Very Rich Philanthrocapitalist Frauds

When I recently blogged about the New Statesman's critique of "philanthrocapitalism", one thing I didn't address - but should have - was fraud.

Based on studies published in the Nonprofit and Voluntary Sector Quarterly, a NY Times article recently reported that fraud and embezzlement in the non-profit sector account for roughly $40 billion a year or around 13% of all philanthropic giving.

This is a gigantic number. Church-related organizations, government nonprofits, $25 million from Goodwill in Santa Clara County, all of them seem to be teeming with fraud.

The most costly cases, the study found, involved male executives earning $100,000 to $149,000 a year. In these examples the executives had generally been with the organization the longest. Perhaps the greatest reason why this is not being talked about more openly and publicly is the reason that one accounting professor gave,

'This has been going on for years, but there’s a feeling that it shouldn’t be discussed,' because of the effect it might have on donations.

Is this a case against philanthropic giving? Not necessarily. It certainly makes giving feel less secure, even though total U.S. giving is nationally on the rise. The original study, of course, lumped government and non-government "nonprofits" together, making it difficult to distinguish which forms of giving are more sound.

The Very Rich Philanthrocapitalists (VRPCs) donate large sums of their income to charities and foundations, which in turn are being appropriated by accounting frauds on a massive scale. When a private philanthropic foundation becomes a bureaucracy, not a privately-funded public interest organization, the risk of fraud increases. This seems to happen whenever large monetary surpluses are siphoned off to organizations with little or no oversight.

The article that I critiqued in on Saturday expressed disgust whenever philanthropists pay too much attention to the social returns from their giving, as if it were a contest. This study suggests that this expression is ultimately unfounded. With such high risks of fraud, greater accountability to the philanthropists makes more sense.

It is not feasible in my view to attack the intentions of philanthropists, or their social position in society, unless their positions were unjustly obtained. I don't assume, like many seem to, that their positions in society are ipso facto evidence of injustice. There is an important burden that must be met, as I explained in the comment section in Philanthrocapitalism. I do, however, think that the philanthropy sector itself can indeed be scrutinized and attacked for all its deceptive accounting practices and overt breaches of contract.

This study should sound the alarm for Very Rich Philanthrocapitalists, and perhaps everyone should be less careless about what happens with their stocks and flows.

Your Role in Combating the Insider Threat

I came across a government document by this title a while back. It is a guide developed by the DIA in 2002 with the Defense Personnel Security Research Center to help finger anti-American spies. The introduction says that 80% of known spies demonstrated "one or more" conditions or certain behaviors before they turned to espionage. What are some of the characteristics of the spies? They proceed to list and categorize them. Remember, 80% of anti-American spies demonstrate at least one of these traits. (Much of the list is laughable if not downright ridiculous. But here are a few gems):

• Repeated irresponsibility.
• Extreme immaturity.
• Showing unusual interest in information outside the job scope.
• Appearing intoxicated at work.
• Going "on and off the wagon".
• Concealing alcohol at work or in the car.
• Unexplained changes in mood.
• Changes in personal hygiene.
• Disloyalty toward the U.S.
  
• Leaks to media.

If you, any of your friends, family, or co-workers show one of these traits - watch out! - they may be engaged in espionage! Almost anything on their list can be interpreted for purposes of severe political suppression. Anyone who does not fit the prototype of an American patriot is in danger.

Drinking too much? Guess what, you're a terrorist!

Having a bad day? Guess what, you're a terrorist!

Unpatriotic? ... terrorist!

Leaking our fabricated intelligence stories to the press? ... terrorist!

Going "on and off the wagon"? (Wait, what?) Oh well ... terrorist!

"Philanthrocapitalism"

I want to critique a recent article in the British current affairs magazine, The New Statesman, which rails against what the author is calling philanthrocapitalism or philanthropy 3.0. According the analysis, 21st-century philanthropists take a more "hard-nosed" approach to giving than philanthropists of an earlier era.

"[Philanthropists] behave like investors, allocating their money to maximise 'social return'. So, for example, Gates calculates how much malaria costs in lost GDP and then decides it's worth paying for its eradication."

Gone was the era of simply giving away profits willy nilly and hoping charitable organizations were able to use it wisely, philanthropy 1.0. In our era (regrettably?) 3.0 philanthropists take charge of their donations and work especially hard in order to increase its benefits to society. Are we to assume philanthropy is not justified in making cold calculations and not justified in their desire to maximize social returns? Ostensibly, that is the position of The New Statesman. At any rate the author points out thee distinct problems with philanthrocapitalism:

"[First] philanthrocapitalism legitimises growing inequality, which might be unsustainable politically without greater generosity from the filthy rich. In fact, the rich are not particularly generous; if anything, people on middling or low incomes give proportionately more of their money to charity."

