Most consumers don’t think to themselves “I expect rates vol to rise in the future, so I’d better be long gamma right now.”Only the smart ones do. When inflation overwhelms your rate, you effectively get your house for half price (inflation adjusted) after 15 years. The deal only keeps getting better from there. Such a ridiculous deal can't possibly exist without subsidy.
This is an economic structure that doesn’t particularly make sense: Fannie and Freddie are in the business of using the government’s implicit guarantee as a source of cheap capital; they borrow cheaply and lend not-so-cheaply, and pocket the difference — or used to. Now, the US Treasury pockets the difference. So, economically, what happens is that the US government issues debt, buys mortgages, and turns a profit on the gap. As far as anyone knows, the reason the deal’s legal structure doesn’t match that accounting structure is that Fannie and Freddie have a lot of debt, and the government doesn’t want to consolidate it on their balance sheet. So Fannie and Freddie are a highly-levered off-balance-sheet structured credit play.Always can count on governmental accounting to think Enron were innovators.
Proponents of the GSEs note that while the GSEs wrote their assets down to the point of insolvency during the crisis, realized losses were lower; they wrote stuff back up eventually. But that’s an appallingly irresponsible argument. Anyone can make money on levered bets if the loans never get called in. Here’s a surefire strategy: lever up 20 to 1 in equity index futures. When you get a margin call, let it go to voicemail.AHAHAHAHAHA
A obvious conclusion here is that, even among those who respond to my twitter polls, a substantial fraction have set hair-triggers for offense. For example, it seems >20% say merely asking if the world would have been better off if Nazis had won justifies a high enough chance of a Nazi author to be offensive. Explicit denials may help, but if the offended are much more vocal than are others, a vocal choir of objection seems largely inevitable.
The true concerns of the great intellectual and political movements are quite straightforward to discern when judging actions. Political movements are straightforward to figure out; their ideology is little more than "say and do anything to gain power". They do like to disguise themselves with one intellectual movement or the other, which generally is leftist or reactionary (the right).
Frankly, when one speaks of intellectual movements in the last century, there really isn't one aside from leftism to speak of until quite recently. While the varieties of leftist moderate to revolutionary thought have many disagreements, there is a shared tone upon which the difference is simply in intensity. This common tone is the emotional need for external validation.
All forms of collectivization, democracy, concern about "alienation" and other forms of consensus decision-making are neither necessary or desirable. The aggregate result of all individual actions (if free of coercive modification) will tend towards satisfying the ends of as many of the individuals as possible. The best average individual outcomes does not necessarily mean general approval of the actions of any given individual; most successful individuals are generally disliked. This is simply the "crabs in a bucket" effect. You'd be surprised how much of politics this explains.
This is further complicated by market success to some extent actually requiring a degree of consensus. Many times commercial projects fail not because the project fails to meet the needs of said consumer, but because customers simply did not feel their concerns were listened to. Much of the art of successful projects is convincing stakeholders that good ideas from the team actually were the stakeholder's idea. Buy-In is very important to people -- more so than rational evaluation as to the given utility of the goods and services in which they partake.
This, I think explains the popularity of the "mixed economy", as people are rational in wildly varying levels about various subjects. Most irrationally desire validation, but only so much. Validation is at a higher tier of Maslow's hierarchy -- starving people don't give a damn about what you think of them. This would also explain why revolutionary agitation happens not at the low point of penury, but when things turn south for rising bourgeoisie.
This leads me to the recent developments in reactionary intellectual tradition; previously there wasn't much of one other than "don't kill the goose that laid the golden egg". Which is to say concerns from a lower level of economic coordination and maslow's hierarchy.
This is why much of the support for reactionary dictatorship tends to be populist, as the poorest classes get their opinions where they get their corn pone. Similarly, the concerns of long-term wealth is mostly tied up in capital preservation, making elite alliances with the forces of reaction the obvious choice.
In any case, Libertarianism and the "dark enlightenment" (AKA the "alt-right") is the recent development I speak of. Both have their detractors on the reactionary right as these philosophies are a sort of synthesis born of liberal ideas. Nevertheless, they are both rooted in a more rational approach to the subject rather than the fundamentally emotional need for validation dominating leftism.
This in large part explains the demographic split amongst the various factions now:
Unfortunately, the rational ones among them are little better. Rationality does not imply being well-informed. As such, self-defeating consensus philosophy tends to take root, as it has wide appeal amongst their less rational peers. This infection of design by committee produces substandard outcomes that everyone feels real good about and validated by. As such "True Leftism/Socialism/Communism" as advocated by these types is unerringly defeated by authoritarians of one stripe or another when push comes to shove.
