Economic Systems: Mixed Beats Pure

Economics pretends to be a science, but more than most sciences it tends to be driven by ideology.

In ideologies the answers are given. Facts are fit into theoretical frameworks. Facts that don't fit in are denied or even falsified, and at best are explained away. Just as with religions.

In the United States and much of the globe there are two major economic ideologies to choose from: free market capitalism, and socialism. Both camps look back at the 20th century and pull facts (or pseudo facts) from the economic trajectories of various nations to justify their current policy prescriptions.

I believe they are both wrong, to the extent they demand pure systems. I believe the historical record shows that they are both wrong. I believe that in the United States and elsewhere we need to build up a popular culture, science of economics, and political system that understands that mixed systems (involving both free and regulated markets, and the control of capital at times by capitalists, and at times by government) can work better than pure systems.

Ideologists are people who insist on using the same tool set for every job, even when a better (often just bigger) tool set is available.

To keep this essay short, I will focus on one ideology, free-market capitalism. This ideology is being pushed heavily in the United States by capitalists, their media voices, their academic establishment, their religious establishment, and their politicians. However, let me make it clear that I am not in favor of a centrally-planned socialist system where the government owns everything (though its claim would be that it holds everything in common for the people). I am in favor of a mixed system. I am just coming at it from the free-market side.

If you think free markets are sacred, then of course whatever comes out of them is wonderful. The Great Depression was created by free markets, so it must have been wonderful.

I don't believe the Great Depression was wonderful.

So assuming I can demonstrate that mixed systems can be superior to pure free market capitalist systems, what would be the goal? I am willing to go with the classic: the greatest good for the greatest number. It should be clear that by choosing different goals you can skew the debate towards pure systems, or even within the range of mixed systems.

If you make either Socialism or Capitalism the goal, then you have self-proving economics. Some more reasonable goals might be: maximizing GDP (gross domestic product) over the long run; minimizing unemployment, crime and hunger; sustainability (environmental and human); profit maximization for business owners; stability; political consequences like democracy (or control of it by an elite); and so on. The ideal economic system would depend on the goals you choose.

I would say a knowledgeable human being would want a mixture of weighted goals, and the flexibility to change the goals themselves, if the experience of reality warrants that.

Some goals many Americans share are: minimizing bubble/bust cycles; maximizing GDP growth over time; distributing GDP adequately so that every American has a good chance of having a good economic life, or minimizing poverty. Minimizing poverty would include protection for children, seniors, and disabled persons.

Many free market ideologists would not like that list of goals, since it almost implies some elements of socialism need to be applied. Some free-marketers would argue that their system is so wonderful that it actually does maximize GDP growth without cycles of busts or creating masses of poor people and criminals.

I would argue that you can't achieve those goals without a Federal Reserve trying to keep a rein on the money supply; mandatory Social Security; mandatory unemployment insurance; and programs for children.

That said, economies are complicated, and they change. Our data-driven economy of today is as different from the factory-led U.S. economy of the late 1940s (when every other nation's factories were still in splinters from World War II bombing campaigns) was from the mainly agricultural economy of the U.S. in the first half of the 1800's.

Long ago the world learned that free markets don't work in certain situations; the ideologists want us to forget the lessons of history. Industrial monopolies (as during the 1800's after the Civil War) tend to concentrate wealth in a few hands, but stifle growth of the economy as a whole. They stifle competition, which is supposed to be the engine of free-market economies. The monopolies were created naturally through competition, but once created they had a word for competition: "Ruinous." In the process of enriching a few capitalists they drain the resources of smaller businesses and consumers, leading to economic stagnation and recessions.

But suppose that you want long-term GDP growth, and don't care if a few people starve or die young from lack of medical care. Would that not then favor a pure free enterprise system, with government relegated to military matter and punishing anyone who dared to steal a loaf of bread?

Yes, according the the free market ideologists. But they ignore history. In the U.S. we mainly had free-market capitalism until 1933. The results should be examined in detail. There was GDP progress, but it came mostly in booms and busts. By 1933 most of the centuries' earlier gains were gone, down the drain because because there was nothing in place to put breaks on the downward plunge that started in 1929.