The amelioration of inequality is not an imperative for anyone in particular in the first place. But why are we assuming philanthropy legitimizes rather than ameliorates? If the state had distributed the same amount of wealth to society it would legitimize state power. Second, business owners should be expected to invest more into their enterprise than charity. If they are using a portion of their profits for charitable purposes, investing in their profitable business only compounds the portion to which they are able to make charitable donations.

"Moreover, generosity is subsidised from tax breaks."

Since when did 'tax breaks' become 'subsidies'? The view that the absence of taxation is an "indirect subsidy" presupposes that the burden of justification is on the state if any income or spending left untaxed, rather than having the state justify any taxation in the first place. It is a complete reversal of liberal ideas about the unassumed justification of the state as the ultimate arbiter. The author goes on,

"[Second] philanthropy is often just another form of marketing, designed to strengthen the donors' market dominance and even to tie certain groups into buying their products or services."

Essentially, a portion of consumer income is being donated to charities whenever they purchase these products or services. Yet the author shifts the focus from amelioration of inequalities to the financial benefits for the philanthropist from donating, neglecting to mention that many philanthropists actually enjoy donating and spend a large portion of their time figuring out ways to maximize social returns. The author overtly sidesteps the real effects of philanthropy in order to talk about the philanthropist's "self interest" or "legitimization" of wealth accumulation.

"[Third] why should rich people, who wield enormous economic power, also determine social priorities? As Robert Reich, secretary for labour under President Clinton, has observed, governments used to collect billions from tycoons and then decide democratically what to do with it."

The author reveres low-income earners when they determine social priorities, but not when wealthy business owners do the same. This is a double-standard. To begin with, business owners had the ambition and the right to design goods and services that society valued in the first place. Second, they had the ability to decide where to spend their profits, and if by so doing they addressed issues that were important to them, it should make little difference what their level of income is. They are 'determining social priorities' through the same principle of liberty that anyone else would.

The author says the governments decided what to do with taxed income "democratically" in the past. Yet involuntary wealth distribution is not democratic, it is statist. Once again, the author assumes that philanthropists must justify their wealth before governments need to justify adversely taking possession of it. When philanthropists decide what to do with their income voluntarily, this is the most democratic form of giving. It is not paternalistic. It requires no arbitrary justification.

The author takes what are essentially benefits to social welfare through free enterprise and paints an ugly portrait of them as anti-democratic and manipulative. The author would rather the state have the monopoly on charity, robbing individuals of their own desire to return their wealth to society through ways that would be incredibly authoritarian. It is disappointing to see so many liberals take up such anti-liberal and anti-democratic positions. State monopolies do not diffuse power; they concentrate power within the arbitrary nexus of institutional thievery.

Do you agree with the Reunification of Austria and do you Vote for Hitler? (yes or no please)

This is a hilarious document. The Anschluss Osterreichs was the 1938 annexation of Austria into Greater Germany through the Nazi Party. The ballot text reads "Do you agree with the reunification of Austria with the German Empire that was enacted on 13 March 1938, and do you vote for the party of our leader Adolf Hitler?," the large circle is labeled "Yes" and the smaller circle "No".

The Anschluss was one of the first steps in the long-desired creation of the German-speaking empire in territories Germany had lost during WWI. There was also the Rhineland, the Saar region, the Sudetenland, Memelland, and ultimately all the violent invasions and annexations that occurred after the Blitzkrieg of Poland in '39, die Polenfeldzug.

I cannot resist drawing some analogies between 1938 and 2008.

The question we all want to know is, Senator Obama, Do you support US Imperialism?

The truth is candidates do not want to talk about ending US imperialism; Obama talks about ending the mindset that led to the invasion of Iraq, but not about imperialism. And if he ends the mindset that got America into Iraq - does that mean he is actually going to get us out of Iraq? What about other countries? And isn't the imperialist mindset much more deep-seated than our analysis of relationship between Iraq alone? What about Afghanistan?

Critique of Contestable Market Theory

From 1979 to 1981 there was a lot of "hit and run entry" into the airline industry. This partly influenced George Baumol in 1982 to write his restatement of the potential competition doctrine in its new form, contestable market theory. He and his colleagues believed the airline industry was one of the best examples of a "perfectly" contestable market.