Right and left authoritarians don't seem to have any particular advantage over each other when opposed. The amount of men and materiel able to be secured for war seems to be the deciding factor in which wins. That said, neither type are likely to emerge as a significant force unless conditions are bad enough for either a revolution and attendant counterrevolution in the first place.
Which brings me back to the mixed economy. It tends to keep the irrational just happy enough to not revolt, and conditions are not so bad that the rational (while radicalized) are cowed by the power afforded the authorities by the irrational. This reminds me of the Saxon law code, which concerned itself not with justice, but minimization of conflict.
It is entirely possible that despite a libertarian social order being in fact the best way to improve material standards of living, it is doomed to create conflict due to the irrational ninnies out there. Civil conflict is a far worse problem to have than the deadweight loss inherent in the mixed economy. Like Ben Stone said repeatedly, there isn't a market for liberty.
Most of the uninformed arguments (thought terminating cliches really) by the middle class against libertarian (and other) anarchy are in this vein of conflict. The traditional counter-arguments here don't exactly help defuse their concerns either:
Ultimately, this is the root of the split between left and right libertarians. Fortunately, the leftist libertarians have not yet figured out how to spread their message as effectively as the right. I suspect this is due to the ideological vacuum on the reactionary right making grounds ripe. By comparison, the left is already chock full of nuts; at best they will simply further splinter an already hopelessly fractured left.
Knowing all this, what then shall we do? A retreat into self-improvement is certainly better than the strategy of chasing shadows as has been done up to this point. It is unfortunately falling into the same "lower level concerns" trap as the old reactionaries. There is no way around having to figure out an emotional appeal to those most libertarians find incredibly distasteful. If you aren't willing to make cynical distortions intended to manipulate those around you, have fun resorting to the cartridge box.
You have to decide that you'd rather be happy and free than right and pure.
For those not aware, I'm a large proponent of the Stoic insights. One of the primary ones I promote is that virtue is not only it's own reward but it's only reward. The other half of this coin, which many do not discover, is that this is a good thing. When altruism is to be rewarded, it is all to easy to fake, with attendant and catastrophic costs to society.
One of the most prominent such failures in our modern society is what is popularly called "Virtue Signaling"; a term which once was simply referred to as "putting on a show". Politics is infested with this, as its practitioners overcompensate for their lack of real virtue with an abundance of such fake virtue.
In any case, it is heartening to realize that this is fundamentally what Nicholas Taleb has been groping for all these years. His Intellectual yet Idiot concept is an expression of this; however that is merely a generalization of his core inisght. Namely, that people are applying the wrong model entirely when it comes to dealing with uncertain events.
As explored here previously, people try a variety of schemes to curve-fit us into Procrustes' Iron Bed; the most popular of these are called "laws". In reality, a far simpler model works: "Do as thou wilt, but be prepared for the consequences". I have come to realize more and more that it's the latter half of that statement that nearly all of civilization's distortions are built to try and avoid.
Taleb's SITG (Skin In The Game) is a powerful argument for why not attempting to expand past that one rule is desirable; the further we insulate ourselves from consequence, the more foolish we necessarily become, until survival itself is threatened. He is pilloried by his detractors for "not providing answers", but they simply do not listen when he advises that rather than worry about the fact consequences happen (X), we instead concern ourselves with how our response effects ourselves and the system as a whole (f(x)) -- being prepared for consequences.
That core insight returns right back to stoicism. The wise stoic concerns himself not with the affairs of the world which are not under his control. He instead concerns himself with what he can control; e.g. the reaction to said events (f(x)).
As such it is unsurprising Taleb has drifted increasingly into the Austrian Economist camp. They are the most closely aligned with these particular insights; indeed his discussion of fat tail risk is quite a damning explanation of nearly all extant centralized economic planning's failure. As an apriori theory as to why information theory and risk must necessarily behave so, Praxeology is in perfect harmony.
The one law is simply a necessary lemma of the core praxeological axiom: "Man Acts on limited information and other means to achieve specific ends". This necessarily implies that circumstances may align such that practically anything may be seen as virtuous or licentious at the time, depending on the context understood to the actors involved.
As such, the wisdom of "live and let live" an "Love thy Neighbor" becomes ever clearer -- as one man's virtue may be another man's vice, all attempts to centrally plan and impose a return curve on the necessarily transactional relationships between humans are doomed to failure. All we can do therefore is simply gird ourselves against the reality of the situation in pursuance of our own ends.