The New Deal did not work out all that well at first, either. It was war (selling to nations already at war until Pearl Harbor, then vast levels of deficit spending on our own war machine until we emerged as the leading world superpower) that got us out of the Depression. After that, however, some of the New Deal, let's call them what they are, Socialist, programs did dampen the boom and bust cycle. There were cycles, but on the whole I would argue that having a mixed system worked better than either pure free-market capitalism or pure socialism would have.

The question should not be whether we should have a capitalist or a socialist economic system. The question should be: which elements of each, working together, create the overall strongest economy?

But for voters, judging politicians, that would demand something that has often proven beyond their ken. It requires understanding complexity. It requires something more than regurgitating campaign ads. It requires independent thinking.

The same for economists. When an American economist reveals himself (or herself) as a pure free-market exponent, know you are dealing with a priest, not a scientist.

Mitt Romney, Mormon, and Islam

Last night I was at a dinner party where three of the five attendees were former Latter Day Saints, better known as the Mormons. I am a former Catholic. I am not sure about the fifth person's childhood faith. In any case we had a good time talking about the Mormon faith and Mitt Romney.

Two of the Mormons had been mainstream, Utah Mormons. One had been in the much smaller Reorganized Church of Jesus Christ of Latter Day Saints (RLDS). That is the one that did not follow Brigham Young to Utah, and instead stayed loyal to the family of the founder, Joseph Smith. And I just leaned something new (from Wikipedia) that the ex-member did not know: this sect changed their name in 2001 to the Community of Christ, and now allows women to be priests.

We had a discussion of where Mitt Romney and the mainstream Church of Jesus Christ of Latter Day Saints fits into the theological spectrum. The Mormons, according to their former members, do not believe Jesus is God in the sense that most believing Christians do. They believe Jesus is a sort of planetary god. They believe that if they (the men, anyway) have enough wives and children and are holy enough they will reincarnate on planets of their own, which they will rule over as (small g) gods.

This strange combination of science fiction and primitive Christianity makes a lot of sense if you understand the culture of the United States of America in the 1820s, when Joseph Smith pieced his cult together. Science had discovered that planets were not just mobile stars, but bodies like earth, big enough to live on, perhaps. The large number of stars indicated that there might be large numbers of planets beyond the solar system. The Bible did not mention this (or foresee steamboats and railroads and other development), so either the Bible was not written by a omniscient God or it was only a partial revelation. Times were changing, and religion clearly needed a major update. Joseph Smith was the most successful of the updaters of that era.

Which brings us round to Islam. There can be no doubt that Mohammed, the Prophet, was the Joseph Smith of his day (570 - 632 A.D.). He too was born a nobody. He became a trader and capitalist (just like Mitt) and in the course of business visited much of the Middle East. He came in contact with people of many different religions. Most importantly, in addition to meeting orthodox Christians, he met both gnostic Christians and the original Christians. The original Christians were still Jews and thought Jesus was a prophet, not a god. Their historical records told them that Jesus had died on the Cross, but had not been resurrected.

Eventually Mohammed founded a new religion. He did not pretend to be a god, and his followers have been very strict about that issue. His religion must have met a lot of people's needs because it became wildly popular far faster than any prior religion. It is still popular today.

Just like the Latter Day Saints, early on Islam split into two sects. One, the main Sunni branch, was started by the powerful elders, mostly military leaders, who had known Mohammed. The other, Shia, was formed by the direct bloodline descendants of Mohammed. They have been fighting ever since.

Mitt Romney does not want potential voters to know what Mormons really believe. He does not want them to know that despite its name, the Church of Jesus Christ of Latter Day Saints could be categorized as Islamic. Joseph Smith certainly knew some of what was then modern science. He also clearly was influenced by ancient Egyptian precepts and Islam. Many passages of Smith's writtings are paraphrased from the Koran. The polygamy thing is obvious: Mohammed practiced polygamy. The concept of Heaven in the Mormon Church is right out of the Koran, with some 19th century science updates.

