Saturday, January 28, 2006

Special Analysis:
The Inconsequential Citizen, the Inconsequential State

The most recent Open Thread here at The Dark Wraith Forums has generated an extraordinary if complex and at times contentious discussion spanning dozens of individual comments. At length, the conversation turned to the matter of the individual state—the fundamental unit of account in sovereignty—that benefits or suffers from the actions of the several other states in their collective and unilateral actions. Is it then moral or is it immoral in absolute principle for a state or group of states to impose will upon another state or group of states; or is "morality" irrelevant when the only actionable mechanism of imposition is through power?

I offered in the comments of that Open Thread, and herewith provide in augmented form, a perspective that uses the social contract between the individual and a free society as the analogue of consequentiality of the state in a world of many sovereignties.
Within the ranks of what could be described as the "liberal societies" of the past several hundred years are found several distinct threads with regard to the relationship between the state and the citizen thereof. In one mode, a democratic construction leads to the full expression of the person within that state. The dilemma comes when deciding whether that person as an individual is relevant: in other words, does the individual exist wholly separate from his state, or is he infused of and animated fully by it?

Jean-Jacques Rousseau proposed that, were the individual allowed his or her free reign—including as that would the right of private property, etc.—the state would degenerate into a fanfare of individual greeds, the most powerful interests of which would rule, and the remainder of which would consume one another in an endless progress of avaricious devices.

Unfortunately, a prescription fulfilling Rousseau's thinking was proposed by Karl Marx, who was unabashed in the relevance of the whole at the expense of the dispensation of each person within it.

Unfortunately, again, the alternative—the one of which Rousseau warned—was the dominance of the individual at the expense of the permanent subordination of the state. Henry David Thoreau, if in rude and callous fashion, expressed unwaivering opposition to any form of government that moved to express power over him. His became one of many touchstones to the mode of modern states that recognize individual power and, more importantly, the individuation that naturally arises from a state so circumscribed. Mahatma Ghandi, for example, would surely not have endorsed an anarchic state of equilibrium virtually endorsed by Thoreau, yet Ghandi quoted him and described him as inspirational. At its face, that seems impossibly contradictory, since the father of modern India certainly anticipated the power of the state being brought to bear on ancient, brutish institutions of classism. The resolution comes in imagining that a powerful form of the liberalism of modernity is expressed in its expectation of and effort to achieve a state that is directed solely to the end of ensuring personal liberty and freedom of action within a minimal shell of common and statutory laws that ensure not much more than civil order and domestic tranquility.

That, however, might not be enough. In this configuration, the state really does exist as an entity—subordinate though it may be—separate from the individual governed by it. And therein lies the knot: to function effectively within a larger sphere of states, some of which might have constructive relationships to their own citizens entirely other than ours, the liberal state must act. Regardless of how it conducts its affairs of state, it must act separately from its citizens, even if it is acting upon their will, as expressed through democratically elected representatives, through recent revolution, or otherwise. It must still act, and that's where the disturbing idea of "inconsequentiality" of citizens as individuals, as groups with common interests, and even in some circumstances as aggregates with voting power comes into play.

I address this matter as a fierce individualist. Part of that individualism is a repudiation of the state as having the right to unduly harm inalienable rights I was conferred by birth within its borders. I must then come to terms with my inconsequentiality, and I do so as such: the state must fully, at all times, and in all matters recognize the rights I am granted by the Bill of Rights and by such interpretations rendered thereupon by the Courts of the land. In exchange for freeing the state of the burden of having to carry out duties requiring that it use its treasure to control, compel, or otherwise demand of me that which would expend its treasure, its time, and its attention, the state may then regard me as inconsequential as an individual. By extension, I anticipate that the state will in all of its affairs external to these sovereign borders work to the end of recognizing the same configuration through whatever devices by which it comes to have power over other peoples of the Earth.

This way of statecraft is at peril: neo-conservatism—what has been called "neo-liberalism" in some quarters—takes this all as ample and sufficient justification for adventurism abroad and the unavoidable consequence of repression in the homeland. That such malevolent misapplication of principle is the neo-conservative's first and exclusive tendency is not an indication of conceptual flaw in liberalism, but rather a sharp beacon of caution to the danger of allowing any person without deeply humanistic grounding to ever be allowed power beyond his or her crippled ability to grasp its proper, just, and effective use.

