Wednesday, January 28, 2015

The Founder no one knows

The first major secessionist movement in American history depended on many things for its success, not the least of which was an unemployed, twice-married tax collector from Thetford, England who had dropped out of school at age 12 to apprentice in his father’s stay-making business.  As an adult he stumbled through various unsuccessful occupations while building a reputation as a beer hall debater.  

At 37, broke and already close to the end of his life given the statistics for that period, he took a coach to London where he had a chance meeting with Benjamin Franklin.  Franklin was so impressed with his intellect he wrote him a letter of recommendation and urged him to take it to Philadelphia where he might find employment as a tutor.  

Typhus almost killed him on the voyage over, but after a lengthy convalescence he found work as editor of a new magazine, publishing his first article on January 24, 1775.  Foreign vices, he wrote, engaging his poetic flair, should they survive the voyage from Europe, 
either expire on their arrival, or linger away in an incurable consumption. There is a happy something in the climate of America, which disarms them of all their power both of infection and attraction.
As one biographer has noted, “This was the beginning of [his] long love affair with America.” 

More articles, often of an incendiary nature, tripled the number of subscribers.  Later that year Franklin returned to Philadelphia and asked him to write a history of the colonies’ conflict with the Mother Country.  Since he had once again lost his job over a salary dispute he decided to accept Franklin’s offer.  

The 77-page pamphlet he published anonymously changed world history.  
It argued persuasively that the choice for Americans was independence or slavery, that King George, far from deserving unconditional loyalty, was in truth “the Royal Brute of Great Britain” and the one chiefly responsible for the oppressive measures imposed on the colonists. [Mises article]
Published on January 10, 1776 and priced at an affordable two shillings, it sold 120,000 copies in three months, reaching tradesmen and statesmen alike.  As Pulitzer Prize-winning historian Bernard Bailyn has written, 
A group of influential and articulate leaders, especially those from Massachusetts, were convinced that only independence from England could properly serve American needs, and Benjamin Franklin . . . had reached the same conclusion and had found like-minded people in Philadelphia.  But that was not the common opinion of the Congress, and it was not the general view of the population at large.  Not a single colony had instructed its delegates to work for independence . . . All the most powerful unspoken assumptions of the time -- indeed, common sense -- ran counter to the notion of independence. [Bernard Bailyn, pp. 68-69, emphasis in original]
His pamphlet overturned those unspoken assumptions.  After July 4th colonists understood what the war was about.  

But it wasn't going well at all.  After suffering heavy losses in New York, Washington retreated across New Jersey and crossed the Delaware River, settling in outside Philadelphia.  By mid-December many soldiers had only one goal, staying alive until their period of enlistment was up at the end of the month.  Morale was low, and desertions were rising.  Well-aware of the colonists’ condition, British General Sir William Howe ordered his troops into winter quarters, creating outposts from New York to Burlington, New Jersey.  

A desperate Washington turned to the Thetford native, who was serving as an aide-de-camp, and asked him for help. 
Shortly before Washington crossed the Delaware on Christmas night for an early morning attack on a Hessian garrison at Trenton, he penned the first of a series of essays known as “The American Crisis.”  It is said that Washington ordered the essay read to his demoralized and ill-clad troops during a sleet-storm before making the crossing.  The essay, immortalized in American history with its opening words — These are the times that try men’s souls — may have inspired the men or not, but it did boost the spirits of patriot civilians when they heard news of the Americans’ decisive victory.  [Mises article]
After the war he returned to England to find a builder for an iron bridge he had designed.  Though he was by then a celebrity and participating in the “pomp and show” of Europe, he had strong longings for his adopted country thousands of miles away.

In a letter to his newly-married friend, Kitty Nicholson Few, in January 1789, he anguished over the future of the country he had helped create that had undergone a nationalist-led coup d’etat in Philadelphia during the summer of 1787. 
A thousand years hence (for I must indulge in a few thoughts), perhaps in less, America may be what England now is! The innocence of her character that won the hearts of all nations in her favor may sound like a romance, and her inimitable virtue as if it had never been. The ruins of that liberty which thousands bled for, or suffered to obtain, may just furnish materials for a village tale or extort a sigh from rustic sensibility, while the fashionable of that day, enveloped in dissipation, shall deride the principle and deny the fact.
Those last words — “shall deride the principle and deny the fact” — do we not hear them every day, in one form or another, from anyone with a public voice?  Have we not surrendered to an elite that wanted a more “energetic” government funded by an “elastic” currency?  Have we become “what England now is,” which he described as “the greatest perfection of fraud and corruption that ever took place since governments began”?  I leave that for you to decide.