Of course Joseph Smith gave no credit to the Koran, which would have been impolitic. He was a new Prophet and according to his theology, was headed to being a god on his own planet when he died on this earth.

Like most small starter religions, Smith's new Church advocated religious tolerance. "We claim the privilege of worshiping Almighty God according to the dictates of our conscience, and allow all men the same privilege." [Pearl of Great Price] Thus they advocated for a non-Christian America where their version of Islam could be part of the cultural mix.

Why then, since he belongs to a branch of Islam, is Mitt Romney currently siding with Israel so strongly?
Mitt Romney has always been skilled at the art of deception and willing to do whatever lying it takes to get what he wants. He went to Harvard Law School to brush up on that skill. What else would you expect from a man who grew up in France, who speaks French better than English, and yet want to be the first Latter Day Saint President of the United States of America?

Romney needs to win in Florida to be President and establish Joseph Smith's vision of a Mormon Kingdom on the American continent. "We believe in being subject to kings," [Pearl of Great Price].

Mitt Romney needs a few hundred thousand Jewish votes in Florida to become President. Those of you who support the human rights of Palestinians don't need to worry about Romney's pro-Israel, zionist rhetoric. Mormons know the True Zion is on the American continent. Their leadership is very pro-Islam, and has already made deals with the Saudis to gain total economic control of the globe and its women. The Jews and Christians just need to be fooled for a few more months.

Entangled in Spooky Science

Spooky science sells better than serious science, especially when science requires mathematics beyond 99% of the population's knowledge. The June 2011 Scientific American issue includes an article by Vlatko Vedral, Living in a Quantum World, that emphasizes one spooky corner of reality, quantum entanglement. This is also a favorite topic of New Age purveyors of spooky religious viewpoints, as if it might provide a physical basis for ESP and other tricks of the trade.

We are spooked by the unfamiliar. Familiar things that should be totally amazing, like transistor radios and lasers, which rely on quantum mechanical effects, don't faze us at all these days. We don't have to understand new technologies to stop being spooked by them, we just need to see them in action for a while.

I would argue that quantum physics has few new philosophical implications. It is no where near as revolutionary as what we now call Classical physics.

Classic is one of those words we need to be careful about. It used to allude to the culture of the ancient Greeks and Romans, let's say from 500 B.C. to before the Christ cult took over in the 4th century after Augustus Caesar. In physics it means, roughly, how the world was conceived of by scientists from the era of Galileo and Copernicus until Albert Einstein's four famous papers of 1905.

Classical physics was pretty darned spooky stuff. Not really believable, unless you looked at nature with a great deal of care. Before classical physics there was ordinary human intuition based on experiences in the world, and there was the physics of Aristotle and his cohort of Greek geeks. Today seven year olds know about dinosaurs and galaxies, but no one knew about them in 1400. Except for a very few people who studied the Greek classics (and the equivalents of other civilizations, notably the Arabs, Indians and Chinese), experience was limited. Water flowed downhill, the seasons were reliable, the stars rotated around Polaris, and no one had built a decent sewer system since the fall of the Roman Empire.

For Aristotle objects moved only when under the influence of a continuous force. People familiar with Newton's first law of motion (previously stated by many others, especially Islamic scientists), that an object's velocity remains constant unless acted on by an external force, may laugh at Aristotle. But in the everyday real-world Aristotle is right and Newton is wrong. Aristotle correctly believed there is always friction; he argued that vacuums, required for friction-free maintenance of velocity, cannot exist. The best modern car running on a flat road need gas, and the force from its engine, to maintain a constant speed to overcome friction. For Newton's version of the law to work you need essentially imaginary conditions: a perfect vacuum, which you can't find even in inter-galactic space.

The idea of continuing motion without a force behind it was spooky; it still is if you think about it too much. But it was not as spooky as the revelation that the earth revolves on its axis. We seem to be relatively motionless, hugging mother earth, but we are not.

