“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Saturday, July 12, 2008

the economy of loaves and fishes

Kevin Phillips, as a populist, always gets under the skin of professional economists. And, of course, when a professional economist is put in a corner, he responds with professional jargon. Like Sganarelle in The Doctor in Spite of Himself, mixing up medical and rhetorical effects, economists will immediately revert to model talk when pressed, disregarding the fact that their enemy, the populist, is criticizing the very idea that those models represent economic reality. The economist will then defend himself with some reference to other sciences in which models are used, like physics. Thus, Tyler Cowen, the man who wants you to believe that there is no difference between trading between Austin and Dallas and trading between Austin and Bangalore, gave Phillips book the thumbs down in his review of it, which ends by saying: The author should spend a week locked in a room with the Solow model. Of course, as I have pointed out in my own post on trading the residual, the Solow model is very much about national economies. Since Cowen apparently believes the nation has no status as a unit of analysis in economics, it is hard to see what he thinks that model is going to do for him, since it presupposes that the nation is a unit of analysis. In any case, the model reference is almost always meant to impress the reader with the “science” of economics, and the science is supposed to be proven by the fact that the models can be built, just like in physics. Of course, there’s no reason to think that physical forces and economics forces are alike. If anything, the model should be behavioral, the reference should be to biology, and the reification of models should simply stop. The counter-revolution in economics, the overthrow of the post-World War II order (as the inevitable cracks showed up in capitalism – the declining rate of profit, as per Marx’s prediction, which was all over the seventies) was a return to the ‘foundation’ of economics as a science. Robert Lucas, when he wrote that equilibrium is the “condition of intelligibility” of economic thought, put the doctrine nicely. This is the great rule. Institutional economists, and the Keynes who has not been modified and smoothed into professional presentability, exist on the outskirts precisely because they dispute this idea.

However, this isn’t to say that Phillips doesn’t carry certain old superstitions into his attacks on the establishment, including one of the oldest, which is that the State should – for magical reasons – always try to balance its budget. This populist theme puzzles me. It turns the state into an abstraction – which is, of course, a large step in the direction of neo-classical economics. If the state could be seen as an intrusion on the efficient market sphere – instead of simply another aspect of the total economy, one having to do with the economy’s primary task of distributing wealth – then we dissipate the cloud of unknowing that settles over the economic system whenever economists pull the discussion of it into a discussion of “efficiency.”

That said, in this Harpers article, Phillips is right to point out that the picture of our economy painted by the government over time has been increasingly distorted by the desire of administrations, Democrat and Republican, to massage the numbers. And to put a gloss on the ideologies they are selling. The most startling of those distortions is the odd way in which the government treats housing.

“In 1983, under the Reagan Administration, inflation was further finagled when the Bureau of Labor Statistics decided that housing, too, was overstating the Consumer Price Index; the BLS substituted an entirely different “Owner Equivalent Rent” measurement, based on what a homeowner might get for renting his or her house. This methodology, controversial at the time but still in place today, simply sidestepped what was happening in the real world of homeowner costs. Because low inflation encourages low interest rates, which in turn make it much easier to borrow money, the BLS’s decision no doubt encouraged, during the late 1980s, the large and often speculative expansion in private debt—much of which involved real estate, and some of which went spectacularly bad between 1989 and 1992 in the savings-and-loan, real estate, and junk-bond scandals.”

Later on, Phillips writes:

“Nothing, however, can match the tortured evolution of the third key number, the somewhat misnamed Consumer Price Index. Government economists themselves admit that the revisions during the Clinton years worked to reduce the current inflation figures by more than a percentage point, but the overall distortion has been considerably more severe. Just the 1983 manipulation, which substituted “owner equivalent rent” for home-ownership costs, served to understate or reduce inflation during the recent housing boom by 3 to 4 percentage points.”