Happy birthday, Thomas Paine.  And thanks for the country.

For a dramatization of his role in the American Revolution, see this.

Thursday, January 22, 2015

What to do with the fast pace of technology

TIME’s Rana Foroohar is concerned about how technology is making all of us less trusting.  It’s moving too fast, she says, at least for the average Joe.  

Backing her up is the 2015 Trust Barometer Survey, released every year at the World Economic Forum in Davos that’s ongoing now.  Two out of every three consumers in the 27 countries surveyed said they were unable to cope with the fast pace of technology development.  Ms. Foroohar didn’t mention this, but we’re already on the knee of the technology exponential.  As change moves into the vertical part of the curve and accelerates at a blinding pace, what will consumers do then?  Taking a Trust survey will be pointless.

I suppose this might be why she’s so concerned.  Warning to tech giants: The average Joe, she believes, will line up behind politicians promising to do something about it.  

What might they do?
Expect more push back on sharing economy companies that skirt local regulation, a greater focus on the monopoly power of mammoth tech companies, and closer scrutiny of the personal wealth of tech titans themselves.
You’ve been warned, Tech Giants.  Get with it, or else.

Or else what?  Let’s see . . . “expect more push back,” she says.  Who is doing the pushing in the first place?  Companies like Apple, Google, Amazon, Microsoft, or IBM?  When was the last time you saw Jeff Bezos or Tim Cook “pushing” something in the coercive sense?  Whatever it is they’re offering can always be declined.  Millions of people do it.  The phrase “No, thanks” comes to mind.  Average Joes are free to use it whenever they wish.  Even Joes way above or below average have been known to use it.  

Maybe they’ve been habituated with government programs that don’t allow saying no without suffering a penalty, like the income tax and ObamaCare. 

Note: Governments push in the coercive sense.  They also push back coercively whenever their subjects resist laws or regulations they don’t like.  

But aren’t these tech mammoths monopolies?  If they were, they’d be pretty much impervious to competition and consumer wishes.  That’s hardly the case with the ones making headlines with new products.  To repeat: Anyone uncomfortable about the pace of technology can stop buying the gadgets and services the techs are offering. 

I don’t question the veracity of the Trust Barometer survey, but I would like to remind Ms. Foroohar of another poll taken every day, 24/7.  I’m referring to the free market, of course, where surveys are carried out by way of the buying decisions of consumers.  Unlike other surveys this one is comprehensive.  It is democracy in action, people voting or abstaining from voting by buying or not buying.  Want to get a tech giant’s attention?  Stop buying their products.  They’ll get the message.

We all know people who don’t embrace the latest and greatest.  I have a buddy who is very happy with his iPhone 4s and not at all interested in the latest models.  I have another friend who would almost prefer death to using any digital device.  A very prolific writer still uses PC-AT keyboards of the 1980s because he found they get the job done better than newer ones.  I promised my father shortly before his death that I would get our mother to use email.  Never happened, and she was perfectly content without it.  My siblings wade slowly into the tech world, but they’ve never mentioned being overwhelmed by it. 

Of those who buy digital gadgets or do their shopping online, the message consumers are sending is give us more — more features, more memory, faster processors, more delivery options — at the same or lower price.  Most of them can’t wait to get something better.  Knowing this is where their profits lie, tech companies do what they can to comply.  This is capitalism in action.  This is freedom in action.

For decades we’ve heard how fabulously rich some of the “tech titans” are, and now that a consumer survey shows distrust is in the air Ms. Foroohar expects government to scrutinize their wealth more closely.  She doesn’t say why, but I suppose it has something to do with envy.

Long ago sociologist Franz Oppenheimer made the distinction between the political means and the economic means of acquiring wealth.  The first is by theft, the second, production.  The state provides the political means of getting rich through confiscation and favors — favors that include antitrust investigations targeting one’s competitors, for example.  Any big company that wants no part of politics would soon change course, as they become ripe targets for bribe-seeking legislators who threaten some new regulation or investigation.  It is the state apparatus, not the free market, that makes possible entrenched business corruption.  Rent-seeking, as it’s called, is a way of increasing one’s share of existing wealth without creating wealth.  