In 1982 it seemed all a potential entrant into the airline carrier industry needed to do was a hire a few staff, some pilots, and lease an old plane. It did not seem very difficult. The basic assumptions of the theory were as follows:

1. Entry into the market was free. This means there were no barriers to entry, no cost advantages for incumbents, no patents, and no product differentiation advantages.
2. Entry was absolute. When the entrant lowers prices it undermines the incumbents revenues completely.
3. No sunk costs were associated with entry. When there are no sunk costs, costs that cannot be recovered, then there are no barriers to exit, which again implies there are no barriers to entry.
   

Any move away from these assumptions would change the results dramatically. If sunk costs were greater than zero, for example, then hit and run entry would be impossible and incumbents could earner excess profits without attracting entry. If the airline carrier industry was perfectly contestable, then prices would equal average cost. This was said to be the only sustainable price since any higher prices would attracts entry. Essentially, Baumol said the industry was setting limit prices.

But, of course, entry is not free, not absolute, and there are sunk costs associated with entry.

1. Free entry. There are more costs associated with entry than the variable costs associated with hiring labor and leasing aircraft. If incumbent firms are pricing below the entrants average costs, this is a barrier. Assuming capital markets are perfect, this would still imply greater costs. Firms with cash reserves and easy access to capital markets through networks and reputation have an absolute cost advantage. Restrictive practices at airports make it difficult to obtain landing slots. The scarcity of gate slots and bidding over them can also become barriers to entry.
   
2. Absolute displacement. This assumption is highly questionable in any market. In the airline industry incumbents always have sufficient advanced notice of any impending entry to permit them to respond with price reductions. The cost advantages of incumbents become barriers to displacing their prices.
   
3. Sunk costs. If some sunk costs are necessary to penetrate the market, then assumption three is false. Advertising has been identified as one of the most significant sunk costs in a market. Advertising costs cannot be recovered if the carrier is not successful. The trademarks and rights associated with this all become sunk costs, and thus barriers to exit, and ultimately, barriers to entry.
   

Historically, many major incumbents did not role over when the newer airlines entered the market after deregulation. Many carriers which entered the market during the early eighties have either merged or vanished. For example, Big Sky, Braniff, Gulf Air, People's Express, etc. Vanished incumbents like Pan Am and Eastern was due to direct competition with other incumbents after deregulation and cost inefficiencies in general.

The Chicago School of Economics, which Baumol was educated in, says in general that there are no barriers to entry in any market. There are only "natural barriers". Without government regulation, many entry barriers disappear. This is true. But there still significant barriers and costs (especially sunk costs) associated with almost every market entry.

Although the airline industry is not perfectly contestable, as Chicago said, the theory had a large impact on the industry. Antitrust authorities were loathe to intervene in the industry due to the popularity of the theory of contestable markets, and I think this is a good thing for the industry. Perhaps all an industry really needs is to be contestable enough to attract not potential entrants per se, but rather, substantial criticism of antitrust intervention.

Sub(versive)Media

"Good morning, slaves! and welcome to another sedition of It's the End of the World as We Know It."

I just added the Submedia blog to the blogroll. You can also watch their TV show on Submedia.tv. This independent media collective was started by a small group of producers who used to work for Democracy Now!, the daily independent news channel featuring Amy Goodman. Now Submedia produces a brilliant weekly show which is broadcasting in many different places. In August Submedia will be at the Democratic and Republican National Conventions producing a daily show which will air on Free Speech TV, and I will be in Denver for the DNC collaborating and helping them create the show!

Watch Free Speech TV when the time comes around!
Do it in Denver!

Paralogisms of Cognitive Microeconomics

I've been having a lot of fun recently with Kant's Critique. It was meant to apply to every aspect of human reason. In this strategy below, I'm arguing that microeconomics is no exception.


Cognitive biases and limitations are a function of individual consumer demand. In order for microeconomic models to play an adequate role in consumer choice theory, these limitations of human reason must be avoided. But they cannot. Interpersonal utility comparisons, and thus social choice theory, are impossible.

A “paralogism” is a logical argument which is not formally invalid, but rather, so ridden with unintentional, paradoxical or ambiguous reasoning—usually involving some sort of equivocation—such that it cannot be accepted in its entirety.

1^st Paralogism: All consumer preferences are based on the presupposition that the consumer says to him or herself “I demand...." The individual is the subject and goods and services are the predicates. But economists often confuse the subjectivity of demand with a permanent, interpersonal (and often objective) indifference curve.