If you think about that for a minute, you will have a key to the odd behavior of the Fed – which is aligned with the odd behavior of the Bush administration. If housing prices had been fairly assessed, the Fed would have faced a big jump in inflation around 2004-2006. And it would have had to respond, at least by traditional rules, by raising interest rates to meet that inflation. Now, the Fed did raise interest rates over this period, but the addition of 3 to 4 percentage points to the inflation numbers would have caused a much bigger raise. At the same time, the Bush administration should have used the peak period to raise taxes – the state should have taken money out of an incipient inflationary spiral. What would have been the effect of that? If would, for one thing, have busted the housing bubble earlier. And for another thing, it would have strengthened the dollar. A stronger dollar, of course, would have significantly lowered the inflation in the price of a barrel of oil. Such being the case, the Fed would then have lowered the interest rate for a whole other reason over the last two years – with housing prices falling as they are. And presumably the price of oil, even with the rise due to the mad, bad aggression of the Bush people, would not have risen to over one hundred dollars a barrel. Instead, we have a typical third world misalignment between, on the one hand, deflation of the most significant asset most Americans are invested in, the house, and on the other hand, inflation of the one product that Americans depend upon most to maintain their lifestyles, oil.

Of course, the odd adjustments to the cost of living index explain other things too. If housing prices were really going down, by way of hedonic adjustments, when they seemed to be going up, then it would make sense that the number of buyers would be going up – there are more buyers for lower priced goods. Indeed, that happened. Unfortunately, it also happened that the majority of those buyers were using mortgages they couldn’t pay for. Somehow, they couldn’t hedonically adjust the mortgage terms so that they could pay it.

In a sense, what Phillips is pointing to is the separation between accounting, on the one hand, and economics assessments, on the other. Accounting, which should move policy, should simply be about the costs in the real living environment. Economists, however, are right that, from an absolute standpoint, Americans are living in a more prosperous world than, say, when they had to spend a third of their take home income on food. But they are dead wrong that anybody is living in an absolute standpoint. We all live in the relative. In accounting, if a company makes a better quality product, x, for the same cost it made the alpha line of x, and sells it for the same price, the company doesn’t thus lose money. No accountant in the world would put the company in the red for such a deal. What counts is simply the cash flow.

Now, of course, it is too late. What the Fed can or can’t do doesn’t matter so much at the moment. If the Government doesn’t understand where to cut unnecessary expenses – the Iraq war – and where to increase expenditures – unemployment benefits, health care, and a vast program for addressing the twin problems of de-industrialization and the environment - then this is going to be another period of severe recession for most Americans, followed by a silent recession for most Americans. It isn’t a good prospect.

On the other hand, if the U.S. is not going to do what it should to address the huge environmental problems its very prosperity has caused, a set of problems that the U.S., with its massive socialistic investments in higher education, is perfectly positioned to take on, maybe the cure is just a long, long slump.

Thursday, July 10, 2008

the human limit/l’expérience-limite



Before I had ever read the phrase “l’expérience-limite”, I had felt it. In the rather peculiar way one gropes around a hole in the dark, gaining a hand understanding which is, of course, difficult to put into words that belong to the world of light. The feeling, which was especially strong in me in the eighties, was that the norms of success, success as I had imbibed it in the burbs where I grew up, encoded, at a deep level, a ghastly defeat. The term of success were simply the terms of a dishonorable surrender, a betrayal of the forces one’s ego could muster, just so as to retire to a lifetime of being able to purchase enough stupifiants to help one forget the treason, that failed slave revolt. This is, of course, a child’s view of that artificial paradise, our life now. On the other hand, our criteria are determined by our situation – I have no overall vision of this time in which to judge it absolutely.

So, when I encountered the phrase in Blanchot, who I read after reading Bataille (and Bataille has always been closer to my heart) – I was magically caught up in it. In fact, in the early nineties, under the banner of l’expérience-limite, I fucked up in a number of ways that I’m not going to go into – some of them I am still paying for.

Since, at the moment, I am using the “human limit” to help me define that way of being in the world which was eclipsed by the happiness culture, I thought I’d go back and see what Foucault said about l’expérience-limite – he whose life was, according to his biographer, James Miller, so enthralled by that notion. Actually, Foucault doesn’t say much about it directly. But he does make one of his flashing, gnostic remarks in an interview with Duccio Trombadori in 1978:


“ The phenomenologist's experience is basically a way of organizing
the conscious perception (_regard reflexif_) of any aspect of daily,
lived experience in its transitory form, in order to grasp its meaning.
Nietzsche, Bataille, and Blanchot, on the contrary, try through
experience to reach that point of life which lies as close as possible to
the impossibility of living, which lies at the limit or extreme. They
attempt to gather the maximum amount of intensity and impossibility at
the same time. The work of the phenomenologist, however, essentially
consists of unfolding the entire field of possibilities connected to
daily experience.

