Corporations as a threat to democracy

In a blog post on the forthcoming Australian election, journalist and QUT researcher Derek Barry has managed to express the notion that corporations are bad very clearly, complete with Chomskyan hyperlink (via):

The problem for journalism is that most journalists are employed by corporate media. The single biggest threat to democracy is the corporation itself with its profit motive subsuming all other motives to the fatal detriment of the body politic. That means large numbers of lobbyists, PR flacks and lawyers working only to make more money for their company. People who don't see society, only consumers.

Corporations are bad because they are motivated by profit, are based on a bad view of the world, have lots of money and so are the biggest threat to democracy.

Bit odd that democracy grew up in highly commercial societies then, isn’t it? Indeed, that the historical origins of modern elected representation was to give merchants a say.

If you are in business, you have to get consent for your income on a regular, even daily or hourly or moment-by-moment, basis. This is quite central to why commerce generally has a better record towards marginalised groups than politics or religion and why the politics of government-by-consent grew up in highly commercial societies.

Profit is just making more in sales than what it cost to produce/acquire/put together what one is selling. No economy can operate if one’s productive units do not make profits—that is, generate surpluses by creating more value than they consume.

Such surpluses are how one generates funds for the creation of capital, the produced means of production, and the prosperity of society is determined by how much capital it has operating per person and how effectively.

And if profits are bad, does that make losses good? Well, losses have value as a signaling mechanism (indeed, a great deal of value as such, which is why eliminating loss by providing guarantees can have such disastrous effects). But losses have value as signals because they are things to be avoided. And if losses have signaling value, so do profits.

So, on the face of it, “profits are wicked” (which means “productive surpluses are wicked”) is a nonsense pejorative, however common (indeed, clichéd). But notice how talking about ‘surpluses’ sounded so much better than ‘profits’? First, because ‘surplus’ has not had the ongoing campaign against it that ‘profit’ has had. Second, because profits are typically private and motivated by gain.

Well, so are worker’s wages. Most workers have as instrumental an outlook on working and being paid for it as business folk have on, well, working and getting paid for it. (Indeed, if anything, businessfolk are more likely to be engaged in an area they personally enjoy: remembering that managers are employees, not businessfolk in this sense.)

Much of the modern assault on profits as wicked is derived from the Marxist critique of the same. But that is based on a false theory of value and a spurious theory of exploitation which relies on playing games with the meaning of ‘labour’.

But such rhetoric as I quoted above is not about the realities of being in business, it is about the status of not being in business. Of not being engaged in grubby “profit”. It it is a case of “look at me, I am not motivated by grubby profit, but by Virtue!”

This is, of course, an old status claim: one that dates back at least to Plato and Confucius. And, as in those cases, it is a claim that is congenial to rival power groups: whether landed aristocrats, scholar-bureaucrats or priests and clerics, as the case might be.

Or, as in our time, conspicuous compassion within the (typically inner city) academic-advocacy NGO-public servant-union networks: folk who get status against commerce and power against markets. And who, clearly, have good motives, a proper understanding of the world and work in good institutions: they just ooze virtue and conspicuous compassion, unlike those wicked corporate folk.

It remains the sort of self-congratulation that is millennia old and does not get any better over time.

It is true that some corporations can have huge turnovers, but politics is not their prime activity. So they tend to engage in any political activity for commercial reasons. Thus, the more politics interferes in commerce, the more corporations engage in lobbying. Politics drives lobbying, rather than the other way around.

Jonah Goldberg, in the sensible bit of his book Liberal Fascism (the main thesis of the book I strongly disagree with), gives an excellent example of this. Microsoft™ used to have a minimal lobbying presence in Washington. Then the US Justice Department went after Microsoft™ in an anti-trust suit. Microsoft™ now mounts a major lobbying operation in Washington.

The more interventionist public policy is, the more official discretions matter, the bigger the return (in profits gained and losses avoided) there will be in lobbying and the more lobbying there will be. Lobbying is the legal side, corruption the illegal side, of the market for official discretions. If you want to reduce lobbying and corruption, reduce the ambit of official discretions.

This is what the UK did, leading to its later C19th and early C20th reputation as a remarkably corruption-free polity. C16th and C17th England had a fairly high level of corruption. But—in the later C18th and early C19th—there was a massive purge of interventionist regulations under the influence of classical economists such as Adam Smith and David Ricardo. The result was a dramatic drop in the level of corruption, an effect that percolated down society.

In Australia, where is there the most political corruption? In land use cases, since official discretions there are so pervasive and so valuable. Particularly at the local government level, as that is the level of government where oversight is poorest. (The extensive official discretions over land use also have other ill effects.)

Command economies are pervaded by official discretions (as all attempts to replace markets and voluntary activity have to be). This is why—once the revolutionary fervour wears off—command economies rapidly become extremely corrupt.

To advocate strongly interventionist government policy and then complain about corporate lobbying is to engage in laughable misdiagnosis. But very useful misdiagnosis, if you are in the business of rival politics.

Since politics is not corporations’ main activity, the resources they allocate to it tend to be significantly less than rumoured or imagined. Indeed, the academic-advocacy NGO-union networks dispose, directly or indirectly, of significantly more politically-directed resources than does business. (And far more than small business.) But pointing loudly at “evil corporations” is very useful. For it is very convenient for rival power networks to direct attention to “evil corporations” and away from themselves. It is easier to hide what you are: particularly from yourself. (Status claims based on alleged moral superiority rather need that sort of self-blindness.)

We all clearly much prefer living in societies where profit-seeking private corporations are thick on the ground. Indeed, this is a very widespread preference, as global migration flows demonstrate. This is not an accidental feature, because such societies are also prosperous, liberal and free precisely because of (not despite) having large and vibrant private sectors.

What folk are really complaining about when they jump up and down about how wicked corporations are—including what a “threat” they are—is the existence of rival politics and rival points of view. The notion that corporations are “the greatest threat to democracy” is based on status-claims and power-seeking, it is not reality or evidence based.