2^nd Paralogism: Cognitive biases are internalized into indifference curves and thus become functions of the model, with the disclaimer "ceteris paribus". The isolation provided by the model does not lead to isolation of real-world cognitive biases. Cognitive biases cannot be avoided. Yet models which assume bounded rationality avoid cognitive biases.

All attempts to bound rationality, along with interpersonal utility comparisons, are normative economic models, not positive economic models. Positive economics is impossible. This is not an error of microeconomic theory; it is an error of public choice theory. The inherent judgmental and heuristic bias of comparing and abstracting choice models is inescapable for microeconomic theory.

"Every Church is a Stone on the Grave of a God-Man"

Will all the Nietzsche scholars in the world should lock arms in an act of direct action to prevent this from happening? Or maybe it is a good thing that "monumental history" is being destructed?

Ratemycop

You may have heard of ratemyprof.com, the site that allows students to rate their professors and write positive or negative reviews. Another site, based on the same principle, is called ratemycop.com. It allows anyone to write reviews of police officers, good ones and bad ones, and bring an entirely different layer of police accountability in the hands of everyday citizens. I think tools like these will help provide police departments with the kind of accountability and loosely-networked oversight that is desperately needed. Private citizens generate this sort of content, not the state, which benefits the general population in ways that the state would not have done otherwise.

To every internet libertarian's chagrin, however, ratemycop.com was shutdown earlier this March due to police complaints about the site. However, GoDaddy.com, the hosting service running ratemycop.com, told the owner of the site, Gino Sesto, the reason it was shutdown was that it had exceeded its 3 terabyte bandwidth limit.

But net activism proved once again to be a valuable tool for correcting undemocratic, nontransparent actions like these. After the original article in Wired was published, the net community picked it up, viralized it, slashdotted it, brought it to the fore, and soon the site was up again by March 26th. This is internet "people power" in full effect.

In September, IBM workers decided to stage a worker's strike not in RL (real life) but in SL (Second Life). The Second Life traffic in the IBM complex overloaded the resolution-generating processes of the area and basically shutdown IBM's Second Life center. Thousands of people attended the online rally.

The power of people to connect and network on the internet in new and innovative ways has made it virtually impossible for states to crack down on. Sooner or later, someone will find a hosting service or a venue to bring valuable information to the fore and states are in no position to prevent this from happening.

Just as when Turkey and other governments decided to ban YouTube due to dissent and criticism, it only made the governments look ridiculous and reactionary to the rest of the world, sometimes forcing them to sheepishly re-lift the ban. When GoDaddy.com banned ratemycop.com it only made the website more popular and in greater demand. Essentially, the state's reactionary fear ensured the success of the website. Sesto says police as well as citizens can post comments, and a future version of the site will allow them to authenticate themselves to post rebuttals more prominently. Police chiefs, however, still irate about the concept of citizen oversight, have not ended their attempts to make the website illegal.

"Militainment", call it like it is

Military recruiting.
Military advertising.
Entertainment.
Military entertainment.
That's militainment!
America's Army for Xbox 360.
Get it while it's hot.

And while you're being amazed by the latest advertising strategies and life-like graphics, check out NoArmy.com. It's a new counter-recruitment website launched on the 5th Anniversary of the Iraq Invasion to counter the military's aggressive campaigns to target high school youth.

One interesting video I came across on the NoArmy.com video channel was about a high school student journalist who penetrated the 'military recruitment complex' and pretended to be a drug addict and a drop out who wanted in the army. His recruiters told him to write up a fake diploma from "Faith Hill Baptist High School", write a fake grade transfer, and use detox chemicals to pass the drug test. You can find this video and others under the tab "recruiter lies".

the Airline industry's Shock Doctrine

In the wake of the September 11 attacks, the Economist published an article encouraging America and Britian to refrain from doling out subsidies to airliners which benefited mainly shareholders and already well-paid staff. "The right way forward would start by letting more airlines go under," the article said. "That would have given a breathing-space in which to sort out how many ought to survive, and in what form."

Though she hadn't written her book "The Shock Doctrine" yet, Naomi Klein calls advice like this "disaster capitalism", whereby in her view politicians and capitalists use disaster scenarios to expand enterprises and let the free market control once-nationalized industries. However, why should we be so onerous about letting inputs and prices even themselves out? The alternative view is to call this process "creative destruction" when new forms of organization and management replace older, failing forms. This process can be sparked by new technologies or disasters, or other dynamic changes. The view that "capitalism" is at its worst when disasters strike is nonsense, since by virtue of being disastrous, disasters are undesirable. When prices are free to find the appropriate level resources can be allocated without waste, especially during times when all resources are more scarce than usual. Preserving everything the way it had been before by using police power to allocate and redistribute is one of the worst fallacies of leftist statism.