Electricity and magnetism are part of pre-1905 physics. Talk about spooky. Both were believed by religious types to be the physical basis for ESP and hypnotism (called personal magnetism). Both exerted force at a distance. It took decades of experimenting and thinking to figure out their basic laws. But people got used to them. They got used to the telegraph, electric lights, and telephones.

Other people, including scientists, had trouble with Albert Einstein's work on relativity. Einstein himself had lots of trouble with the concepts of quantum physics, even though he was one of the inventors of the inventors of the field. He called quantum entanglement "spooky action at a distance." This from a guy whose father and uncle had a successful 19th-century electromagnetics business. (Which is why doing well in elementary school was not all that important to his future success.)

Context is as important in the natural sciences as it is in philosophy or dealing with various human cultures. Vedral's "Living in a Quantum World," makes the case that quantum effects can show up in our macro world. In particular he wrote about quantum entanglement. It is interesting stuff, and I applaud those who have figured out how to extend our knowledge of this subtle phenomena. But be forewarned, this is the stuff New Age con artists use to bamboozle their soft-brained victims.

Beware of physics writers over generalizing. Vedral uses the phrase "Quantum mechanics says ..." Quantum mechanics does not say anything. Physicists say things, and they often disagree with each other, especially about quantum mechanics and its philosophical interpretations. As a group they like to say that quantum mechanics has a long history of making correct predictions as verified by experiments. But in fact, as illustrated in, for instance, Abraham Pais's Inward Bound: Of Matter and Forces in the Physical World, quantum mechanics has a long history of missing on as many predictions as it hit. Today's quantum mechanics is not the quantum mechanics of 1940. The math has often been fudged after the experimental results were known. That is fine, fixing a theory is part of the process of science.

It does not serve science, however, to pretend that a theory developed in the 1920's accurately predicted all the results known today.

Get Down Moses, With the U.S. Constitution

When the U.S. Constitution was forced on the American people in 1788 religion was not very different than it is today. There were no Mormons yet, but most of the major Christian sects had made an appearance. The educated ruling class studied the Greek and Roman classics, meaning they were exposed to both pagan beliefs and skepticism. Many Americans, possibly a majority were agnostics, atheists, materialists, or deists.

Politics was already a highly developed art and craft. So was its camp follower, corruption. I would argue that the first Congress under the new Constitution was the most corrupt in American history, but then there is a lot of competition, and records of corruption are incomplete, so I can't be sure. The U.S. Constitution was largely based on the British Constitution, but also borrowed from the Iroquois confederation, ancient Greek and Roman forms, and the various states, notably the State of Virginia.

Science, on the other hand, was just beginning its climb up Mount Sinai. Isaac Newton had invented calculus and outlined what is now called classical physics; he had died in 1727. But electricity was still something created by friction or lightning. Charles Darwin would not be born until 1809. Atoms would remain basically undifferentiated blobs until the 1890's.

For a document designed to centralize the power of the ruling elite, with just enough democracy included to keep the rabble from revolting too often, the U.S. Constitution is a pretty good basis for government. Its most obvious flaws, like the structure of the Senate, are a result of political compromise, not planning or wisdom. Amendments have, on the whole, improved it over the centuries. Most importantly, even the early ruling elite had their moments of working for the public good.

Largely because of Tea Party agitation, many Americans are taking a good look at their Constitution. Like any complex object, it can be looked at from many different angles. A citizen might like one part and dislike another. Throw in the often-mythologized stories about the (white) men who wrote the damned thing, and you have a lot of room for principled disagreements. Need more room, and you can just desert principles, which is a rather common (and often successful) political strategy.

Religious people, I mean the truly religious, project their religion into almost everything. It is almost a truism in certain circles that the U.S. Constitution was written by God. Now you and I know that is not true: God writes in Latin, not English. But the God-smitten won't have it any other way.

Which creates its own issues. Were Amendments to the Constitution written by God, or just the Original Constitution? Did God also write the Articles of Confederation? Why exactly did God give Congress the power to "promote the progress of science" [Article I, Section VIII, paragraph 8]?