ADDENDA See also my later post on trust, power and status.

The oppressiveness of God

Elizabeth Anscombe was an ardent and effective defender of orthodox Catholic doctrine in mainstream academic philosophy. Her essay Contraception and Chastity was originally published four years after, and as a defense of, Humanitae Vitae, Pope Paul VI’s encyclical on contraception and human sexuality.

The essay is, as you would expect from a philosopher of Anscombe’s skill and standing, a well-argued defense of the natural law sexual teaching of the Catholic Church.

The key framing of the essay, indeed of this whole mode of thought, is expressed as follows:

What people are for is, we believe, like guided missiles, to home in on God, God who is the one truth it is infinitely worth knowing, the possession of which you could never get tired of, like the water which if you have you can never thirst again, because your thirst is slaked forever and always. It's this potentiality, this incredible possibility, of the knowledge of God of such a kind as even to be sharing in his nature, which Christianity holds out to people; and because of this potentiality every life, right up to the last, must be treated as precious.

People, and their moral obligations, are defined in terms of God.

Which means they are not defined in terms of themselves, in terms of the human, but of something beyond the human. Which leaves open the possibility of defining people as being outside the properly human. Or as having “betrayed” their humanity by failing to conform to this defining purpose, or its derivatives.

It also means moral obligations are defined by criteria beyond the human. One can “fail” the test of morality due to considerations that have nothing to do with how considerate or respectful your behaviour is towards your fellow human humans.

The great potential for oppressiveness this has is obvious and is attested by plentiful historical experience.

In Anscombe’s essay, this grounding in the extra-human expressed through two salient features. Sex is not defined by its experienced reality—either among humans or in nature—but by its alleged defining purpose (reproduction: the purpose that connects sexuality to the creative impulse, the only way in monotheism sex connects us to the divine). Anything that falls outside that defining purpose is thus anathema: regardless of its human reality (and any role in catharsis, expressing love or intimacy, or as pleasure must be bound within that purpose). As Anscombe writes, in traditional Catholic teaching:

all artificial methods of birth control were taught to be gravely wrong if, before, after, or during intercourse you do something intended to turn that intercourse into an infertile act if it would otherwise have been fertile.

The second, and consequence of this, is that Anscombe has to work at making sure love is defined as only being “proper” if it falls within this defining purpose. Love is not defined by its human experience: human experience is judged by extra-human criteria. This has the very convenient effect (for doctrine and sacerdotal authority) of putting bounds on the “love thy neighbour” precept.

All of which has various consequences, including that humans who fall outside this defined “proper” nature are defined as being outside the realm of the “properly” human (as the Vatican makes quite explicit). “Love thy neighbour” gets doubly subverted: by the redefining of ‘love’ (in all its forms, confining it to within legitimating purpose) and the redefining of the human (and so ‘neighbour’).

But there is no single set of ways of defining God’s purposes, the purposes that trump the human. Just as Catholic thought defines the queers—those who do not fit with the binary identification of sex and gender, the demand that humans be defined by their genitals: gays, lesbians, bisexuals, transgenders, intersex—as outside God’s purposes, so Muslim thought defines Christians as being (in part) outside the ambit of God’s purposes: as being, through their failure to accept Muhammad as God’s Prophet, in revolt against the wishes of God.

Just as both Christian thought and Islamic scripture define Jews as similarly being (in part) outside the ambit of God’s purposes. The more Christianity subverts “love thy neighbour”, the more the commandment not to use God to strip people of their moral protections is subverted, the more its behaviour converges with Islam because the more the authoritativeness of God operates to trump mere human claims.

But this is a game anyone can play. This claim of “I have a theory, and you are to be punished for failing to conform to my theory”.

Anscombe is invoking a tradition that claims that this is not merely a matter of revelation, of scriptural authority. On the contrary, it is a matter of natural law, of the metaphysical structure of the universe. Now, the universe is the creation of God, so it still leads back to Him. Nevertheless, it is about how things are in a structure-of-things sense. As Anscombe writes:

In fact there's no greater connexion of "natural law" with the prohibition on contraception than with any other part of morality. Any type of wrong action is "against the natural law": stealing is, framing someone is, oppressing people is.

Tell that to the Jews and the queers, but let’s move on:

"Natural law" is simply a way of speaking about the whole of morality, used by Catholic thinkers because they believe the general precepts of morality are laws promulgated by God our Creator in the enlightened human understanding when it is thinking in general terms about what are good and what are bad actions. That is to say, the discoveries of reflection and reasoning when we think straight about these things are God's legislation to us (whether we realize this or not).

This “legislation” including how the universe is. (Such as reproduction being “the purpose” of sex.)

Natural law theorists, such as Edward Feser (a clearer and more effective presenter of Catholic natural law theory than Anscombe), insist that they are engaged in moral deductions from the metaphysical structures of the universe.

The problem with this is that, when one examines the conclusions of natural law theorists across time, they produce the conclusions one expects from their time and place. So Aristotle produces conclusions that fit in with C4th BC Greece, Aquinas that fit in with C13th Latin Christendom and Feser, George and Finnis conclusions that fit in within the ambit of contemporary moral conclusions. As we can see in their attitudes to, for example, slavery, human bondage, the role of women, the appropriate legal treatment of sex acts, contraception, infanticide, abortion, charging interest. Natural law moral theorising is not an exercise in “moral deduction” at all, it is an exercise in using a mode of reasoning that allows the conclusion to select its premises.

Very useful for a system of religious doctrine to be sure, but not one that justifies escape from the problems of defining the nature of the human, and moral obligations, in this extra-human way.

What natural law theorising, in its trumping-authority-in-the-structure-of-things mode, does provide a link to, however, is secular ways of doing exactly the same thing. What Nazism and Leninism have in common, for example, with such religious modes of thought is not being “religious” per se, but in setting up structures and authorities that trump the human. Not in their Godlessness, but in their substitute Gods, their substitute trumping authorities.