It does not follow from any of this that the system of free exchange is to blame for the ill effects from disasters on prices and outputs. Naomi Klein's book, which I have read and whom I also heard speak in Los Angeles, is incredibly naive in its theoretic work. It was written after Hurricane Katrina hit New Orleans, and its ideas can hardly be extended beyond that isolated incident. As Robert Nozick wrote in his essay "Why Intellectuals Oppose Capitalism", leftists are so incredibly quick to blame nearly everything undesirable on the market system.

The further advice from the Economist was for the air carriers and governments to

"dismantle the network of regulations that have for too long stood in the way of change in the industry. America should open up its market to foreign competition, dumping restrictions on foreign ownership of domestic airlines and allowing foreign airlines to compete internally. The Europeans should jettison their web of national bilateral treaties with America and negotiate a genuine open-skies deal, at EU level. That would allow Air France, for instance, to fly to America from London or British Airways to do the same from Paris. Cross-border mergers should be permitted and even encouraged. And instead of suspending the use-it-or-lose-it rule for take-off slots, they should be auctioned to the highest bidders, which will probably be low-cost airlines."

What role ought a government play in a disaster scenario? After 9/11 air travel was in extremely low demand, and rightly so. Consumer confidence in the industry had dropped due to the attacks which may have been prevented without relying on government security regulations. This is a hardline argument, but I think it is acceptable: if air staff were permitted a means of defending themselves whilst in air, they may have been able to stop the terrorists from taking control of the planes.

Instead of permitting air carriers to defend themselves in ways that they see fit, governments imposed stricter regulations and handed out subsidies to the largest carriers. By October of 2001, the US government had spent $5 billion in airline subsidies and $10 billion in loans for an industry that was already losing $3 billion before the attacks. European carriers then complained that this put their industries at an absolute cost disadvantage since their governments were not subsidizing their industry to keep them competitive. Though the EU took a less-lenient stance, US actions put pressure on every government to spend billions in airline subsidies in order to compete with America.

If anything, disaster capitalism is not a problem of the market, it is a problem with governments. The airline industry is not going to disappear if states do not subsidize them. Air travel grew steadily at 5% annually for all but one out of fifteen years prior to 9/11, the only exception being the recession and following Gulf War of 1991.

Leisurely Afternoon Thoughts on Perspectivism

I remember reading a few chapters of a book a while back called "New Evidence that Demands a Verdict". It was written by a Biblical studies author named Josh McDowell with the intention of creating an encyclopedia of criticisms and responses to postmodernist, atheist, relativist, and non-believing arguments against the faith. One of their interesting lines of argumentation against the sorts of epistemological arguments advanced by Kant and the cognitive critics ever since is that the arguments are "self-defeating". Generally I tend to agree that most argumentation is ultimately self-defeating, yet I'm perfectly fine with this. Where is "the view from nowhere"? Does it really matter? What does concern me is that Biblical authors would then think to juxtapose one self-defeating argument with another and be willing to choose between what must be in their view competing defeatisms.

I would argue that the immanent critique of the Kantian sort is not in fact self-defeating, but very pertinent. Nietzsche takes the argument further to show that truths are perspectival, especially his, which he is proud of. Arguing from an immanent perspective that every pronouncement is ultimately perspectival appears to Christian apologists as simply another perspective. Therefore, they say, why accept something if it is merely perspective? The argument begs the question from a transcendent perspective in order to critique the immanent perspective. It is not clear how the transcendence was achieved. Immanently, the idea that we cannot escape perspectivism is true by the fact that nothing else is possible. Those who argue the view that "all is perspective" is only another perspective are correct, yet this cannot possibly disprove perspectivism. Who can prove that there some perspectives which are in fact non-perspectives? That must be their objective. Yet proof by counter-example would be impossible. Since the apologist's take is to say that "and this one too is a perspective" he is mistaken if he concludes he has made room for something non-perspectival. He is scratching at the walls of perspectivism and demonstrating how inescapable it is for us.

The apologist-atheist debate has generally not interested me since high school. Perspectival thinking has. The analytic apologists, just as the analytic logicists, tend to overlook immanence and perspectivism altogether.

Combating the Combat Zone's Bullshit

Read the original article here, in which an imaginary situation was fabricated in order to poke fun at student groups like Students for a Democratic Society, the Black Student Union, and Students for a Sustainable Campus. This was a little response I wrote. It's in a style that closely resembles their own.

