Bubble

In 2004 Bernanke referred to the 30 year smoothing of the business cycle as “The Great Moderation.” There was no reason to think this moderation would end. Man now controlled the business cycle and his economic destiny. Three elements were critical to this 30 year period:

1. Financial innovation: beginning in the early ‘80s with the tranche-ing and packaging of mortgages into MBSs and then later in the ‘90s and ‘00s using all sorts of debt of even the poorest credit quality. Add credit default swaps and a multiplicity of other exotic products difficult to price (in terms of risk) and personal indebtedness levels rose dramatically, particularly those of the poorest Americans. Even the riskiest loans could now be tranched and transformed into AAA securities. Banks were able to make loans, quickly package them and move them off their balance sheets, thereby allowing for the origination of new loans. FNM and FRE bought up the MBSs as buyers of last resort in a government effort to make housing affordable to the poorest Americans. Essentially, financial innovation in the form of debt tranche-ing and packaging led to the democratization of indebtedness, and government support for MBSs led to a flourishing secondary market in mortgage debt of the shakiest credit quality.

2. Falling interest rates: from the early '80s to the present day short rates fell from 18% to zero allowing for the continual refinancing of existing debt. In effect, the Fed continually bailed out borrowers (and creditors who had lent too much).

3. The computer and internet: These revolutionary technological innovations transformed society and provided the productive asset base for real economic growth, not growth tied to debt issuance. Massive productivity gains began with the introduction of the personal computer in the '80s and later, with the development of the internet, led to government budget surpluses by the late ‘90s. The computerization of society caused such a dramatic increase in productivity and tax revenues that even the Clinton government was unable to spend it. These productivity gains in turn gave rise to new expectations over future economic growth, that growth would at least continue at these new rates, and further debt issuance was based upon these growth assumptions.

Conscience & The State

39. Do not suppose that cooperation and competition are antithetical or opposite. Rather cooperation as learned from the good mother is the base foundation for all economic interaction. To wrong one’s trading partner, to hoard at the expense of others or at the expense of the exchange system itself, are each violations of the good mother’s originary example of cooperation. The good mother's example is a check on competition so that it does not begin to resemble some Hobbesian world of individuals in constant war with one another. The good mother’s example of cooperation allows mutual benefits to be maintained between trading parties in the absence of codified laws and regulation.

45. It is the good mother who develops and encourages conscience in the child. Conscience is cooperation embodied. He learns to feel his violation of cooperation and altruism physically. His conscience warns him with the racing of his heart, the sweatiness of his palms, the sinking feeling in his stomach.

48. Cooperation, altruism and the gift resist systematic codification in law. Indeed, the growth of the State and the expansion of regulation and law may be seen as a further factor undermining the institution of good motherhood. The State’s prohibitions are appealed to as a guide to economic interaction rather than conscience as developed by the good mother. The State, rather than the conscience of individual men, becomes the sole caretaker of the economic system, and any activity in accord with the State’s regulation is understood to be legal and just. Loopholes and other systematic abuse is legal and therefore acceptable. The State, rather than the conscience of individual men, is the arbiter of acceptable conduct.

The Good Mother

4. The family is the first group. The family survives through cooperation, not competition. The good mother is savings and sacrifice. There is no family without her.

12. The bond between mother and child begins at conception with her body feeding the fetus’ development inside her, and later, after his birth, she nourishes him from her breast. The intimacy of these experiences and their shared genetic lineage founds the powerful connection between them. She gives of her body so that the child may live. Her attention is always in regard to the child. She speaks to it and plays with it. She gives of her body and time without any expectation. There is no calculus in the relation of mother to child.

17. From the good mother he learns cooperation, altruism, and the gift. The good mother’s care is the expression of man’s first and most basic institutions, and it is upon these institutions that others are founded. The good mother prepares the child for his future and to do so she forgoes consumption today. That is her sacrifice, self-sacrifice, and the child is her savings.

29. Motherhood is not simply preparing a child for the economic institutions he will encounter later in life. It is not about getting him a head-start on other children by making him an early reader, or educating him in Chinese, or forcing him to learn an instrument. If educating a child to gain a competitive advantage relative to other children was the objective of motherhood then it could be performed by anyone and, verily, this conception guides the Western mother. A nanny can nurse the child on formula while she is away at work. A good pre-school can advance his education. The Western mother argues that specialists are better equipped to care for her child and instruct him. And paying specialists for her child’s care also allows her to have a work career.