A common feature of these moral framings—precisely because each framing is deemed so utterly authoritative—is that people who fall outside its definition of the “properly human” can only escape from within the framing (and if the framing permits it). That is, they have to play that game, they have no claims against the framing. Jews have to become Christians or Muslims, Christians have to become Muslims, queers must fight their own nature, “class enemies” have to embrace the dictatorship of the proletariat and so on. With racism, of course, one cannot escape the framing: at best, one can become a “good nigger” and accept one’s inferiority.

And, of course, such structure gives great power and authority to those who are the “guardians of the framing”, who are the “gatekeepers of righteousness”. Hence its appeal to those who see themselves as such and its intimate connection to elevated claims of “guardianship”. To elevated concepts of priesthood and infallible Popes, to the Will of the Fuhrer, to various Great Leaders (Lenin, Stalin, Mao, Kim, …). Plato has a lot to answer for.

So, if one wants to understand what is it about Catholic teaching that seems so oppressive, it is that it is extra-human in its claims and groundings and so is substantially at war with the human. But it is hardly alone in that.

About Elena Kagan

The process of confirming a US Supreme Court Justice has became an intensely political process.

Elena Kagan seems something of odd choice for Supreme Court Justice despite being (if not for all that long) Solicitor-General, hence worries about her “lack of form”, so people look to her hiring record to get hints and worry about such matters such as her First Amendment views. Unsurprisingly, people examine her thesis for clues about her judicial philosophy.

Given the importance of the US Supreme Court, it is understandable that there should be debates about the nominee. This compilation of links on the nominee provides some sense of the debate and interest. One can track the various stories folk want to tell about the nominee. People have even angsted about her sexuality.

What caught my eye is that Kagan is the third least popular Supreme Court nominee since Robert Bork (the most unpopular, followed by Harriet Miers: Bork and Miers are the two failed-to-be-confirmed nominees of recent decades). Among the nominees from Robert Bork on, the most popular have been Chief Justice John Roberts, Clarence Thomas and Sonia Sotomayor. If one goes for net support—vote for less vote against—then the three with the most clearly supported were Ruth Bader Ginsurg, John Roberts and Clarence Thomas: Kagan is still the third least net supported after Miers and Bork. Kagan also has the third highest undecideds after Miers and Bork. She just does not positively excite folk in general. So, appealing to something which resonates with popular sentiment is not a reason to nominate her.

That she is Jewish seems to be largely beside the point: on the IQ evidence, three Jewish members of SCOTUS is about right. Though, if she does get confirmed, having three Jews and six Catholics on the Supreme Court will be something of a major marker of the decline of the WASP elite. But she is the epitome of the Harvard-Yale domination of the peak of American government.

That she is a woman is marginally more interesting, but after Justices Sandra Day O’Connor, Ruth Bader Ginsburg and Sonia Sotomayor, that is less exciting that it would previously have been.

So, a bit of a blank slate in terms of judicial “form” and philosophy: if the nominee is a bit puzzling, then one looks at who did the nominating. It is pretty silly to try and class President Obama as a closet socialist or secret Muslim (though it would be good if he would refrain from patronising Israelis about such matters). It is much more sensible to label him as the Chicago corporatist he fairly clearly is: albeit an academically-minded Chicago corporatist. (Which is not the same as being fascist, despite claims to the contrary.)

Kagan is a politically-minded academic (and academic administrator). Is she a corporatist? Is she someone who thinks things should be managed, by the right sort of people? Who knows what is expected? According to this little vignette in a recent essay by Angelo Cordevilla, yes:

If, for example, you are Laurence Tribe in 1984, Harvard professor of law, leftist pillar of the establishment, you can "write" your magnum opus by using the products of your student assistant, Ron Klain. A decade later, after Klain admits to having written some parts of the book, and the other parts are found to be verbatim or paraphrases of a book published in 1974, you can claim (perhaps correctly) that your plagiarism was "inadvertent," and you can count on the Law School's dean, Elena Kagan, to appoint a committee including former and future Harvard president Derek Bok that issues a secret report that "closes" the incident. Incidentally, Kagan ends up a justice of the Supreme Court. Not one of these people did their jobs: the professor did not write the book himself, the assistant plagiarized instead of researching, the dean and the committee did not hold the professor accountable, and all ended up rewarded. By contrast, for example, learned papers and distinguished careers in climatology at MIT (Richard Lindzen) or UVA (S. Fred Singer) are not enough for their questions about "global warming" to be taken seriously. For our ruling class, identity always trumps.

Worried yet?

And a little less surprising as a nominee, perhaps? Or that her nomination does not resonate with the wider American public all that well. But it resonates fine with the right sort of people.

ADDENDA A much more detailed piece which makes a similar point.

Pig legs and Thomist moral reasoning

This is extends a comment I made here.


In ethics, Thomism or Catholic natural law theory is a system of reasoning whereby moral conclusions congruent with whatever is convenient for Catholic doctrine at the time are deduced from the metaphysical structure of the universe.

The Thomist view on sex is that the inherent function of sex—what brought it into existence—is reproduction, so sex can only be used according to the form of reproduction. The originating function of sex determines what is the proper, natural, way to engage in sex. Men and women were brought into the world for each other and only in their complementarity can moral erotic relationships exist.

This reasoning thus reaches the conclusion desired from the metaphysical characteristics of the universe: sex and gender must conform to the simple binary identification of remaining as born and only having sex with the opposite sex within marriage based on us being fully defined by our genitals. This excludes all the queers (gays, lesbians, bisexuals, transgenders, intersex) who do not conform to this simple binary identification. But it (at least, it does in the modern, amended, version) allows married couples past conception age to continue to have sex (since it is the reproductive form that counts, as that is congruent with the defining function of sex, not whether conception is possible).