That having been noted, be the affection through commerce, militarism, or other project, if the state will at every turn respect and recognize that each affected individual throughout the world merits the trajectory toward and achievement of the expansive rights idealized by liberalism, the state will have not only the respect of the peoples of other lands, but will also be the envy of other states as they in their components, alliances, and aggregate find that they, like we, are inconsequential to the greater goal, which is the sovereign state at peace with its own; and thus by virtue of inconsequentiality, both the nations and the peoples of the world become free.

The Dark Wraith has spoken.

<< 15 Comments Total
 PoliShifter blogged...

the United States as I once knew it is close to longer existing.

Sat Jan 28, 08:37:21 PM EST  
 StealthBadger blogged...

What is most infuriating about the proponent of the neo-conservative view of power is that this person often buy into its own myths of inherent rightness, whether it be from a position of metaphorical steroid-enhanced patriotism, or simple greed.

A simplistic look at Coercion: Power, when applied, distorts the thing it's applied to. This is a given, providing you're using sufficient "power" to produce a discernable effect. The problem with the application of power is two-fold: First, when you alter, or even cease applying power, the distortion you've produced will slacken - but almost certainly whatever you're pressuring will not return to the way it was.
Second (and my favorite as a lover of schadenfreude) is the Law of Unintended Consequences. A particular way the two of them combine to cause problems is that other actors (including whoever or whatever is the focus of all this attention) are beginning/ending/changing the exertions they're bringing to bear - which makes understanding the consequences of just what the hell you're doing even less likely than if you didn't have a single-minded view of reality and the people in it.

If, from the above statements, you get the feeling that I'm advocating that coercion or force be used sparingly, after much thought, debate, and research, and with great trepidation and readiness for the situation to blow up in your face, you're exactly right. For the same reason that I like the idea of Open Source software, peer review, and transparent voting tabulation, I feel that a government as described in our host's last paragraph is the best government is not that governs least, since sometimes least may not be appropriate, as in the reconstruction of the Gulf Coast, but with the greatest respect for those living under its contract.

Sat Jan 28, 09:06:13 PM EST  
 StealthBadger blogged...

*re-reads that*

Bleh, I need to not post for a bit after I've just awakened from a nap. And use the preview button. Sorry for the disorganized state of that.

Sat Jan 28, 09:07:31 PM EST  
 oldwhitelady blogged...

Good evening, Dark Wraith.

Thank you for posting such a thoughtful article. I enjoyed reading it, so very much.

Sat Jan 28, 09:44:58 PM EST  
 Dark Wraith blogged...

Good evening, Stealth Badger. You were pretty lucid for having just returned to the world of the waking from your nap.

An important point I am trying to construct in a number of posts and comments both here and elsewhere is that the solutions of extremism—be they of a Rightist or of a Leftist character—are inferior to a far more difficult, disciplined approach of liberalism that requires experience, dedication, and constant monitoring. The survival of the individual in the onslaught of modernity is of primary importance to me, and it does not fare well in the hurricane of ideological rigidity offered by those of any extreme. This is true even of the Libertarian mindset: in its full fruition, some individuals come to dominate what becomes of all others an oppressed mass. Bullies have no tolerance for everyone living free, unless such freedom is nothing more than the freedom to be exploited.

Libertarianism doesn't worry me at all, however, compared to neo-conservatism, which is persistently an ideology held by the people who seem to be utterly immune to the seasoning of experience. Even history itself is not for the purpose of gathering wisdom, but rather only to the facile end of having some ready excuses. That these fools have managed to grab power and hold on to it is an indictment not so much of them—nature abhors a vacuum of stupidity—as it is a scathing damnation of the voters in this country who have become so degenerated in their education, analytical skills, and capacity for critical thought that they would wholly embrace the neo-conservative agenda, which on its face was and remains entirely transparent and ill-conceived.

As infuriating as that may be, I am even more annoyed that the neo-conservatives will not ultimately be driven from power because of the corruption of their fundamental philosophy, but rather because of the disappointment attending their results. That sets us up for yet another round of neo-conservatism in only a few decades, when the voters in their growing ignorance have once again forgotten the dire results of the last play they gave to the children of the scorn.