Moreover, phenomenology tries to grasp the significance of daily
experience in order to reaffirm the fundamental chracter of the subject,
of the self, of its transcendental functions. On the contrary,
experience according to Nietzsche, Blanchot, and Bataille has rather the
task of "tearing" the subject from itself in such a way that it is no
longer the subject as such, or that it is completely "other" than itself
so that it may arrive at its annihilation, its dissociation.

It is this de-subjectifying undertaking, the idea of a "limit-experience"
that tears the subject from itself, which is the fundamental lesson that
I've learned from these authors. And no matter how boring and erudite my
resulting books have been, this lesson has always allowed me to conceive
them as direct experiences to "tear" me from myself, to prevent me from
always being the same."


This way of looking at the experience limit has, unfortunately, only been applied to Foucault’s own biography. I think, however, it contains the seed of an experience of reading and writing, of the third life, which brings together the adventurer and the book. The book, the use of which becomes the sign that separates the savage from the civilized, would, it seems, not have a savage use – useless to the savage who can’t read it, and transforming the savage who does read it – into the civilized. Perhaps, however, there is a savage literacy, a way of taking the book too seriously, of being driven mad by it, or of going through it – writing it and reading it – as an experience of de-subjectification.

Tuesday, July 08, 2008

In praise of bourgeois theater

LI loves Roland Barthes. But we don’t share all of Barthes’ tastes. For instance, Barthes said, in an interview, that he could never feel “close” to Molière. In Molière, he saw foreshadowed the bourgeois theater for which Barthes, famously, had extreme distaste. No Artaud or Brecht came out of Sganarelle’s pocket.

What came out of Molière’s pocket – Labiche, Nestroy, Offenbach – is oriented to a certain kind of laughter. For Barthes, this laughter came out of the smiling, healthy lips of the bourgeois as a sort of baying of the hounds. It was unlocked by simple contradiction: those contradictions which unfolded, tactically, as characters scheme to realize desires which are, on the surface, prohibited by the bourgeois order, but which turn out to be eminently subsumable under that order. That is, in fact, the function of the laugh – it is an acknowledgement of weakness and an acceptance of the underground order, that social supplement which drains off certain irrepressible desires. It is the humor of the wink, the humor of dinner theater, the humor of the suburban ethos depicted on the tv sitcom, in which hypocrisy is exposed not as a way of critiquing the system, but as a weapon to make the system seem total. Whatever doesn’t destroy you makes you weaker. And: everything you want is here, anyway.

So we understand Barthes dislike - and surely his view of Moliere as the ultimate bourgeois writer is influenced by Sainte-Beuve - but we don’t share it. We believe there is a certain aesthetic glory to the humor of the wink. But more than that, the great bourgeois farceurs throw a demonic light on the strategies of their characters, by which they turn the closed system into a Piranesian series of echo chambers. Barthes, we believe, never read Kraus – which is a shame. Kraus would have, perhaps, unlocked for him the dimension in Nestroy and Offenbach, and by inference, Molière, which Barthes seems to miss (besides which, we think the avant garde gesture of separating Brecht from Molière is foolish – Brecht is tied to cabaret, to the humor of Karl Valentin, for instance, by so many lilliputian threads that you can’t yank them out - and that humor in turn leads us inevitably back to Moliere).

In the essay, Nestroy and Posterity (der Nachwelt), Kraus writes:

“If art is not what they [the patrons of good taste] believe and allow, but is the distance between a spectacle and a thought, is the shortest connection between a gutter and the Milky Way, then there has never been a messenger under the German heavens quite like Nestroy. Evidently I mean, never among those that have reported, with a laughing face, that life is an ugly business. We will not disbelieve his message just because it arrives in a couplet. Nor because, in his hurry, he gave the hearer something catchy to sing, because he satisfied with contempt the needs of the public, in order to be able to think a little higher without being interfered with. Or because he wrapped his dynamite in cotton wool and only blew up his world after he had led it to firmly believe that it was the best of worlds; and because he had the spirit to lay on the shaving cream, when it was time for cutting necks ... although otherwise he didn’t wish to give anybody any trouble.”

