Makers and takers, ancient mariners, hyperinflation, and other items

Mail 750 Saturday, November 17, 2012

I noted in View that I am preparing an essay on surviving in an age of makers and takers. That has generated considerable mail, some of which is very relevant. It is worth noting that the subject is a great deal more complex than the title: clearly there are more than rwo categories of people. Makers and takers is neither mutually exclusive nor collectively exhaustive of the citizens and inhabitants of these United States. It is a convenient way to refer to the growing number of people dependent on government for basic needs that formerly were not supplied by government nor considered government responsibility.

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Makers and Takers

I have been pondering the "Makers/Takers" divide in light of the Cost of Knowledge boycott of Elsevier.

If you mean to write an essay on the matter, the subtle thing is to see where the poles are really located. The simplistic classification most folks on the right want to make that puts business owners in the "makers" and government workers (along with welfare recipients) among the "takers" does not correspond to reality.

Many government workers (e.g. soldiers, homicide detectives, those of us who teach large lecture sections in and conduct research in useful disciplines at state universities) provide useful services to society, and are arguably "makers", while businessmen whose business model is dependent on monopoly rents derived from state-granted monopolies called "copyrights" and "patents" (e.g. academic publishers, patent trolls, consulting firms and lobbyists specializing in expanding copyright and patent protection for incumbents in the market) held on books they did not write and inventions they did not make are arguably "takers".

The discussion of who is a "maker" and who is a "taker" in the realm of finance could get very nuanced.

I commend Luigi Zingales "A Capitalism for the People" to your attention if you have not already read it. In truth I think it would be better to dwell on his distinction between pro-market and pro-business than on the easily abused maker/taker distinction.

David Yetter

Indeed. There are several dimensions to this matter.

While there may be those who would condemn civil servants and those who work for the government in other ways, they certainly do not include me. I spent a good part of my life working for government institutions, as an undergraduate assistant at the Universities of Iowa and Washington; at Boeing, where a good part of my work was directly paid by the government and had nothing to do with the commercial activities of the company; at Aerospace Corporation which was known as a “government non-profit”, and the work was directly for the Air Force; at North American where I worked on projects funded by NASA; and so forth. And I very nearly took a position as a senior GS at a level that required a vote of the Civil Service Commission before they could offer me the position at that level; I could eaily have ended up as a retired civil servant. I certainly do not despise those who do government service per se.

On the other hand, I have always been in favor of the old Hatch Act which forbade federal civil servants from engaging in any political activities including donating to political parties or candidates or political action committees – in other words, restricting their free speech as a condition of government employment. I suspect that it is time to reopen that debate. FDR favored the Hatch Act and for good reasons, just as he opposed unionization of civil service.

On the other hand, I do not consider artists and authors to be in the taker category. The Constitution is pretty clear on the purpose of patents and copyrights. If the notion is that those rights are being abused, I would quickly agree: it wasn’t me who insisted on copyrights lasting forever. I was perfectly happy with the 28 years plus a 28 year renewable under which I wrote most of my early works, and I would be happy enough with Victor Hugo’s “life plus fifty years” in the international copyright conventions – if I were to alter that, it would be to cut that to life plus 40 years. And I am appalled at what has happened to patent laws in this era of a politicicized plaintiff bar.

As to universities, I am a product of public universities: in my time tuition was quite low. On the other hand, the federal government didn’t try to ‘help’ me by insisting that I be paid some fanciful minimum wage: a good part of my working my way through college came from board jobs, at which I waited on table for an hour in exchange for a meal from the restaurant’s menu. Board jobs no longer exist, but they were pretty standard in college towns at one time.

Universities like all bureaucracies are subject to the Iron Law, and will absorb as much money as comes their way; and if government pumps money out to stimulate demand, the price will rise to absorb all the money and then some. It may be a good investment to provide free or nearly free university level education to some percentage of the population, and then to provide that nearly free to anyone who chooses certain professions and can maintain competence in them; but it is clearly madness to subsidize endless graduates in sociology, ethnic studies, basket weaving – we can all make lists. And it is insane to raise the cost of studying engineering and medicine in order to finance the university departments that turn out graduates in useless studies.

The real debates are on freedom and subsidies: are we to have ‘entitlements’ or investments? It is one thing to justify taxation for investment when there is some relationship between what is spent and what that buys, and sheer entitlements in which the recipient has a right to something paid for by someone else.