The mechanics of sex thus become a major moral issue because sex can only properly happen by the form which conforms to its defining, which is to say its originating, the reason why it exists, purpose.

Any sexual activity that fails to conform to that reproductive form is using sex against its originating purpose. So, no blowjobs, no anal sex, no masturbation, no contraception that interferes with the natural process, no sex within the same gender: the only permitted intentional orgasms come from a penis ejaculating into a vagina connected to an unimpeded uterus. That sex in nature has lots of other functions does not matter: they are not evidence, they are malfunctions and malformations.

Fairly clearly, this is using the conclusion to select the premises. One simply focuses on that part of reality that conforms to the desired conclusion and dismisses the rest as improper: hence the ability to “deduce” from the metaphysical characteristics of the universe the desired conclusions.

To see how opportunistic this is, consider the case of the pig leg. The inherent function of a pig leg is to move the pig around, which would seem to ban bacon, ham and roast pork, given they involve irretrievably frustrating the pig leg from carrying on the function which brought it into existence. When we make and consume bacon, the pig leg is not being used according to the form that arises from its originating function.

Clearly the pig leg can perform other functions than moving the pig around but, then, so equally can sex perform other functions than reproduction. Certainly, we have to eat to live, but we are not compelled to specifically consume pig legs. It is just tasty and convenient that we do so.

While we can use other things than pig legs to get tasty nutrition, sex provides catharsis and intimacy in ways that generally lack equivalent substitutes. Whatever difference one is going draw between making bacon and non-reproductive sex, it is not going to turn on originating purpose.

The real difference between the originating function of sex and the originating function of pig legs is that Catholic theorists are looking for ways to restrict sex (for reasons I discuss in my recent post on the role of God in moral discourse), but they are not looking for ways to restrict food. (If originating purpose determines proper use, we should only eat things which can continue to function when we harvest the eaten bit, or which can no longer perform their original purpose. It is also hard to see how evolution can be a proper process, since it is all about finding new functions.)

The religious taboos are driving the reasoning, not the metaphysical structure of the universe. Which, as noted, is the trick with such "natural law" moral reasoning and what makes it so doctrinally useful: it picks on the aspects of reality it finds convenient and simply dismisses any divergence as "improper". (That this then ends up creating “improper” humans in significant numbers each generation is just too bad; they grow up as isolated individuals in a sea of "proper" humans, so have historically been very easy targets.) If the conclusion gets to choose its premises in that way, it is hardly surprising that it ends up "deducing" from the metaphysical structure of reality whatever conclusions are currently congenial for Catholic doctrine.

But it is also a specific example of a more general issue. When we theorise, we abstract away from reality. In doing so, we can abstract away from the reality of people’s humanity. Which is precisely what Catholic natural law doctrine does, it abstracts away from the reality of human sexual diversity thereby, as I noted previously, creating categories of people who should not exist—the queers: all the people who do not conform to the binary identification of sex with gender.

Since they clearly do exist, generation after generation, the response is to deem them metaphysically flawed, for the theory says they ought not to exist, and require them to conform to the theory, at whatever the personal cost (and blame them when they do not so conform). Their inconvenient existence is then a burden placed on them: the theory is trumps. This is, of course, an approach we see in other ideological systems. It is oppressive—even murderous and tyrannical—there too.

Defining bigotry

Bigotry is the unilateral denial of moral protections to a category of people: unilateral because it does not flow from any specific acts by them transgressing against other people’s moral protections.

Since it is about denying moral protections to people who have not individually transgressed against the moral protections of others, the net effect of acting on bigotry is to decrease the ambit of moral constraint and therefore increase the level of immoral behaviour. Since it is about denying people moral protection, bigotry is, in fact, a moral claim: a claim about the ambit of moral constraints, about the status of people’s membership in the moral community.

So, bigotry is a way of claiming to defend morality while acting to undermine it by narrowing and/or lessening membership of the moral community. Bigots always claim to be defending moral decency, doing so by identifying a group who are outside (in whole or in part) its protections due to some flaw in them—thereby making them a threat to moral decency—not in the framing that excludes or otherwise diminishes them.

The more such framing is contested, and the less it is enforced, the more bigotry diminishes. The more uncontested the framing is, and the more it is enforced, the greater the level of bigotry.

This is why bigots often attempt to drive excluded group or groups out of the space of public debate: if they are allowed to present themselves as “just folk” then the moral claims of exclusion are likely to decay. The greater the sanctions imposed against such action in the public space, the easier it is to maintain a structure of exclusion. The more such sanctions decay, the harder it is to do so.

Since the denial of moral protection is unilateral, in that it is not based on specific transgressions against the moral protections of others, it has to be justified. In particular, the excluded have to categorised as some sort of threat: a threat of moral importance, even to morality itself. The smaller the minority involved, the more this has to be done, otherwise it is just a large minority monstrously bullying a small and vulnerable minority. Typically, they are held to be a profoundly corrupting influence in some way: that they will, if not excluded and repressed, act to undermine some basic structure or structures of society. Or that what they do or are is offensive, or otherwise malignly contradictory, to some basic principle or authority.

There will be thus the notion that they are, in some sort of way, a moral contagion: whether by converting others, by infecting their moral sense or by an enhanced propensity to immoral behaviour in general. That the flaw in them that justifies their exclusion will manifest in more pervasive moral flaws: even in a complete rejection of moral constraints.

They are thus turned into a threat to moral decency, which makes their exclusion not unilateral after all, but a defence of moral decency.

Any of these attitudes can be internalised. When Bishop Desmond Tutu was asked what was the worst thing about apartheid, he replied “the way it makes you doubt that you are a child of God”.

But, regardless of whether it is internalised by the object of bigotry, full bigotry leaves its object no escape while one remains in that category. Everything they do and say is tainted, without standing or, at least, irredeemably lesser. They are not permitted to escape their framing: all the problems are in them and what they do, not in how things are framed.