...Once the coast was clear, The Trail's staff emerged from their hiding places checking to see whether their golf shoes were still white.

"I don't understand why people just can't sit down and watch Comedy Central like the rest of us," one freshman writer said gingerly.

"I was raised to respect authority," piped a freckled boy wearing Abercrombie & Fitch, his head hiding in a Rambo comic book.

"Don't they have jobs!" screamed the sports columnists in unison, their little mugs flushed with challenge.

"Racism, war, environmentalism... all those things aren't problems anymore." said the senior editor assuringly. "Protests don't solve anything. Good journalism does. I want all of you to write stories that tell it like it is."

"Yeah!" the club agreed. "They don't belong in our school. They never did! No one - not even the press - picks up on their stupid little issues anyway."

Sauntering off to the media house together, they worked up some irregular verbs and exchanged more hotheaded invectives for the next week's edition.

Somebody made a comment on their website that they liked my addendum better than the original article. Ha! Thank you, fans!

Funny Interviews with Pro-War Demonstrators

As much as conservatives like to pout about scruffy-haired anti-war college students, why is it that I can never get a conservative to call me that face to face? Today I put together this video with a friend while at an anti-war demonstration yesterday which shut down a military recruiting center in Tacoma, WA. The conservatives scoured the anti-war webpages and filled them with nonsensical cheers and bravado. The local FoxNews talk radio station urged all the leather bikers in Washington to meet in Tacoma to show up the moonbattish hippies. So clearly the anti-war voice was going to be outnumbered. If you couldn't guess already, they're pretty ridiculous and have some of the most misconstrued ideas about sources of information, international relations, cultural intelligence, authority, military use of force, and pretty much everything else you wouldn't need a college degree in order to to understand.

If you're curious as to why I spoke in an accent, which was German not Estonian by the way, it was to see how sensitive conservatives were to white foreigners. De Tocqueville wrote in Democracy in America that Americans were always more sensitive to the comments of outsiders than their fellow compatriots. There are a number of reasons why this is so. At any rate, being a somewhat naive Estonian exchange student provided the opportunity to be persuasive in a relatively unnoticeable way. But I suppose it also pointed out the cultural intelligence of those whom I questioned.

I hope you enjoyed the video.

Politics and Government Video Blog

This video blog essentially is about another blog, the UPS Politics and Government blog.

I filmed this video not too long ago at my university for a series of videos to introduce more students and faculty to other professors and the kinds of technology we can use to stay in touch with them.

Minimal by Minimal

Lately I have been listening to the mixings of Richie Hawtin, who brilliantly shapes dance songs into an extremely minuscule format, bringing the experience of electronic music to a higher level. This style of mixing is called "minimalism", which is driven by a 4/4 beat,derived from house music and generally considered a standard dance rhythm. Because minimal techno tracks are so stripped down, the subtle introduction of one or two new sounds can have a tremendous impact.

Once an optimal beat-per-minute is found, all the tracks are matched and Hawtin is free to experiment with incredible spatial freedom. In the early days of techno there were no rules and DJs experimented immensely. But with new technologies even more possibilities broke through. The spatial transition, moving away from the traditional stereo field of music and into the 5.1 channels of surround sound, changed the dynamic effect of music. Richie Hawtin and others use this to their advantage, creating organic minimal and danceable sound environments, or a non-mechanical "downmix" as some would say.

Last week I listened to art Professor Elise Richman explain a bit about minimalism in art. From her perspective Donald Judd and others who developed this austere and very "American" form of art that was supposed to be geometrically perfect and immediately recognizable in its construction. Judd uses industrial manufacturing to create perfect solid-colored block shapes and other angular dimensions. I had seen Judd's work before, and the best way I could think to describe it would be "Euclidean escapism".

Minimal techno in fact has its roots in Detroit, home of the American automobile industry, and also in fact home of the techno movement too. Yet unlike Donald Judd's minimalism, the sound of minimal techno does not invoke the feeling of "industry". Richie Hawtin's style is often also called IDM, or "intelligent dance music" for its static effects and slow sound movement built on top of multiple "bed" layers of drums and kicks. When one thinks of "industrial" techno music, loud sounds that are jarring come to mind like electric synths and the high resonated kick drum of nRgY raves. Hawtin's minimalism is not jarring but instead feels incredibly smooth and well-rounded, and therefore very non-Euclidean.