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Jerry,

It looks like people have finally become aware of Jane Jacobs proposal of the theory of the “survival syndromes” she first published in her book SYSTEMS OF SURVIVAL. Those would be an explanation of the “traders and Takers” systems that have been successful throughout human history that she postulates have evolved into “Marketplaces” and “Guardians” of all societies. In her book she “found” that there were 15 “rules” that needed to be followed for each system to “work.” However, more interesting to me is her discovery that to use the “Taker” rules in a market place, or to use “Trader” (maker?) rules in Guardianship results in total CRIMINAL ACTIVITY. If Taker rules are used in a Market, then you have nothing less than a Mafia style “protection racket” where fees (taxes, political donations) must be paid so you won’t be destroyed by those in charge. If Market rules are used in the “Taker” (Guardian?) arena, then you will have a “Guardian” who is “for sale to the highest bidder”, or total corruption. When you view the current American societal systems operant today, you must conclude that our current system is a mix of a government for sale that is also operating as a Mafia style protection racket where if you make a political donation to the “wrong party”, then the Guardians will put you out of business. Think of all the republican owned GM auto dealerships that were closed and what happened to the non union businesses in the auto bailout as an obvious example.

The information has always been there, but our over controlled media have stifled its’ dissemination. Hopefully, you can get this out to your readership as in the past you have mentioned Jane Jacobs THE COMING DARK AGE (her last book).

Vasyl Banduric

Jane Jacobs is always worth reading and contemplating. While there are items in her rules  I would quarrel with, the concept seems correct. And the media are not to blame for the lack of discussion of such items in our institutions of learning.

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Makers & Takers

Jerry, as I recall, the quote (from Heinlein, via Lazarus Long), was “makers, takers, and fakers.” You probably want to worry about all three categories.

–John

As I said, neither mutually exclusive nor collectively exhaustive.

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Survival in a world of makers and takers.

Dear Dr. Pournelle:

Long before the (temper-tantrum?) petitions to secede, the Balkanization of the USA was a concern. RAH wasn’t the first and maybe wasn’t the best, but his ‘Friday’ struck a chord that I have never been able to forget. While I see the fracturing of this nation in the future, I think the form it will take is to be influenced more by state-to-state immigration rather than corporations splitting the GDP pie.

Please continue to sign me,

Blowin’ in the Wind

I recall California and its Chief in Friday. Mr. Heinlein was prescient…

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Everyone is a criminal…except government employees of course

http://takimag.com/article/this_country_is_going_to_jail_gavin_mcinnes/print#axzz2CR4NN3Ut

Our incarceration rate <http://www.nytimes.com/2012/10/21/sunday-review/candidates-and-the-truth-about-america.htm> is higher than that in China, Russia, Cuba, or Iran. We have “5 percent of the world’s population. But…almost a quarter of the world’s prisoners <http://www.nytimes.com/2008/04/23/world/americas/23iht-23prison.12253738.html?pagewanted=all> .” There is a drug arrest in this country every 19 seconds <http://stopthedrugwar.org/chronicle/2011/sep/20/drug_arrest_every_19_seconds_say> . Charles Lynch faced 100 years <http://abcnews.go.com/Business/Stossel/story?id=7816309&page=1> in prison for selling medical marijuana legally. There are around 75,000 arrests yearly <http://prostitution.procon.org/view.resource.php?resourceID=000120> for prostitution.

Charles Brumbelow

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unemployment –

Hi Jerry,

Your correspondent is wrong on a number of points. Unemployment had been extended to 99 weeks – which just ended. See http://www.edd.ca.gov/unemployment/Federal_Unemployment_Insurance_Extensions.htm for details.

Second, the employer pays for unemployment insurance, not the individual. And those rates are skyrocketing because of the extensions, which is part of the reason we’re not seeing salary increases outside of union contracts (the other part is healthcare costs). Those fixed costs are driving price inflation without wage inflation (which, contrary to your other correspondent, can still go hyper). The cost of goods increases.

Third, there is a substantial portion of the folks on unemployment insurance who are choosing it as a lifestyle – especially when combined with SNAP, TANF, and all the other programs, it’s livable. I have a family member who runs a temp agency. The revolving door is that they’ll hire someone, who will work just long enough to reset the unemployment term, and then never accept another assignment and start collecting again.

Now I’m not suggesting that everyone, or even a majority, of folks on it are abusing it. But a non-zero, and somewhat substantial portion of folks are.