Monday, July 07, 2008

Happy Tanabata!

Our far flung correspondent, Mr. T in NYC, reminded us yesterday that today is Tanabata day – at least it might be. I am hoping he will send some pics of how he celebrated it. This day should be dear to those who love the stars – North, I’m lookin’ at you! – and for those living in smoggy regions where the stars barely peep through – I will shed tears for you.

As for LI, we are going to pray for our wishes to come true. And then we will watch this nice little video from Oomph, the German metal goth band that has its own ideas about wishes.

Happy festival, you all!

Sunday, July 06, 2008

Some jottings

Notes:

- Some dates. In 1695, Perrault’s Contes de la mere Oye is published. Mlle L’Heritier’s La Tour Ténébreuse ou les jours lumineux, which contains Ricdin-Ricdon, was published in 1705, though it was in circulation, I believe, earlier. Antoine Galland published Le Mille et une Nuits between 1704 and 1717. And, finally, Augustin Calmet’s Dissertations sur les apparitions, des anges, des démons et des esprits, et sur les revenants et vampires de Hongrie, de Boheme, de Moravie et de Silésie was published in 1746. We will return to all of this later.

...
- In the introduction to Calmet’s dissertation, he writes that the supernatural has changed even in his native Lorraine in the last fifty years. Each century, each country has its fashions, its diseases, its particular visitations. Once, people made pilgrimages to Rome. Once, the countryside would be flooded, in times of crisis, with flagellants. “At the end of the sixteenth century and the beginning of the seventeenth, everybody in Lorraine only talked about witches and warlocks. That has no longer been the question for a long time. When Descartes’ philosophy appeared, what a vogue did it have? One despised ancient philosophy; one only spoke now of physical experiments, of new systems, of the new discoveries of M. Newton which had just appeared; all the intelligences were turned to his side. The system of M. Law, the banknotes, the fureurs of the rue Quinquampoix, what movements haven’t they caused in the kingdom?”
- Calmet’s notion of modes, his mixture of convulsionaires, witches and banknotes, is just in the line of our own thoughts. Of course, Calmet’s dissertation is to inform France of a new mode, a new fashion in the supernatural world, coming in from the East: the vampire. A whole new kind of revenant.
- In our last post regarding fairy tales, we pointed to a similarity between the world of the fairy tale, in which, in a given, unplanned moment, the social totality was subject to the wish – and the presiding spirit of the modern, ilex, the world turned upside down.
- Rightside up society produces within itself the story of how it came, which is inseparable from how its rules and conventions function. Oftentimes, in folk etymologies, a previous word is hypothesized as being the predecessor of some current word. This is, properly, not back formation, but it is often so called. Rightside up societies use a form of back formation to explain themselves to themselves.
- But the modern, as we have noted, is obsessively drawn to the moment of ilex. There are two steps in the modern game. One is to boldly project a vision of rightside up society which shows that, actually, it is upside down. Or, rather, what is makes the society rightside up is just what the society denies. The second move comes later – that is the move that explains how it is that the collective social consciousness could believe about itself theories and facts that are in error. In the Enlightenment, the explanation refers to superstition. For the Marxists, the explanation is the false consciousness. For the Freudians, it is the complex relationship of the superego to the unconscious.
- In Cornelius Agrippa’s work on the incertitude of science, according to his biographer, Prost, Agrippa made a violent attack on the nobility. In fact, he produced a myth, a geneology of society that went like this:

“The separation of the human family into two branches began with the very children of Adam. From the victim, Abel, came the plebians; from Cain, the murderer, came the nobles, whose work will be to hold in contempt the laws of God and those of nature, confidence in their own force, the usurpation of authority, the foundation of cities and empires, the domination over the creature that God had set at liberty, and who sees himself submitted to servitude and iniquity. For such is, from the beginning, the office of the nobility.”

Agrippa was a favorite author of Foucault’s during the time of the writing of the Words and Things. In Agrippa, one gets a strong sense of the Renaissance episteme Foucault hypothesized, one based on similitudes, the infinite search for the signatures in things. It isn’t surprising that Agrippa’s notion of the horror of the nobility extends, then, to noble creatures.