Preferring to take everything in small bits in order to capture the full experience, the minimalists are the wine and cheese connoisseurs of the underground techno scene. Those who haven't developed an appreciation for the minimal style will listen to twenty seconds of minimalism and not understand what is attractive about it. It has been my experience that minimalism generally appeals to those who are older than the standard rave-going crowd. Having listened to a lot of electronic music throughout their lives, its subtle, steady sound provides a heady, almost intellectual, feeling of being in control. Not to say that minimalism can only be understood by those who have spent time listening to techno away from parties, but there is a bit of elitism or a "been there, done that" aspect to minimalism.

Just as the minimalist DJs themselves tend to have been around longer, the appreciation of minimalism builds over time. After listening to twenty minutes of a minimal session the logic of the rhythm surrounds your brain and becomes an advanced ambiance to dance to. Much like an art installation which cannot be experienced in two dimensional representation alone, minimal techno builds a sculpture in the mind that can only be understood through the dimension of time and change. That is also why the surround dynamics play important role.

Minimalism in the arts can nearly always be spotted through its austere repetitions and iterations. Yet all electronic dance music makes use of repetition and iteration. The development of minimalism simply takes this to a greater extreme. If there has been a post-minimalist movement in the arts, then maybe minimalism is actually the post-minimalism of techno. The Detroit techno scene of the mid-1980s is simply the critical reference point for all techno music thereafter.

You can listen and download Richie Hawtin's latest album DE9: Transitions for free here. (And being able to listen to the album did in fact convince me to purchase it even though I already had some of the music. I particularly like the very organic track "Where is Mayday?")

The Market for Meditation

It has been reported that the guru, Maharishi Mahesh, who recently died, throughout his life made billions from college students who wanted to learn how to meditate and purchased all sorts of Maharishi products in so doing. Take a peek at the website. A commentator on NPR said there are Maharishi products for almost every aspect of your life.

Meditation itself is a fascinating exercise. Authors on Eastern meditation range from those who advocate specific techniques and traditionalist methods, to those who advocate unspecified forms of meditation with every task. Zen "walking meditation", for example. The market for meditation is chalk full of copyrighted ideas and trademarked symbols, and the business of meditation understands that successful differentiation from other practices lead to a certain kind of power. It lowers the search-costs of prospective meditators, and gives them an American-style branded meditation they can seek.

Maharishi, one of the earliest entrants into the American meditation market, offered something college students in the 60s had scarcely heard of, and for which there were no substitutes. Maharishi products therefore had very inelastic demand, meaning that as the price continued to increase dramatically, demand kept increasing as well. The price of meditation rose from $35 to about $250 and as an NPR news piece says, as demand kept increasing Maharishi almost single-handedly introduced Eastern mysticism to the West.

I, on the other hand, have never paid more than $15 for a yoga class. A few years ago I took around five or six different classes. I found that most of the time you can take the first yoga class for free, and if there are enough locations around, you can learn most of the basic ideas for free by skipping around. The advanced or luxury classes like Maharishi's, however, are much more expensive. The price and exclusivity itself are objects of my curiosity.

What is peculiar about the demand for mysticism is its similarity to "Veblen goods", named after Thorstein Veblen. It is some good for which the price increasing increases the quantity demanded. It is related to the "snob effect", although it is difficult to say whether the increased price triggered the increased demand or the other way around. Veblen goods are the opposite of "Giffen goods", which are so inferior the price increasing causes quantity demanded to increase as well. Giffen goods are said not to exist. Increasing incomes in the 60s could easily have lead to the increase in luxury goods like meditation schooling, but this is only conjectural. Low-income earners meditate as well, just as low-income households may spend a larger share of their income on other spiritualisms, like at church.

Utility gained from Maharishi's meditation likely displays a different sort of preference satisfaction altogether, more like satisfaction though Scientology, and that is why some have commented on it as the "Maharishi Effect".

From Russia with Angelhaken

One of my philosophy professors, who is also a very prominent Nietzsche scholar, read us an email he received this morning from Russia in which the author proclaimed to be the Übermensch he has been studying all these years. As he read the email out loud, I could not help but wonder who this person was, who implores scholars to visit him on a boat off the coast of Barcelona to study him and learn truths they could not imbibe from the richness of Nietzsche's texts. The letter was indeed an invitation, sent to only one other prominent Nietzsche scholar, and appealed very much to their sense of learned, careful study and understanding of Nietzsche, exactly as Zarathustra sends fishhooks to his readers in order that they themselves will learn the superior truths he has set forth. So apparently this Russian has style, perhaps he is the real deal, one who is not born posthumously, lofty in soul, the most rare of men, etc., etc. If I were my philosophy professor, I would go, but I think I might also bring a concealed weapon with me.