While not a direct comparison, here’s a similar example of how to game the system. I worked in a health food store, back in the days when food stamps were paper. Folks would come in, buy 10 cent gum with a 1 dollar stamp, and pocket the change (which was given in real cash). Then they’d come back a couple more times. Then they’d walk next door and buy cigarettes with the coins. Other examples include buying Twinkies, Cheetos, and other junk food with food stamps. Or using the atm machine at casino’s and strip clubs for cash advances on other welfare cards.

There’s something to be said for the old soup kitchen lines – there’s a shame factor there that limits fraud, and that’s a good thing. Folks who really need the help get it, but most who don’t, won’t abuse it because of the stigma. Rather than food stamps, perhaps it’d be better to stop paying farmers not to grow crops, pay them for the crops they do grow, and issue a 50 lb bag of flour, a few #10 cans of peanut butter, and a couple of blocks of bacon and butter every month. Welfare is supposed to be a safety net about human kindness and survival, not tips for dancers, cash for blackjack, or Twinkies to eat in front of the flat panel tv.

Cheers,

Doug

You need not worry about Twinkies…

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Preparing for inflation

It may be coincidental to all this, but I note the Google Fibre is up and running in Kansas City. Could it be that they are choosing to invest their capital into infrastructure rather than more liquid forms of wealth to avoid some of these trends?

I can see their business getting stronger all the time, with that kind of thinking.

Mark Love

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‘In March 2011, a Predator parked at the camp started its engine without any human direction, even though the ignition had been turned off and the fuel lines closed.’

<http://www.washingtonpost.com/world/national-security/remote-us-base-at-core-of-secret-operations/2012/10/25/a26a9392-197a-11e2-bd10-5ff056538b7c_print.html>

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Roland Dobbins

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"If the ancient finds in the Mediterranean can be verified, they will show that Homo erectus or Neanderthals or both had the skills and cognitive ability to build boats and navigate them."

<http://www.livescience.com/24810-neanderthals-sailed-mediterranean.html>

Roland Dobbins

Australia was inhabited 100,000 years ago. It takes no better technology to go to Australia than to go to Crete. And indeed we know what technology was needed to settle Hawaii and Easter Island. While that didn’t happen all that long ago, it’s not inconceivable that it could have happened 50,000 years ago. Sailing isn’t that complicated. I have never thought it impossible that the Americas were settled along the Pacific coast with boats…

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Incompetence v. malice

I have been looking for the origin (hard to believe I invented it) of the following mashup of Napoleon and Arthur C. Clarke: "A sufficiently advanced incompetence is indistinguishable from malice." I first thought of it back when we were hearing of a new Windows / MSIE security hole every few days, but it still holds for much of what governments (all levels) have been doing.

Steve Rush

I am not sure I ever heard that before. Clever.

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China Eyes Atlantic Base

Chinese air power could become a threat to U.S. hegemony in the Pacific, but now China appears to be considering a move into the Atlantic.  The article does an excellent job describing the geographical and geopolitical challenges viz. crises China would create with such a base. 

<.>

On June 27, a plane carrying Wen Jiabao made a “technical” stop on the island of Terceira, in the Azores. Following an official greeting by Alamo Meneses, the regional secretary of environment of the sea, the Chinese premier spent four hours touring the remote Portuguese outpost in the middle of the Atlantic Ocean.

Wen’s Terceira walkabout, which followed a four-nation visit to South America, largely escaped notice at the time, but alarm bells should have immediately gone off in Washington and in European capitals. For one thing, Wen’s last official stop on the trip was Santiago, the capital of Chile. Flights from Chile to China normally cross the Pacific, not the Atlantic, so there was no reason for his plane to be near the Azores. Moreover, those who visit the Azores generally favor other islands in the out-of-the-way chain.

Terceira, however, has one big attraction for Beijing: Air Base No. 4. Better known as Lajes Field, the facility where Premier Wen’s 747 landed in June is jointly operated by the U.S. Air Force and its Portuguese counterpart. If China controlled the base, the Atlantic would no longer be secure. From the 10,865-foot runway on the northeast edge of the island, Chinese planes could patrol the northern and central portions of the Atlantic and thereby cut air and sea traffic between the U.S. and Europe. Beijing would also be able to deny access to the nearby Mediterranean Sea.

</>

http://www.nationalreview.com/articles/332454/red-flag-over-atlantic-gordon-g-chang

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Most Respectfully,

Joshua Jordan, KSC

Percussa Resurgo

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The Rise and Fall of Stalin’s Atlantis.

