative assumptions is difficult. Let me try at least to describe the main areas in which I see deep divisions.

One is the social and political arena. So-called progressive attitudes and policies clearly dominate within the education system and within our ever-expanding government and quasi-governmental bureaucracies. Such attitudes also dominate the mainstream media and the increasingly influential technology companies. ‘Conservatism’ has become a dirty word associated either with fundamentalist Christians or war-mongering neocons. Burkean and other sensible and moderate forms of conservatism are not much discussed or widely understood.

Unfortunately, the arts have become a vehicle for the dominant ideology. There is an appalling homogeneity of views amongst actors, directors, screenwriters, dramatists and artists of various kinds. I know a bit about Western cultural history and I have never seen anything like it.

There are, of course, a few dissidents, a few independent voices, but even they find themselves caught up in the general silliness. Satire works only when the basic culture is still more or less intact. It deals with aberrations, exaggerating certain trends. But our politicians, bureaucrats, actors, academics and educators unwittingly satirize themselves.

[This is an extract from a piece published last month at The Electric Agora.]

Tuesday, September 17, 2019

Karl Lagerfeld

Here is a short extract from a piece I wrote early this year:

Variations on the general theme that things ain’t what they used to be are often heard but rarely taken seriously. And, as a general rule, the older the speaker is, the less seriously the claims are taken. Of course he would say that, the old codger. Life was so much better for him back then.

A couple of years ago the German-born fashion designer Karl Lagerfeld admitted to feeling that the world he had once lived in had ceased to exist. Paris, where he has lived and worked since the 1950s (when “it looked like an old French movie”), had never been as gloomy, dangerous or depressing as it was now.

As fate would have it, Mr Lagerfeld himself ceased to exist two weeks after my piece appeared. He was hospitalized on February 18th and died from complications associated with pancreatic cancer the next morning. In accordance with his wishes, there was no formal funeral, no ceremony.

My attitude to the industry in which Lagerfeld worked is not positive, and I have little knowledge of or interest in the man himself. What is most interesting is the phenomenon, the artifice, the public image – sustained over many years – as a kind of mask or act which was understood to be just that. Whatever his faults, Karl Lagerfeld had style and staying power. He also maintained a sense of privacy, showing himself to be (in this respect at least) very much a product of the lost world which he remembered.

Saturday, August 10, 2019

Sex, schisms and pseudo-scholarship

I have been following – via The Electric Agora and via Twitter (where I maintain a fitful and tenuous personal presence*) – certain recent sex/gender identity debates and, more generally, the internecine conflict between various feminist and other progressive factions. I have not been participating in these clashes and skirmishes. They are not my battles.

I will say here, however, that I support the view (which Daniel Kaufman has articulated through EA articles and through the EA Twitter account) that much psychological and physical harm is being done to children and others, especially in relation to sex/gender “transitioning”. There is no doubt that young children need to be protected from the actions of a group of people who are at once the victims and promoters of a set of extremely muddled ideas about sex and identity.

My criticisms are not just of the arguments being deployed but of underlying assumptions; in fact, of the whole framework of identity politics within which the arguments are deployed. I am inclined to see the ideological splintering as deriving from deep-seated contradictions and flaws within feminism and within progressive and radical thinking more generally. The process is similar to what has happened to churches and other religious groups over the millennia, and also to the splintering which inevitably affects political parties. The more passionate and radical the groups, the more they are subject to internecine strife.

An article by Sonia Zawitkowski
recently got me thinking about these issues again. The article is about standpoint theory which entails a highly politicized approach to knowledge and values. You know the sort of thing: the “oppressors” see everything in distorted, self-serving ways, while oppressed groups tend to see things more truly.

Zawitkowski writes: “[T]he complexity of today’s most controversial social problems coupled with an increasingly polarized political climate means that we need standpoint theory more than ever.”

Do we really? Sure, we need to take account of social situation, self-interest, etc. when assessing people’s opinions (including our own) on various controversial social issues, but we don’t need standpoint theory or any other kind of theory to do this. The whole concept of “theory” when used to refer to intellectual constructs driven by ideology (critical theory, feminist theory, standpoint theory, etc.) is extremely problematic. It is, as I see it, a case of intellectual sleight of hand, rhetorical trickery, the packaging of mere opinion and polemics as scholarship. (Once upon a time scholarship required a commitment to actual research – and scholars were actually respected.)

I have points of agreement with Zawitkowski. She speaks, for example, of “a glaring disregard of the moral and normative nature of [early arguments concerning universal suffrage and the status of women]… There exist rational arguments for and against most egalitarian policies, but ultimately people are arguing for their preferred state of affairs based on their conception of the Good. This necessarily involves the prioritization of different rights, each conferring benefits and drawbacks for different groups.”

It is always unfortunate when values-based and ideologically-driven arguments are presented as if they were not values- and ideology-based.

As I see it, social harmony is a function of the extent to which moral and social values are shared within a population, and the social fragmentation we see today in most Western countries is directly associated with the loss of a shared culture. Ideologically-driven academic theorizing isn’t going to help.

Inevitably, in the sort of situation we are in, bureaucracy and regulation expands and proliferates. This process is both facilitated and justified by the promulgation of narratives developed and approved by various entrenched groups (including teachers and academics). Clumsy legal remedies are sought in areas where previously informal cultural and moral systems did the work. A spare and limited framework of law and regulation supporting the basic prerequisites for ordinary social existence, prosperity and peace is now just a forlorn libertarian dream, or perhaps a distant memory.

* @mark_english1

Monday, April 1, 2019

The wisdom of Roman Polanski

The girl on the phone (it's Catherine Deneuve in the film Repulsion if you're wondering) featured in an illuminated hoarding promoting a program of old Roman Polanski films at a local cinema. The image is certainly striking. The old technology (big, old-fashioned receiver with coiled cord) gives this still a weirdness it would not originally have had, but does not make it quaint. There is a wildness in the pose and a confronting directness in the stare.

The accompanying quote (from Polanski) runs: "Cinema should make you forget you are sitting in a theatre."

Well, yes... Polanski made some great films but this famous remark of his is not a particularly penetrating one. It goes without saying, I would have thought.

I had a look at a list of Polanski quotes and he certainly wasn't averse, it seems, to stating the obvious – e.g. "Films are films, life is life." But then all of us say things like this. The problem for celebrities is that offhand remarks get written down and presented as some kind of wisdom.

The best comments in the collection I looked at were about the crucial importance of attention to detail, and about honesty in dealing with violence.

He also had some interesting things to say about neuroticism. He values certain forms of neuroticism in actors, and seems himself to exhibit neurotic tendencies.

Here he is sounding a bit like Woody Allen:

"Whenever I get happy, I always have a terrible feeling."

I can relate to that.