You know why. He was preparing the way for his greatest prophets. Charles Darwin, James Clerk Maxwell, Max Planck, Albert Einstein, and Francis Crick, among others.

Groping Towards Reality

Humans are part of reality, but seeing reality clearly is sometimes difficult. I have been looking for a metaphor for the process of orienting oneself to reality and avoiding fiction. The best I have come up with so far is groping towards reality.

From ancient to modern times people have both groped towards a clear understanding of reality and attempted to construct blinders so that they could misinterpret the world to suit themselves. More often than not, the world being a complicated place, the same person or groups of persons would get parts of the picture right while painting in illusions for other parts.

Both the existence of reality and the human ability to know it have been questioned from ancient times. I believe questioning things, including what appear to be fundamental truths, is a good thing. What is funny is that having concluded either that reality is an illusion, or that humans can not know anything much about reality, people seldom question those conclusions. [See also my Questions to the Illusionists].

In some ways certain Buddhist critiques of the reality of reality are more cogent than their modern philosophic counterparts. In the Surangama Sutra the Buddha asks Ananda, "What is it that gave you the sensation of seeing? What was it that experienced the sensation? And who is it that experienced the feeling of being pleased?" The analysis that follows, in question and answer style, is quite sophisticated even if it ultimately leads one astray.

Cast forward to the modern philosophy of deconstructionism and you have Wittgenstein's (later) philosophic methods turned on their head to create a rationalization that amounts to saying: the world is not real, or at least we can't really know much about it.

But we do know a great deal about the world, both individually and collectively. Not only that, but other animals know about the world, even if they are not smart enough to create a theory of why it is just an illusion. We are both in and of the world.

It has taken our sensory apparatus and nervous system a couple of billion years to evolve. Our genetic inheritance gives us the ability to survive in the world, and that requires the ability to gain a knowledge of the world. Human babies are prepared to learn about the world. They learn from their interactions with the world. Their learning is held in their brains.

Groping is a good word for the process. The baby feels its way, reaching about uncertainly. It uses the resulting memories to build maps and images of the external world. It learns about its body. It begins to learn a language.

Having learned a language, a child starts learning about the world second hand. Family members relate what they did when "away." They talk about events that happened in the past, or what they plan to do in the future.

They also inevitably tell the child things that are not true, or are partly true. Prejudices, superstitions, and religions. Cultural behaviors: how to behave, what is expected of a child, a man, or a woman.

Children cope as best they can. One thing leads to another. There may be formal schooling. Some people eventually feel impelled to try to figure out what "the truth" is. But it is a complex world. Some people change religions, but in most cultures during most of history changing religion was a dangerous and daring act. Today in these United States of America people shop for a religion, a philosophy, a self-help guru, or a school of psychology. Most are shopping for amenable society, not so much for truth.

I think that philosophies tend to oversimplify the human condition. It is a complex world. We are complex. Each brain is a wonder of cellular architecture, capable of holding and comparing billions of memories of experiences.

Lately, I have been inspired by the work of Jeff Hawkins and colleagues on how the cortex of the brain might work [See my Machine Understanding blog]. The process described by Hawkins can fairly be described as groping. He believes that the detailed structure of the brain has evolved to turn sensory input into memories and automatic predictions about the world. Humans constantly adjust to the world, noticing when it does not conform to prior predictions.

The culture of science, while it has been used with bad motives all too frequently, for the most part follows the same pattern. The scientific method, amidst the ugly complexity of the world, is a kind of groping. We look at the world and what we think we already know. We form a hypothesis, or prediction. We set up an experiment to test the prediction against the hypothesis.

Quantum physics and molecular biology are usually considered to be very difficult sciences. You must work hard and be smart to succeed at them. But when it comes to studying humans, there are extra difficulties. The world is not an illusion, but humans are particularly good at distorting data about themselves.

On that line, a comment on a book I just finished, Outliers: The Story of Success
by Malcolm Gladwell. This is an illuminating book about the human condition. It picks apart our assumptions about what makes a human highly successful in our society. Each of the chapters, focusing on one aspect of human culture and how it impacts success, is a great read. You will see Bill Gates, The Beatles, and math test scores in a whole new light if you read it. There are illusions in the world, but the world is not an illusion. The idea that success is a simple result of genius is one of our cultural illusions.