<http://www.spiegel.de/international/world/exploring-the-crumbling-soviet-oil-platform-city-of-neft-dashlari-a-867055.html>

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Roland Dobbins

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Denver UFOs buffy willow

Jerry,

The “UFO” activity looks a lot like bugs flying in front of the camera. The various trajectories are about what you’d expect if a bug flew in front of a camera, and the blurry shapes are what an out of focus object would see, especially if digital processing was used for sharpening or other effects, or if the bug was moving fast enough to appear elongated due to CMOS sensor scan rates and framerate adjustments as the sensor info is converted into digital video.

In at least one of the videos, an object that initially appeared to be in the distance briefly flew and appeared in front of shrubbery or trees or other objects, indicating that it was not actually a distant object. Based on relative distances and angular line of sight rates, it looks even more like it is simply out of focus bugs flying in front of the camera.

As for witness statements that there was “nothing there”, as someone blessed with vision that is naturally 20/10 and can be corrected to somewhere around 20/7, it sometimes surprises me what other people can’t see. I’ve seen bugs fly like that all my life, simply because my eyes are good so I notice them as they whiz by. It wouldn’t surprise me if whoever set up the camera didn’t notice bugs flying in the camera field of view or realize that in the video, the out of focus condition coupled with digital processing artifacts would make those bugs look larger, farther away, and more substantial.

Sean

Interesting. Alas, I have never seen a flying saucer. I did a short stint investigating a couple of reports for Blue Book when I worked with USAF in the 1960’s; I could only conclude that a jury would probably convict someone of murder on the testimony of the witness, but there was no possibility of proof. Of course there would be no murder trial without some evidence that there had been a murder.

Plenty of believable people have told incredible UFO stories. As Ted Sturgeon put it one night when we were on a national TV show, “I’d like to see wreckage and bodies. Not someone who says he has seen them.”

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On computers and central planning

As a software developer, I tend to feel that the only people who think computers solve the problems of central planning are those who’ve never tried to build large-scale, low-latency systems. They’re hard.

The hardest part? Synchronization. If you want a system to scale without sacrificing latency, you quite literally cannot wait until you have all your information in front of you before doing your analysis. Throwing more hardware at the problem only helps to an extent; you can make a single decision making component as fast as industry allows, but it will never be enough to cope with the additional demands that would always be placed on the system.

The most productive parts of the computing industry over the past ten years have been those built on many actors (be it machines, CPUs, CPU cores or individual GPU units) performing actions driven by local knowledge.

If that doesn’t sound directly analogous to the basis for an economy driven by individuals, I don’t know what would.

Michael Mol

Before I would trust computer systems to run an economy I would like some evidence that our economic models have some efficiency or even correspondence with reality.

We know the market works. With command economies it is always “This time for sure.”

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Hyperinflation

The reason a true hyperinflation is highly unlikely in the US is that it destroys the value of financial assets (inflation erodes assets, hyperinflation wipes them out). Too much of the net worth of the US is in financial assets for any government to deliberately ignite hyperinflation, and hyperinflation does not happen by accident. All of the uncontrolled hyperinflations involve countries with relatively limited financial assets and economies dominated by hard assets (Argentina, Zimbabwe) or in the midst of a general economic collapse that wiped out what financial assets existed even before the hyperinflation started (post-USSR break-up, post WWII central Europe). The Weimar case was tied to reparations and Versailles – the German economy of the early 20s was something of a special case in German history.

A simple way to think about this – via Wikipedia as of 2009 the total US bond market (govt & private) was over $30 trillion. Add to that all the pensions, annuities and other fixed income assets and you can see that it makes no sense for the government to inflate away $16 trillion in government debt at the cost of destroying something like triple that amount of national wealth. And as the 70s proved, there are political trip-wires that will go off way before things get that bad. Only in the aftermath of a collapse that wipes out these assets would you see hyperinflation (to wipe out whatever remaining debt is owed to foriegners).

I find it hard to believe some level of inflation beyond the desired 2-3% will not occur in the next 3-5 years. But before it gets very far it will be clear to the powers that be that it does more harm than good, and the damage will be limited. It won’t be trivial, but it only goes exponential if there are far worse things to worry about.

Paul Westkaemper

I have no estimate of the probability of what is called hyperinflation, but I do not see how we can avoid the inflation levels of the Carter era. Inflation is too much money chasing too few goods. It has the effect of ruining those dependent on savings and fixed incomes. I would think Carter era inflation levels almost inevitable.

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