38. Child care is a nuisance for the Western mother. It diverts her from her career, which represents her independence from her husband and her family. She rationalizes that the economic benefits of being able to work while a surrogate mother cares for her child is best for both the child and family. Economic considerations are primary to her and thus to the Western family. No longer does the Western mother wish to be identified with her family and with her children. Rather her career, her bank account, and the clothing and possessions she has purchased is how she identifies herself.

50. The undermining of motherhood and the family has extended to the home itself. The home as the dwelling place of the family has more recently become an investment, an asset to leverage and borrow against for further consumption.

52. Whether it is as a result of indebtedness or the desire to earn more for further consumption, the mother is no longer at home. The family is split through by economic considerations. The child develops with a mostly absent mother and only a limited experience of cooperation, altruism and the gift that only she can provide him.

55. For many Western women, motherhood consists simply in providing food and shelter until the age of eighteen, and access to an education that prepares the child for economic life. Her time, she argues, is her own. With divorce laws erected to favor these careerist mothers, many cease to maintain their attractiveness to their husbands. They become emotionally cold, deny them sex, allow themselves to fatten, and call upon their husbands only to fix things around the house. In her refusal to be good wife and good mother, the family is compromised.

69. Abortion, the selection of sperm donors or other manipulations of pregnancy, choosing not to breastfeed (also nutritionally damaging to a baby), homosexual partners or single fathers raising children, etc. are all distortions of motherhood that damage the originary institutions of cooperation and altruism.

76. The good mother cooperates to make the family possible. The good father competes with other men to provide for the family.

77. The good mother is irreplaceable to the child. The good father though, is more easily replaced. Beyond the income he provides the family, he need only be present as a model of hard work and competitive effort for the child.

Aforismo para Colombianas

An aphorism for Andreas of Braunau, Austria

The young Latinas say first among their priorities is the family. To have children, to be a joyful, simple and caring woman, to find the love of an honest man, these are her goals. Yet she sees the conspicuous wealth, the shopping malls, large homes, and fashionable women of the West and she thinks, ‘Now, if only I could have those things too.’ But she does not realize that the Western woman has given up families, the care for children, and her joy in exchange for grand material consumption.

A Puzzling Reduction

The pure competitor.
The pure cheat.
The pure altruist.

There are others.

The evolutionists have identified many behaviors and questioned whether they could survive given natural selection. For them these behaviors are genetically determined, with genetic origins similar to those for blue eyes or black hair. But are they not mistaken to reduce human behavior to genes? Are they implying that human behavior is only genetic?

Certainly the genetic models can be predictive for physical attributes. But are these models equally predictive for human behavior?

Questions must first be asked regarding what exactly constitutes any of these behaviors. What (or who) is the standard? Who sets it? Is the individual expressing competitive behavior always in all cases competitive? Does he never act altruistically/cooperatively? Are there variant cultural interpretations of these behaviors--couldn’t one behavior also sometimes be interpreted as another? Do cheaters always trump altruists over time in the manner of dark hair trumping red?

And what does it mean that these supposedly weaker behaviors continue to exist? What does this mean for the evolutionist’s models?

What of Darwin’s statement that natural selection was only one force acting upon the evolution man?

After Overcoming

His overcoming brings the great peace. He overcomes into silence. The untroubled man no longer writes. There is no more need for philosophy, any sort of talking or writing about. Indeed, what is philosophy no longer has meaning for him. He understands that language can have nothing more to say on these matters. His overcoming has returned him to the world.

Note on Writing

“If my mind could gain a firm footing, I would not make essays. I would make decisions.” ― Montaigne

There is something of the coward’s hesitation in sitting down to write that can never quite be removed. The writing moment is an extension of the conscious moment, a breakdown of man’s place within the world. Writing may clarify a man for action and return him to the world, or itself become a kind of fetish, a bad habit, a secure retreat from the world of men and activity.

He who writes feels more productive than he who simply sits. But it is mostly a false comfort, because for whom does the writer write? His audience is those who sit to read. And his writing, if he chooses to publish, encourages other men to sit.

Writing, to be productive, must itself result from some conflict regarding an action, return the writer to action, and just as importantly bring any reader to action. While good writing returns both author and reader to the world of decision, bad writing creates a lasting world of its own for a reader, giving him pleasure and comfort to remain within it. He lives in the musty quiet of libraries, or under the protection of universities, and any writing he may do will be no more than a derivative, secondary literature on that which was already written.