The Dark Wraith snorts his way into the bleak and bleaker future.

Sat Jan 28, 09:45:15 PM EST  
 Dark Wraith blogged...

Good evening, PoliShifter.

This is, of course, the point being made by Stealth Badger: the distortionary effect of bad policy isn't merely for the time in which it is applied; it lives on as the causative agent for events and circumstances later, as we shall learn both here and abroad in the years after the neo-conservatives have been chased out of town at the end of a whip.

We'll be cleaning up messes for decades, in fact, and these catastrophes just standing in line waiting to blossom will run the full gamut from the domestic fiscal to the international military.

To some extent, I pointed this out in the series "The 21st Century": what the neo-cons are doing is essentially forcing the hand of the world, most particularly Europe, which will be compelled to react to some extent in kind, despite the better wishes of many that it can resist. My judgment indicates that, between the military hegemony of the United States and the economic hegemony of China, the European Union will be starved down to economic deprivation if it does not move to the Right and embrace some degree of neo-conservative expansionism into Africa, Asia, and the Middle East.

The lack of success it is having in dealing with Iran is a cautionary example. I honestly don't think that Europe is in some sense "failing" in these negotiations as much as it is being frustrated by forces that have parochial agenda they are imposing on the situation to their own ends, but to the world's disadvantage. Most specifically, it strikes me that China is playing the spoiler in this game, and the White House is showing itself to be little more than a blustering, babbling child trying to be important in a negotiating situation far beyond its understanding and capacity to engage with any material contributions to bring to the table.

The bottom line is that this country is, as you note, nothing like it once was; and it never will be again. That's unfortunate: there for a while, we were on the right track in some modest but important ways.


The Dark Wraith sometimes has to really curb expression of his less diplomatic desires regarding what the neo-conservative Republicans should receive for their punishment.

Sat Jan 28, 11:28:18 PM EST  
 Terrible blogged...

Totally OT: re: tax deduction for unremburshed educator expenses. I thought it was strange that I wouldn't know about what you were saying a few weeks ago at BlondeSense about that only applying to K-12. Well it looks to me that what you were referring to is the deduction that can be taken without a schedule A. But as far as I know unreemburshed employment expenses can still be taken on the schedule A for any occupation. Even a college professor! Hell if a ditch digger can deduct having to buy his own shovel I'm pretty sure a professor can still deduct his pens! As far as any IRS 'flags' I think most people worry too much about that.

the temporary tax professional has spoken ;-)

Sun Jan 29, 09:56:44 AM EST  
 Dark Wraith blogged...

Good morning, Terrible.

Thank you for pointing that out to me. As a general rule, business expenses do have the benefit of tax deductibility. It's just that the particular application for teachers is somewhat different.

Although I do not render tax advice anymore, for my own peace of mind (as I noted awhile back at BlondeSense), I personally do not recognize expenses of any kind whatsoever on tax forms because of the potential for an IRS computer or agent to send up a red flag. That danger has existed for a long time; but with the politically charged atmosphere in Washington, these days, I see anything out of the bland, generic Form 1040 as an open invitation for retributive action by a government that now sees its own citizens as enemies and criminals just waiting to be caught.

And I do fully acknowledge that I'm far too paranoid; but the perverse consequence of the disability is that I sleep soundly at night (given what little sleep I get).

That having been said, I am grateful for the information you conveyed.



The Dark Wraith keeps an eye over his shoulder at all times.

Sun Jan 29, 11:07:13 AM EST  
 StealthBadger blogged...

Cordial but preoccupied Greetings.

This is only marginally on-topic, since it touches on the idea of people not having a clue about Unintended Consequences. I'm still puzzled about the yield curve, but I lack the economic expertise to express my reservations beyond "someone tried something, and it looks like it's not working."

In any statistical data there are always strange anomolies, usually the organism being measured doing what it damn well pleases, but I can't shake the feeling that something is wrong, and I hate being stuck on feelings when there are facts out there.

Please forgive the crudity and probable error in this analysis, but the month of January shows anomalies that I'm at an utter lack to explain.