“All nobility, in a word, is in its essence evil [mauvaise]. Among the animals, those that one values as more noble than the others are everywhere the most nuisance causing: these are the eagles, the vultures, the lions, the tigers. Among the trees, those which are reputed noble and consecrated to the gods are those which are sterile, and of which the fruits are of no use, like the oak and the laurel. Among the stones, it is not the millstone with which we grind the wheat, but the gem without utility that is honored.” (Prost 2, 84).

Perhaps Nietzsche read Prost on Agrippa – this passage is almost too perfectly opposed to Nietzsche, down to Zarathustra’s animals.

Prost notes that Agrippa published this diatribe against the nobility in a book which he was careful to adorn with his emblems of nobility. LI is not very impressed with the irony here. Much more interesting is the millenarian energy.

Trading away the residual

In development economics, the “residual” refers to the factor in the growth of the economy first identified by Robert Solow in 1956. It had been thought that physical capital accumulation, plus land, explained the growth of national economies. After Solow, whose model indicated that these could account, at most, for 50 percent of economic growth, economists started exploring just what the residual was. This was the beginning of the new growth school, with its emphasis on knowledge, technological change, education.

Alas, this changed emphasis rather neglected the relationship between physical capital accumulation and ‘human capital”. For economists, humans are blanks. The man who works as a welder can be retrained to work in a grocery store, or to make chips for a computer, etc., etc. His work preferences, his experience, counts for zip. It is only – ah, the sweetness of it all! – when you get to highly skilled labor like, say, being an economist that you have to be careful to preserve the full majesty of the skill. Economists never consider that they should be retrained to teach, say, literary criticism. That is because they recognize, in themselves, what it means to be human, and in others, what it means to be a zero in a column. We are talking about a severe professional autism.

The impact of this autism is evident in the way the New Growth school attached itself to the old orthodoxy of free trade. One would think that there would be sense, a glimmering sense, that technostructures, then, must involve knowledge – must involve a whole dimension of tacit knowledge – necessary for their growth and change. For instance, when the auto first arrived on the scene in these here states, it naturally attracted the repair services of blacksmiths. Blacksmiths were those people who, at the grassroots, had the most experience with metal – and the auto was the most metal the average person had ever had to deal with. If one traces auto repair back far enough in this country, you always run into blacksmithing.

This makes sense. There are constraints on substitution of skills. And there are paths that skills take in an economy. Imagine, however, that somehow, the U.S. had outsourced all blacksmiths, or most, before the auto appeared. The experience of this vast metal object and needing to repair it would have had to involve creating a service from scratch. This would have impeded, in a major way, the sales and distribution of autos.

Well, this is what the kind of free trade regime which is the essence of Reaganism has helped bring about. We have offshored our residual. Or much of it. Economists are stubbornly blind to that fact, because this offshoring has been massively beneficial to the only class they serve, the wealthiest 1 percent. That class, of course, makes money everywhere. Of course, when it gets into trouble, it gets its money from the taxpayers of one country or anoterh in the grand old tradition of ancien regime nobility – otherwise, however, it is as multi-culty as dick.

The refusal to even consider an industrial policy, about which American economists take a peculiar pride (I did mention the massive professional autism problem, didn’t I?) is resulting in the peculiar shape of downturns and booms in the contemporary U.S. of A. At the moment, economists are puzzling over the odd belief of the public that there is this inflation thing going on. Impossible! inflation, as we all know, being a symptom of class warfare, or, since we don’t want to scare the children, of greedy workers demanding outrageous pay through corrupt unions, which luckily have been smashed. So wages are flat and declining – and isn’t that great! Alas, having pissed on the residual, what is happening at the moment in the U.S. is a phenomenon very familiar from Latin America: a primary products led inflationary spiral. In the seventies and eighties, Latin American countries were hit by savage inflation, kickstarted by increases in petroleum prices, that occurred at the same time the Washington Consensus was being put in place from the barrel of a gun. The inflation eventually went down, and W.C. shills patted themselves on the back – but of course the reason it went down is that the primary product price structure collapsed. Hey, it is back!

Don’t worry though. Nobody will discuss this at all. No economist will recognize it. And, collectively, our lives will get crappier and crappier as we timorously forget that once, there actually was such a thing as resistance. Now, let’s watch some teevee!

Who's that young girl laughing at me
Like I was the butt of some hilarity