And speaking of monopolies . . .

Why is she so concerned with the threat of monopolistic power yet makes no mention of actual monopolies, such as the state itself and its counterfeiter, the central bank?  As noted above we can remove ourselves from the effects of any market entity but how in the world can average Joes avoid the greedy and threatening reach of the state?  How can they avoid losing wealth if they have no other option than the central bank’s monopoly money?

Maybe technology and entrepreneurship will solve these problems in short order.  I hope so.

Ms. Foroohar, a graduate of Columbia, a member of the Council on Foreign Relations, and an occasional commentator on various TV shows, is well-aware of the points presented here, I’m sure.  Why she turns her back on them is a mystery.  

Tuesday, January 13, 2015

Kurzweil's Black Swans

What can we expect in 2015?  Global recession and civil disorder top the list, according to what I read.  Given the way central banks and governments have sabotaged free markets at every turn, coupled with the belligerent nature of U.S. foreign policy and the militarization of our police, both forecasts strike me as plausible. 

But the plausible doesn’t need forecasting, does it?  We need to be reminded of it, certainly, and in that sense it’s critical.  But what we really want to know is: Are any black swans on the horizon?

There are two problems with black swans.  One is predicting them: how do you predict an event that by definition comes as a surprise?  The other is convincing people that this surprising event will in fact occur.  

We all know what happened to the price of oil, but how many prognosticators provided advanced warning of a sharp downturn?  Michael Lynch is one, to an extent.  Are there others who called the drop and who also are not known for making “stopped watch” predictions, as Lynch calls them?

According to, gas prices nationally dropped 6.5 cents in the last week, to $2.119/gallon.  
Since last week, some 12,000 stations dropped their price under $2/gal, with 45.1% of all gas stations (nearly 61,000) now selling under the $2/gal mark. The national average currently stands at its lowest since May 9, 2009, a date that saw 8.9% unemployment . . .
If someone had put this in writing a year ago he or she would’ve been regarded as crazy or Nostradamus.  Who is on record for saying gas prices would drop like a brick?  For most people this was a black swan.

But there are problems with what seems plausible, too.

Certain Austrian economists predicted serious price inflation following the Fed’s unprecedented expansion of the monetary base in 2008-2009.  Quite plausible, given Austrian theory.  If the new money had reached the buying public, we almost certainly would’ve seen a rapid rise in prices as the fractional reserve multiplier kicked in.  But most Austrians and other economists didn’t foresee Bernanke paying banks not to lend the money he created.  Nor perhaps did they fully account for the astronomical debt held by households and businesses, making them adverse to borrowing, or the commercial banks’ reluctance to lend in such an environment.

The non-event of high price inflation struck many analysts as a black swan.

Can we make any reliable predictions of the kind that would surprise almost everyone if they occurred?  Is there any radar anywhere on which black swans are visible?

The answer is no if by black swan we’re looking for a specific event at a specific time.  The answer is a profound yes if we mean there are changes coming that will hit almost everyone over the head.

According to Wikipedia the first smartphone patent was issued to Theodore G. Paraskevakos in 1973, the first devices went on sale in the early 1990s, and today there is fierce competition among companies to make them as powerful and affordable as possible.  I cite the example of smartphones because most people are familiar with them, and as information technologies they’re subject to the law of accelerating returns.  

It is this law that will produce radical changes in the near future and which people seem both to expect and disbelieve at the same time.  