It seems that usually the stock market and the yield rates are in loose harmony, reflected in the numbers from two weeks ago. The numbers from last week look like someone was trying to drive both the stock market and long-term rates with a sharp kick to the short term, with a very, very weak ripple moving forward into the longer-term as the short-term boost initially collapsed, then climbed back 0.02 probably on the strength of the trading numbers from Wall Street - there is no real news that I'm aware of that would support such a boost, especially with the pace of layoffs and consolidation increasing. I do know that there are economic arguments for restructuring being a sign of a corporate entity returning to good health, but what's going on now is more (to use just one example) Ford is making a more modest long term projection as to the market share it expects to have.

I realize you'd said that you'd talk about this later, and am not asking for a full explanation. I am wondering much the same thing as I was last time I mentioned this, but this time I'm wondering if someone went the "if at first you don't succeed, hit it harder" route.

Sun Jan 29, 03:32:10 PM EST  
 Anonymous blogged...

You changed fonts again. I like this one more.

- oddjob

Mon Jan 30, 09:00:44 AM EST  
 Dark Wraith blogged...

Good morning, Stealth Badger.

Suffer me a couple of different but related points. With respect to the bond yield data and securities data in general, these are not "statistics" in the traditional sense that word means. In casual, media, and even much undergraduate exposure to the subject, statistics has to do with sampling and, from the sample(s) taken, arriving at conclusions, ideally through a process of hypothesization.

The securities price data you see here, on financial markets Websites, and elsewhere isn't the result of sampling: it is the full-blown result of every transaction being taken into account, with the markets, themselves, through the actions of market makers, specialists, and others reflecting the results in single, moment-to-moment prices of the securities.

A consequence of this—one quite uncomfortable for some time during training—is that the price of a security impounds all information about the underlying asset. The debate comes in whether or not that "all information" is "all public information" or "all public and all or some private information." That issue (which we call the "form of efficiency" of the markets) aside, there is no anomaly in securities prices as a result of statistical sampling and inherent errors therein.

That does not mean securities prices are not the subject of statistics, but it is statistics of a wholly different kind, one that is only rarely explained even in undergrad stats courses. The kind of statistics (which is nothing but a branch of mathematics, anyway) to which I am referring is the mathematics of "stochastic processes." Now, there's a facile and wholly silly use of that term among so-called technical traders: they talk about a kind of charting analysis called "stochastics," but that's just yet one more of a whole range of tools that are meant more to sell "trading systems" and assorted other garbage.

Real stochastic analysis is a burly field of math involving what looks on the surface to be pretty complicated, hard stuff. It really isn't, once you get the hang of how stochastic variables are just an extension of deterministic ones. Most importantly, understanding securities prices as stochastic processes opens up a revelation: much of the amazing physical world as modeled by Newtonian mechanics is the world of stochastic processes. In fact, much of the entire world is modeled beautifully by stochastic processes. That means, once understood as stochastic processes, securities price dynamics become nothing more than just one more part of a much more deeply unified world of both nature and of human actions (which are far too often seen as somehow separated from nature by something like "free will" or "sin" or "epiphany," even).

In other words, Stealth Badger, the same processes that govern the way heat moves from a warm area to a colder area governs some of the dynamics of securities prices. The same processes that govern a traffic jam or the state of a chessboard during a game also govern some of the dynamics of information within a securities market.

It's all related, and the relationships come into focus through the modeling paradigm of stochastic analysis.

I know those paragraphs above seem like an obtuse aside, but they really are central, and here's how: securities prices are not "in error" in any sense. They reflect precisely the information state of the system they represent. If there really is information unavailable (there's the "form of efficiency" issue, again), then they won't reflect it, but neither can any information-utilizing engine deal with it, since it's outside of the scope of review. "Insider" or "secret" information might exist, but its very existence would lead to a reflection of that, albeit minimal, information entering the system.

In terms of the bond prices, in some sense you are correct in noting broad correlations between equity and debt prices. Those aren't lock-step relationships by any means, and one market does not lead the other. Both react to the information available; but because they represent different claims on the cash flows of underlying assets (whether those assets be physical or otherwise), the reactions of the different securities to that information will necessarily be different, even if related.

Work with me here. Debt represents a prior claim on cash flows; equity represents the "residual" claim on cash flows, this residual being what remains after liabilities have been satisfied in their due course. In less simplistic terms, equity is a riskier asset since its value is predicated on events that are known with quite a bit of uncertainty. Debt is less risky, all other things being equal, since it claims cash flow before the vicissitudes that make profit move so sharply up and down.