Modern Etymology of "Competition"

It was Antoine Augustin Cournot who first had mentioned the number of rivals involved in competition. Competition, which once meant the way in which merchants and traders took account of how their rivals respond to their actions etc., now meant little more than the slope of the average revenue curve.

And it was Francis Ysidro Edgeworth who developed the modern idea of "perfect competition", where the number of sellers is so great that they have no empirical affect on price. At least, this is the way it is conceived of in microeconomics textbooks.

But it was Alfred Marshall's "marginal utility revolution" where the use of the phrase "free competition" was much more closely related to Adam Smith's simple system of natural liberty.

This behavioral concept of competition, which Mark Blaug calls process competition (I like this distinction), was eventually superseded by the end-state competition conception by 1933. I have no idea why Blaug chooses 1933 as the date other that it also being the darkest year of the Great Depression in the United States. (Not just in theory did everything seem "static" in those years.)

But "competition" in modern economics today is generally thought of as either perfect, where no sellers have the ability to change the price, or imperfect, the binary opposite whereby competitive performance is affected by various structures and conduct. The difference is that perfect competition does not in fact exist anywhere in observable market realities whereas imperfect competition is observable everywhere. This distinction never ceases to amuse the student of economics.

Free Market is an Oxymoron

Responding to Muser in the last entry, I agree with you that "free market is an oxymoron" because the status quo is talked about as free trade or free movement in action.

Free trade is commonly set in opposition to "fair trade".

But in my opinion when you study what fair trade literature is saying, it is actually advocating the freest system of trade. They want no agriculture subsidies; they want developing countries trading with developed ones; they want the right to unionize in developing countries; they want alternatives to the IMF and World Bank. As an advocate of "free trade", then, I share opposition to organizations that pretend to promote "free trade" but in fact control our lives. I think the global aspect of trade is positive, globalization is not such a bad idea. The basic idea is anarchist: that man is by nature good, but institutions can be corrupt and control the people.

The Simple System of Natural Liberty

Mark Blaug, an important British author on the history of economics, argues in an essay titled Is Competition a Good Thing? that Adam Smith meant something quite different by "competition" than what economists mean by it today. The clue, Blaug says, is in the articles. "a competition between capitals"; "the competition with private traders", and so forth. Economists today see generally competition as an end-state, as evidenced by the use of comparative statics and general equilibrium theory. For Smith and most of the other classicals, however, competition is a process or a behavioral activity.

Blaug says what we call "competition" today was for a Smith "the obvious and simple system of natural liberty", meaning no more than a 'self-evident' relationship between buyers and sellers given that a marketplace exists. Smith says in The Wealth of Nations that it would be absurd to attempt to prove this "common sense" relationship. Here, Blaug is saying our "competition" is Smith's "simple system of natural liberty".

In The Wealth of Nations what Smith calls the "system of natural liberty" is set in opposition to the mercantile system of trade, whereby the terms of trade are already highly fixed. The terms of trade are not simple. The natural system, on the other hand, is more like what happens between Friday and Crusoe on a deserted island; the mercantile system is what happens when kings and states hoard gold and pillage the wealth of other nations. Mercantilism is highly developed, complex, and the status quo for Smith; the natural system is somewhat like a state-of-nature situation.

Blaug, on the other hand, sets Smith's natural system of liberty in opposition to monopoly market structure. This is misleading because Blaug wants to publish on the differences between static and dynamic efficiency, and he's drawing on Smith to prove his point. But perhaps the only conceived monopolies in The Wealth of Nations was that of the state-owned monopoly in the mercantile system, or just where the demand for goods is inelastic. Blaug also includes in his definition of competition free entry into industries and occupations, which I also think is problematic. The number of sellers in a market does affect both the end-state conception of competition and the more behavioral aspect of competition that Smith talks about.

Analytically, if the number of sellers can be a factor in determining dynamic efficiency, which Blaug wants to eventually say, then the behavioral competition that exists has to be affected by the number of sellers in the market. Sellers behave differently when there are fewer of them. They raise prices, for example. Blaug, I think, is confusing the difference between the system of natural liberty and competition. The natural system is a simple conception of the possibilities of trade in a free market. Competition is an ongoing series of behavioral events and strategies which can be affected and influenced by a number of things that Adam Smith alludes to. The competition between capitals is different than the competition between private traders, for example.

There is a big difference here, so when Blaug says that for Smith "neither competition nor monopoly was a matter of the number of sellers in a market", he is confusing these two different ideas found in Smith.