Which is at the heart of bigotry’s evil: it undermines or destroys the possibility of moral conversation and common moral restraint. For such conversation presupposes sharing some common moral plane when, to the bigot, equality itself is an insult. You do not understand the logic of bigotry unless you understand the reality of the insult of equality. The more committed to the bigotry, the more matters become subordinated to hate and exclusion and to rage at anything that undermines the notion that equality is an insult, that you do share a common humanity. Bigotry uses the language of morality to profoundly subvert the very structure and function of morality.

The role of God in moral discourse

The salient role of God in moral discourse is to operate as a completely trumping moral authority against whom no human claims have standing.

The standard use of this trumping moral authority is to justify stripping categories of people of their moral protections.

The standard form of this justification is to declare the existence of that category of persons is a moral flaw in the order of the universe which is the fault of the members of that category.

So, Islam claims that everyone is obligated to accept that there is no God but Allah and that Muhammad is His Prophet: failure to do so is a grievous error which can only be fully resolved by submitting to these revealed truths. Hence Christians, Jews and other “people of the book” have accepted the truth of the One God but not the truth that Muhammad is His Prophet. That makes them worse than Muslims (who have accepted both) but better than polytheists, atheists and so forth who have accepted neither declared truth: they have not even acknowledged the One God.

The existence of full infidels is a moral flaw, the existence of partial infidels is also a moral flaw (though not as bad and it is better if they are under the rule of Islam, and so have submitted to the rule of the laws of God) but, in both cases, the flaw is in the people themselves for failing to acknowledge these revealed truths. The obligation of Muslims is to work towards a future where these flaws no longer exist. (Which means, of course, that apostasy—rejection of either or both of the previously accepted two truths—is treason against the fundamental purpose of Islam, the aim of history itself, and the sovereignty of God, so punishable by death.)

Islam may have incorporated this logic in its fundamental principles, but it did not even come close to inventing the basic structure.

Centuries before Muhammad was born, Christians had developed the same logic against Jews and pagans. Jews were the Chosen People who had produced the Messiah but failed to follow Him. That was a profound failure on their part—indeed, not merely a rejection of God’s purpose, but of their reason for being the Chosen People. Worse, in order to not force Christians to face the embarrassment of—when the Empire became officially Christian—accepting allegiance to, and responsibility for, a Deicide State (given Jesus was killed by Roman soldiers according to a Roman style of execution under the authority of a Roman official), Jews were held to be guilty of killing the Messiah, the Son of God, and thus of Deicide.

Jews were, however, treated better than pagans, for they did at least accept the One God. Jews may have been a repressed and despised morality, but paganism was utterly illegitimate and increasingly treated as such.

Nevertheless, the failure of God’s Chosen People to accept the Messiah they had produced was a profound flaw in the cosmic order, one that was the fault of the Jews themselves. It also provided an explanation for the embarrassing failure of God’s Chosen People to follow the Messiah they had produced: it was their wilful moral perversity in refusing to follow the revealed truth. It was all their fault, a fault they could assuage only by accepting the truth of Christ.

In just the same way that Muslims later claimed that the embarrassing failure of Jews and Christians to follow the Prophet who was the completion of their tradition was all their fault, a fault they could only assuage by accepting the truth of the Prophet being the seal of the Prophets. Indeed, Islam took the principle further than Christians did, since Christians at least acknowledge that the Jews had it basically correct until Christ came along and provided a new Covenant. Islam, by contrast, claims that God’s message has always been the same, the Jews and the Christians just wilfully distorted it. Which made the failure of Jews and Christian to become Muslims all the more egregious.

In both cases, the principle was drawn that it was clearly outrageous to treat those who did accept God’s revealed truth as morally or otherwise equal to do those who did not. Hence the Muslim notion of dhimmis being derived from the Christian treatment of Jews under the Christian Roman Empire.

One can see the structure of the argument clearly. God is the absolutely trumping moral authority against Whom no moral claims can be made; God has purposes revealed in the universe; failure to follow those purposes is a wilful failure which is the fault of those who so fail; it reveals their profoundly flawed moral character; a flaw that can only be assuaged by repenting of their error. In the absence of such repentance, it is outrageous to treat those who conform to God’s purposes as the moral, social or legal equal of those who wilfully fail to do so.

So, the Muslims applied the argument to Christians and Jews, the Christians applied the argument to Jews. Who did the Jews apply the argument to?

The queers. (I.e. those who fail to conform to the strictly binary conception of sex and gender.)
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And everyone hates the queers
The classic version of this structure of reasoning, later adopted by the Christians, was Philo of Alexandria’s marriage of Platonic natural law theory with scriptural Revelation. It was built into the structure of the universe created by God that the purpose of sex was reproduction, that sex was legitimate only between males and females, a purpose confirmed by scriptural Revelation. To have erotic desire for one’s own sex was a profound flaw, a failure to conform to the natural order and binding scriptural injunctions. To act upon such erotic desires was an abomination, a profound betrayal of God’s purposes (as manifested in the natural order and scriptural injunctions). So clearly, the scriptural punishment should be followed and they should be put to death.

To put it another way, God really, really cares about the mechanics of sex so the mechanics of sex is not merely a religious issue, it is a profound moral issue and so should be a legal issue—indeed, a capital crime: as it was for centuries in Latin Christendom and still is in much of the Muslim world.

The connection between this argument and its application to the Jews is not merely some reasonable inference. We can see it operating quite directly in, for example, the preaching of St John Chrysostom, who takes Philo’s reasoning against queers and then applies to the Jews.

So, the pattern is that the Jews apply the reasoning using God to strip a category of person (the queers) of their moral protections on the grounds that it is their fault for failing to adhere to God’s purposes, the Christians then apply the take reasoning and apply it to the Jews themselves (and the queers). The Muslims then take the same reasoning and apply it to the Christians, the Jews, and the queers.