Government debt is the least of all risky assets for an investor (again, comparing instruments of otherwise similar character, like maturity, call provisions, etc.) Government debt will be satisfied, whereas private debt has a certain probability of failing to provide all or part of the agreed-upon cash flow to its holder.

In practical terms, then, an investor fearing danger in the stock market will have available to him or her (or it) a means of securing considerably lower risk by moving money out of stocks and into bonds. That necessarily means that a so-called "flight to safety" will see investors moving money out of stocks and into government bonds. As investors flee stocks, the price of those equity securities will fall; and as the money flows into bonds, their prices should rise. But recall that price and yield are inversely related: that means, a flight to safety should cause bond yields to drop (as bond prices go up).

Now, we're not seeing the long end of the yield curve dropping, so does that mean there's no flight to safety occurring? The answer would be found in small measure by what's happening in the stock markets. Stock prices last week, for example, were running pretty well upward, which would mean money was being pulled from somewhere to go into those purchases of equities. That would probably explain why the long bonds were falling in price (and their yields were concommitantly rising).

Is this good news? Not in my judgment. Those rising bond yields are more the result of aggressive debt issuance expectations: the markets know the government is going to be borrowing huge amounts of money—far more than it, until recently, was admitting. That's a prescription for rising bond yields down the road as the government has to pay whatever yield is necessary to get its loans. But because of the efficiency of securities markets, the expectation of what will happen "down the road" becomes impounded right now in the bond yields.

There are several other aspects to current yield dynamics. One of them has to do with inflation expectations starting to build seriously into long-term rates on debt. In other words, interest rates on long-maturity loans are starting to reflect an almost inevitable scenario as the excess money the Fed printed over the past nearly five years to pay for the Bush Administration's irresponsible fiscal policies comes back to haunt us as inflation. Beyond that, as a worst-case, almost unthinkable (almost unavoidable) scenario envisioned by a few rather sober market analysts, central banks around the world might have to go into inflation hyper-drive to prevent a global economic fiasco as oil prices skyrocket, the Fed's excess greenbacks start to cause trouble, and the Chinese central bank's almost incomprehensible overhang of yuan all come together in a sort of perfect storm to stomp the daylights out of the world's economies over the next ten years.

That's enough for now, Stealth Badger. I think I've pretty much stomped the daylights out of everyone's interest in this entire subject matter for the time being.



The Dark Wraith will cranked back up at another time.

Mon Jan 30, 12:06:39 PM EST  
 Dark Wraith blogged...

Good morning, OddJob.

Once again, I thought the changes I made would be too minor for notice; but you're right: I'm moving toward uniformity on the Georgia typeface (one of those natively available to be presented by most browsers and one I favor for its gracefulness and serifs). I bumped up the post-script font size slightly, too.

These tweaks were supposed to be only barely noticeable; but once again, the astuteness of the regulars here has caught me in the act of making minor changes.


The Dark Wraith ought to have a "what have I changed now" challenge every week.

Mon Jan 30, 12:11:47 PM EST  
 Anonymous blogged...

I wasn't sure about the change in font size since sometimes a change in font causes a sufficient change in appearance as to look like a different size, even though it isn't.

It won't suprise you to learn I've had supervisors damn me with the faint praise of, "You're very observant.....", with an unspoken "BUT" hanging in the air as it was clearly the supervisor's preference that I did my work more quickly and with less attention to detail (not all jobs are equally demanding in attention to such and getting wrapped up in minutia can be a hindrance to one's performance).

- oddjob

Mon Jan 30, 01:13:50 PM EST  
 StealthBadger blogged...

Thank you, I feel a bit better knowing the name of the locomotive that I suspected (and now know) that is about to run us over. :D

I look forward to your additional writings.

Mon Jan 30, 06:20:34 PM EST  
 The Fat Lady Sings blogged...

Allow me to distill my view of the state and its relationship to me into a single thought:

Fix the god-damned roads, and then get out of my fucking way.

Simple, I know; but very much to the point, Rosseau and/or Marx be damned.

Hey there Stealthbadger - nice to see you here so often!

Mon Jan 30, 08:11:23 PM EST