Science, Nature, and Human Error

This Natural Liberation blog is all too often about political events of the day. Needing a topic to write on, I can look at the day's news. I can also illuminate the topic with some examples from history. The importance of politics is clear: not only are people living or dying because of political decisions, but species are surviving or not, and the entire vast web of life built up on earth these past billions of years is also in peril. Yet I did not want this blog mainly to be about politics.

I want to return to the theme of natural liberation. By going back and forth between how we participate in events and our ethics, we can refine both our knowledge of the world and of our ethics. By looking at mistakes in human reasoning in philosophy, we might liberate ourselves and find a Natural Liberation philosophy that is both good and based on a clear view of the material world.

Science is supposed to be about truth, but it is a troublesome issue for me and many of my friends. I turned away from science when I learned about its misuse by militarists. At the time the Vietnam War was waging and I was worried I would be drafted. That war ended, but the misuse of science has not changed in my lifetime. But all too many people throw out the baby (accurate understanding of nature) with the bath water (bad things done by science and technology).

Science is all about understanding nature. In itself, it is an honest pursuit. When religion, pseudo-science, or new-age claptrap is substituted for science, that is for understanding nature, the problems created by human beings can be as catastrophic as using scientific knowledge for unethical ends.

The history of science is often more instructive than just learning about the current state of scientific knowledge. Usually science histories seem to illuminate a clear path from the Dark Ages to the Nuclear Age. The real history of science includes mistaken ideas in a proportion of over 10 to 1 compared to the ones that eventually stood up to testing. Reading about scientists, including great scientists, making mistakes is a humbling and illuminating experience.

Inward Bound by Abraham Pais shows the many mistakes it sometimes takes to get an accurate view when fallible humans are seeking to understand nature. His story of the discovery of what we call x-rays by Wilhelm Roentgen. He was working with a cathode ray tube, a device that had been around for decades and was still just a decade ago commonly used for TV and computer monitor screens. He wanted to repeat and elaborate on Philipp Lenard's experiment, which was designed to study the rays when outside the actual cathode tube. His experimental device was almost the same as Lenard's, but he saved himself some time and money. Instead of encasing the tube in metal to prevent the rays from escaping randomly, he found that black cardboard would do the job adequately.

Then he noticed something everyone had missed until then: a phosphorescent screen glowed a good distance from the tube, where there was a hole in the cardboard. We now call this phenomena x-rays. The rays inside the tube we call electrons. When an electron of sufficiently high energy hits the glass lining the tube, it may cause an x-ray to be emitted. Lenard missed seeing x-rays because his metal enclosure stopped them.

People loved x-rays. We still use them the same way, to make the invisible visible. For instance taking pictures of bones inside the human body.

Roentgen became pretty good at manipulating x-rays, but strangely his theory about them was quite wrong. He thought they were the long-suspected but never found longitudinal vibrations of electro-magnetism. In fact they were later proven to be just like light and other electro-magnetic waves, only at a very high energy and very short wavelength.

Roentgen was not alone. Many scientists agreed with him about the likely nature of x-rays. Even stranger, despite cathode ray tubes having been in existence for decades by the time of Roentgen's 1895 discovery, no one had "discovered" the electron.

And despite the fact that the periodic table of elements had been worked out in the mid-1800's, no one had put together an even moderately accurate theory of atoms that would explain those chemical facts.

Even more astonishing, when Albert Einstein published his Theory of Special Relativity in 1905, generally still considered to be the most mind-blowing science paper ever, there was still no accurate understanding of atomic particles. The proton would not be "discovered" until 1918. Einstein did not need one: his theory was about time, space, and light (electromagnetism), not about atomic particles.

So it should not be surprising when ordinary people, and even people with scientific training, fall for pseudo-science. The only way to avoid that in general is to maintain a healthy level of skepticism, a balanced personality, and a grounding in the natural world.