On the knee of the exponential

To quote Ray Kurzweil from his March 7, 2001 essay:
An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense “intuitive linear” view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate). The “returns,” such as chip speed and cost-effectiveness, also increase exponentially. There’s even exponential growth in the rate of exponential growth. Within a few decades, machine intelligence will surpass human intelligence, leading to The Singularity — technological change so rapid and profound it represents a rupture in the fabric of human history.  [Italics in original]
I encourage you to read his first sentence a second time.  Common sense will be blind to the technological changes coming.  The incremental advances in smartphone technology will take flight, along with other technologies, as progress reaches the “knee” of the exponential curve (the point at which the exponential trend becomes noticeable).  We are near or on that knee right now.  
The first technological steps — sharp edges, fire, the wheel — took tens of thousands of years. For people living in this era, there was little noticeable technological change in even a thousand years. By 1000 A.D., progress was much faster and a paradigm shift required only a century or two. In the nineteenth century, we saw more technological change than in the nine centuries preceding it. Then in the first twenty years of the twentieth century, we saw more advancement than in all of the nineteenth century. Now, paradigm shifts occur in only a few years time. . . . 
As exponential growth continues to accelerate into the first half of the twenty-first century, it will appear to explode into infinity, at least from the limited and linear perspective of contemporary humans. The progress will ultimately become so fast that it will rupture our ability to follow it. It will literally get out of our control.
If Kurzweil were a kook with a blog it would be easy to dismiss him.  But forget that.  Ray Kurzweil is such an accomplished individual it is difficult to summarize his achievements in a brief article and do him justice.  He is a best-selling author, computer scientist, inventor, futurist, entrepreneur, documentary producer, lecturer, and director of engineering at Google.  As a teenager in 1965 he appeared on Steve Allen’s I’ve Got a Secret and played a piano piece composed by a computer he built. According to Wikipedia,
He has received twenty honorary doctorates, and honors from three U.S. presidents. Kurzweil has been described as a "restless genius" by The Wall Street Journal and "the ultimate thinking machine" by Forbes. PBS included Kurzweil as one of 16 "revolutionaries who made America" along with other inventors of the past two centuries. Inc. magazine ranked him #8 among the "most fascinating" entrepreneurs in the United States and called him "Edison's rightful heir”.
People have faulted him for his perennial optimism, but as he says entrepreneurs are predisposed to optimism.  He’s famous for his predictions, which he discusses in extensive detail here.  He writes:
Fundamental measures of information technology follow predictable and exponential trajectories, belying the conventional wisdom that “you can’t predict the future.” There are still many things — which project, company or technical standard will prevail in the marketplace, or when peace will come to the Middle East — that remain unpredictable, but the underlying price/performance and capacity of information is nonetheless remarkably predictable. Surprisingly, these trends are unperturbed by conditions such as war or peace and prosperity or recession.
In his 1990s book The Age of Spiritual Machines he made 147 predictions for 2009.  Of these 127 were correct or essentially correct (86%), 17 were partially correct, and 3 were wrong — according to his analysis.

Kurzweil's swans

Some of his predictions for the years ahead, which he made in late 2013, include:
  • By the early 2020s, we will have the means to program our biology away from disease and aging.  We already have the tools to reprogram our biology the way we reprogram our computers.  “RNA interference, for example, can turn genes off that promote disease and aging.”
  • By 2030 solar energy will have the capacity to meet all of our energy needs. The production of food and clean water will also be revolutionized. “The total number of watts of electricity produced by solar energy is growing exponentially, doubling every two years. It is now less than seven doublings from 100%.” Once we have inexpensive energy we will be able to convert all the bad water on the planet to usable water.  Agriculture will go from horizontal to vertical, where we will grow high-quality food in AI controlled buildings.
  • By the early 2020s we will print out a significant fraction of the products we use including clothing as well as replacement organs.  The early 2020s will be the golden age of 3D printing.  We’ll be able to choose from thousands of open source clothing designs and print them out at pennies per pound.  “We can already experimentally print out organs by printing a biodegradable scaffolding and then populating it with a patient's own stem cells, all with a 3D printer.  By the early 2020s, this will reach clinical practice.”
  • Within five years, search engines will be based on an understanding of natural language. “At Google, we are creating a system that will read every document on the web and every book for meaning and provide a rich search and question answering experience based on the true meaning of natural language.”
  • By the early 2020s we will be routinely working and playing with each other in full immersion visual-auditory virtual environments. By the 2030s, we will add the tactile sense to full immersion virtual reality.  The latter will require “nanobots [nanometer-size robots] traveling noninvasively into the brain through the capillaries and augmenting the signals coming from our real senses.”
For a robust discussion of how these and many other technological changes will radically alter our lives, please see Kurzweil’s book, The Singularity is Near: When Humans Transcend Biology. 

The State Unmasked

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