So, the one thing that can unite the Abrahamic religions in Jerusalem itself, is that they all hate the queers: they all claim that God finds their aspirations—and any acting upon those aspirations—hateful. The Jews then apparently do not notice that the Christians and Muslims apply the logic to them, the Christians apparently do not notice that the Muslims apply it to them.

The queers, they’re different.

Actually, no, really, they are not.

The dynamics of vulnerability
Indeed, not only does one get exactly the same accusations being mounted against the queers as against the Jews (they betray God’s purposes, they prey on children, they corrupt any institution they touch, they are engage in conspiracies against the righteous and God-fearing, they are agents of the evil one, to treat them as equals is an insult and a betrayal of basic traditions of society) but, across history, Jew-hatred and queer-hatred display similar intensities in hatred because they share two essential characteristics.

In both cases God—the ultimate trumping authority against whom no claims can be made—is used to justify stripping them of moral protections. And they are a small minority, so very vulnerable: the cost of engaging in hatred of them is low. The combination of vulnerability and that the moral authority being cited is absolute in its authority leads to range of hatred from the casual to the intense.

Both the Jews and the queers fall foul of the dynamics of picking on small and vulnerable minorities. For who, after all, is more vulnerable than people who are a few percentage points of society? This vulnerability is even more intense for those who come into their sexuality and gender identity as isolated individuals in an overwhelmingly heterosexual family and social milieus—Jews are at least raised in Jewish families, and, until the Holocaust, being Jew was never an explicit capital crime.

In both cases, a small and vulnerable minority has to be characterised as profoundly corrupting, otherwise it is just a very large majority monstrously bullying a small and vulnerable minority.

They also both fall foul of the dynamics of monotheism. In the case of the Jews, the dynamics of hijacking a revelatory tradition (particularly given its notion of a single, authoritative view of reality): in the case of the queers, the sexual and gender dynamics of monotheism.

With the One God, sex is not part of the divine except in its creative (i.e. reproductive) aspect. So sex—except as reproduction—does not connect us to the divine, it separates us from the divine. So, the mechanics of sex becomes a Very Big Issue that gender exists to manifest. Hence sex that is explicitly not reproductive, indeed fails to conform to the purpose of having the two genders, does not merely separates us from the divine, it defies the divine. One is “betraying” both one’s sexual nature and one’s gender nature. Hence Zoroastrianism (as a proto-monotheism) also anathematises same-sex activity (indeed, classes it as demonic), despite not sharing any scriptural tradition with the Abrahamic religions.

By defining gender and sex purely in terms of reproductive role, monotheism thus designates categories of people who should not exist (those whose sexual orientation or gender identification does not conform to the notion one’s psyche is properly defined by one’s genitals). Clearly, the defining of gender in terms of reproductive role is false: in particular, same-sex attraction and orientation is part of the human. But a theory with the authority of God is taken to completely trump the mere existence of queers. No human testimony counts against God. Their existence becomes defiance, and thus their fault. Monotheists become possessors of a theory of human nature whose “obvious truth” is much more important that other people’s mere existence, for it is a theory with the authority of God.

As for the dynamics of hijacking a revelatory tradition, both Christians and Muslims claim to represent the completion of the prophetic tradition of the Jews. So, the failure of the Jews to follow along in said completions is embarrassing and only explicable—given the “obvious” truth that they do represent the completion of said tradition—in terms of wilful failure. There is nothing wrong with the Christian or Muslim revelations, only the Jews for not following them.

But, here’s the thing about the wilful-failure-to-adhere-to-absolutely-trumping-moral-authority argument. It is perfectly able to be secularised.

The secularisation of excluding flaws
Jew-hatred and queer-hatred have obviously been directly secularised, with spurious “science” used to justify hatreds derived from religion.

But this notion of wilful failure to conform to the proper structure of reality is, after all, precisely the grounds on which Leninists claim the right to tyrannise, appropriate and kill. The completion of history is the absolutely trumping moral authority against which no human moral claims are permissible. Failure to adhere to the clear truth of the Marxist revelation (sorry, “scientific analysis”) of the underlying dynamics and purpose of history is clearly a wilful failure. Hence …

In particular, the labour theory of value, and its concomitant theory of exploitation, creates classes of economic agents who shouldn’t exist. Now the labour theory of value is false and the theory of exploitation a product of a false theory of value and a conceptual shift game. But that just increases its parallel with the monotheist theories of sex and gender.

And the grounds on which the Nazis operated. The Aryan race is the pinnacle of humanity, there are no moral claims to be made against its profound authority. Anything which frustrates the success of the Aryan race (the achievement of necessary lebensraum, the preservation and intensification of its purity) is a wickedness with no standing. Hence …

Now, it is true that Nazism had categories from which no redemption was possible, while Leninism, Islam, Christianity and Judaism all permitted the possibility of exiting from your grievous failings. But, in practice, that made much less difference than is often claimed for it. It all still justified stripping categories of people of their moral protections up to, and including, mass murder. (In the case of queers, since they are scattered throughout human populations—which makes them particularly vulnerable to profound isolation—the most “mass” the murdering gets is homicidal moral panics, but that is a result of the dynamics of scattering, not some difference in the dynamic of hate: as the concentrating effort of the death camps illustrated.)

Contesting humanity
It is all still about contesting people’s basic humanity and claim that their failure to conform to “proper” humanity is their fault: either for wilfully “betraying” their humanity or being deeply inherently flawed in their humanity—or even not being “really” human in the first place. You can tell where a society is on the bigotry scale by which groups it is acceptable to contest the basic humanity of, and to what degree.

So, in modern Western society, it is no longer acceptable to contest the humanity of blacks, Jews or women: to imply they have betrayed their humanity or are some lesser form of the human. But it is still widely acceptable (though increasingly less so) to contest the “proper” humanity of the queers.

Sometimes this is done explicitly, as in the Vatican’s categorisation of homosexuals as metaphysically flawed (“objectively disordered” due to being oriented to an “intrinsic moral evil”). Sometimes, it does in a way that is only implicit, or even entirely unconscious.

“You are different, why should you be included?” is the argument for maintaining various exclusions. The more contestable the existence as “proper” versions of the human, the weaker the arguments have to be to “satisfy”. If the ordinary humanity of queers was uncontested, the argument would be “we are human, why should we be excluded?” and excluding people on the basis of their sexuality would seem as outrageous as doing in on the basis of religion, skin colour or hair colour.

The claims of queers are discounted because they are taken to be outside some defined notion of how humans are, or “properly” are. The presumption of illegitimacy is so traditional, it is invisible, as is the harm it causes.

For example, the way it is taken as perfectly reasonable to make same-sex acts morally problematic. That this then requires the same-sex attracted and oriented to be at war with their own nature is taken to be beside the point. That is just an unfortunate consequence that they have to deal with (and is their fault for being that way in the first place). Their nature and aspirations are secondary to worrying about the mechanics of sex.

Yet the mechanics of sex is not a moral issue: it is a religious taboo issue, but it is not a moral issue, for it does not violate life or property, it does not interfere in how other people live their lives: so it does not violate people’s moral protections.

Issues of rape, consent, adultery, infection, protection of minors, integrity and so on apply to sexual behaviour generally, but not to same-sex behaviour specifically. Same-sex activity violates certain claims about how people ought to be, but that is a different matter. Same-sex activity is simply part of what it is to be human, given that humans are sexually diverse.

The notion that, for example, government policy can change human sexuality is deeply silly. Government can punish people for being different: that it is very good at. But it cannot change human sexuality. In particular, it cannot change the reality that humans are sexually diverse.

But, if that sexual diversity is taken to be illegitimate, if society is taken to require adherence to a norm of how “real” humans are, then the difference is taken to outweigh being human, because one is not human in the “proper” sense, and so can be excluded.

Hence, letting same-sex oriented people serve openly in the military is taken to be “social engineering” when it is the exclusion that is social engineering: attempting policy that is at war with how people are.

The notion that marriage has to be “defended” from the queers is precisely a notion that they are an improper, illegitimate, corrupting force: on the “outside” of “proper humanity”. But what is being defended are notions of masculinity, femininity and sexuality which are false: for it is precisely because they are false that the contrary cases which prove they do not, in fact, define the human have to be excluded, belittled, de-legitimised.

Same-sex marriage is taken to be an “experiment in human nature”, when it is insistence that law ignore the fact that same-sex couples exist, build lives together and even raise children which is the “experiment”. A longstanding one that has clearly failed: people remain sexually diverse. A failure that imposes all sorts of costs on families: alienating parents from their children, making adolescence for an isolated and vulnerable group much more traumatic than it needs to be, encouraging people to hide from their own sexuality in cover or desperation (or simply forced) marriages. But these are failure and costs that have been traditionally hidden, because the harm to people whose existence is illegitimate is hidden, or massively discounted, harm. That only occurs because of the people who “should not exist” and so is their fault. Just as that this “natural” option of presuming heterosexuality while repressing, denying or excluding same-sex relationships rests on brutal repression of preceding traditions is equally invisible.

When the Hawaiian governor recently vetoed a civil unions bill because it was creating civil unions an equivalent of marriage and therefore should be decided at referendum by the voters of Hawaii, she was explicitly—by the example she cited of opposing views—stating the legitimacy of the notion that heterosexuals should have more rights than homosexuals: that to treat them as equal was offensive. Since this view is taken as legitimate, deciding whether to treat queers as proper versions of the human, thus full citizens, and so entitled to equal protection of the law was contentious, hence the voters at large needed to do it. (Just as, not all that many decades ago, treating Jews as the legal equals of Christians was regarded as outrageous and offensive.)

Taking it that institutions should legitimately acting as if queers do not exist, as if their existence is illegitimate, is the default option, the “natural” option. Operating off a (false) theory of what defines gender and which treats the existence of millions of people who are living proof it is false as a unfortunate reality to be repressed.

What has changed is the ability to repress and discount. The traditional ancien regime used judicial (and private) violence to make sure such burdens remained socially invisible. As that repression recedes, the claims for status as ordinary human beings steadily work to the surface. But that is hardly an unfamiliar pattern. It is also an interactive one. The tradition of exclusion was imposed by brutality, maintained by brutality and is collapsing as the necessary enforcing brutality is being withdrawn.

To put it another way, the previous withdrawal of moral protections is now itself being withdrawn.

The function of morality
We have morality so we can live together. The underlying issue is not how people ought to be (that cannot be established pre-moral judgement), but how people ought to act given how people actually are. Given how people actually are, how should we behave towards each other? Morality exists to provide us with moral protections: constraints on behaviour so we can live together. Stripping people of moral protections attacks the function of morality, since it casts people outside the moral community.

Which, we can presume, is not likely to be done to the powerful, but only the (relatively) powerless, since we particularly want the powerful to be bound by moral protections. (Back to Jews and queers being small minorities.) But it is also what makes the authority of God so perilous: absolutely trumping authority must trample those of mere people, mere mortals. A morality that takes human claims as central—that starts with how people actually are, rather than taking their existence as contestable—that is more likely to be humane, in all senses. It is also more likely to be a morality based on how people actually are, rather than a theory of how they ought to be. Conversely, the absolutely trumping authority of God makes is so much easier to authorise discounting of people as they are, since the authority of God is so trumping.

Since morality is about moral protections, what offense against moral protections does people being homosexual do? Particularly given that sexual orientation is established either at birth or very early in infancy (so we are talking literally about human nature as it actually is)? None, that is specific to same-sex acts. That some people are same-sex attracted and oriented violates certain claims about how people ought to be, but that is a different matter.

What harm does anathematising homosexuality do? A great deal. It alienates parents from their children, makes adolescence much more traumatic than it needs to be, drives people to undertake various destructive actions to hide from, or deny, their own sexuality, creates a miasma of fear and dishonesty. This without even considering the horrific punishments periodically imposed on individuals for engaging in homosexual acts. (How many same-sex acts is one person being burnt alive “worth”?)

There is no “homosexual problem” just as there was no “Jewish problem” or “black problem” or whatever. It is entirely a construct of certain theories about people and society, not how things actually are.

But if your existence is illegitimate then the notion that it is anathematising homosexuality—the denying of moral protections—which is the moral problem is invisible since any problems with flow from an illegitimate existence are “those people’s” problems for existing.

Signalling “virtue”
What anathematising homosexual acts and homosexuality does do is that it signals one’s sense of virtue: that one is one of God’s people, a defender of “decency” against those people. All the things that anathematising Jews did for Christians (or still do for many Muslims). Virtue, identity, status: all in one package and without actually having to give anything up.

It is a potent brew for preachers, clerics and priests to sell. So they do. That organised religion has a tendency to anathematise homosexual acts just proves the same-sex oriented are an easy (i.e. isolated and vulnerable small minority) target for clerics and priests to pick on to act as moral gatekeepers and sell effortless virtue against.

Just as it was easy to do so against the Jews. Hence one gets anti-gay activists selling effortless virtue parading themselves as “heroic” defenders of “moral decency” against the nefarious corruption of the queers, just as there were anti-Jewish activists who sold themselves as exposing and opposing the malevolent conspiracies of the Jews.

With “what God wants” as the ultimate trump card, authorising it all and discounting any human misery caused on the way through. Misery that is the fault of those who have failed to conform to “God’s purposes”, the purposes of the absolutely trumping authority against which no human claims count.

ADDENDA One way to read the second principle of Gospel Christianity—love thy neighbour as thyself—is that it bars using God to deprive people of their moral protections. Hence the utility of Philo of Alexandria's exclusory logic to priests and preachers acting as "gatekeepers of righteousness" in justifying denying people the status of being moral neighbours. It is precisely when the love-thy-neighbour principle is subverted (as has obviously been the case with Jews and queers) that the behaviour of organised Christianity converges with that of Islam—as I noted here—because then the authority of God is not balanced by anything that gives human claims effective standing.

The pill and Church attendance

In Lois McMaster Bujold’s Vorkosigan saga books, a contrast is drawn between the very technologically advanced (and sexually free) Beta Colony and the technologically backward, highly socially controlled, Barrayar. On Beta, people have complete sexual freedom, though there is very strong social pressure to wear the appropriate ear-rings to signal one’s sexual and relationship status. There is, however, complete control over reproduction: people can only reproduce if they have a license to do so. Their technology allows them to separate control over ovaries from control over the body the ovaries are in.

Barrayar had previously suffered a drastic drop in its technology and so in its standard of living. The result was that they could only control reproduction by controlling the whole body, leading to a very restrictive set of sexual and gender mores familiar to us as “traditional social values”. In a poor society, women have an interest in making sure that they are not stuck with raising children on their own. Hence pressures to confine sex within marriage (or intention to marry) and for men to accept responsibility for the baby-results of their sexual activity.

One way for women to signal to men that sex involves sharing responsibility for child-rearing is to attend public gatherings where such sexual and gender mores are strongly endorsed. We call such places ‘churches’. (Or ‘synagogues’ or ‘mosques’.)

Then along comes the contraceptive pill. Suddenly, women have a high degree of unilateral control over their fertility. Technology has separated control over ovaries from control over the whole body.

Moreover, this is in societies of greatly increased prosperity: societies where upper body strength no longer had a general social premium (whether in providing protection, or in employment). Societies where the risks of dying in childbirth have massively decreased, so that the expected return on investing in educating women has increased. The combined result was that having a child became much less risky activity for one’s health and single parenthood became much less of a disaster for one’s income.

So the benefits to women of signalling one’s adherence to very controlled sexual and gender mores massively dropped. (The benefits to men of such signalling also dropped: indeed, largely disappeared.)

Worse than that, going to church involved listening to men preaching about how women should not control their own bodies in such a way.

In such a situation what would one predict?

A steep drop in Church attendance: particularly by younger women (and men).

As this review of a book on the pill notes, the contraceptive pill was a case of technology with unintended consequences.
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But, viewed in this light, one feature of the pill becomes much more understandable:

In one of America and the Pill's most interesting chapters, May asks whether men would tolerate the sorts of side effects that women have regularly experienced. The prospect of a male pill has appeared on the horizon various times over the last 50 years, but the issue of side effects scuttled every effort. Scientists, May reports, "actually discovered an effective vaccine that completely stopped the production of sperm without interfering with sex drive." But it also made users' testicles shrink by a third, so the researchers abandoned it, concluding, "The psychological trauma of shrinking testes just cannot be overcome."

Of course not, because there is nothing to do with reproduction that offers men anywhere near the advantages that the pill offered women. As the review notes:

Yet for all this, as May demonstrates, the pill has been a tremendous boon for women, transforming sex and reproduction so thoroughly that it's hard for many to imagine what life was like before it. …

We have to be careful not to engage in too much technological triumphalism, however. This was technology in particular social contexts:

After all, the pill is widely available in Saudi Arabia, but it hasn't made a dent in that country's brutal patriarchy.

Technology is not magical, it remains embedded in human action, human institutions and human cultures. Its possibilities may shape human action, institutions and cultures but it can also be constrained and directed by those actions, institutions and cultures.

In Muslim societies and communities, enforcement of sexual and gender mores tends to be much more active—up to and including violence. Attending the mosque, wearing approved clothing, becomes a way of avoiding sanctions rather than signaling expectations. Hence much higher rates of mosque attendance continuing after the introduction of the pill.

Nevertheless, it is hard to disagree that the impact of the pill in Western cultures was one of:

… social maelstroms that made the pill so significant. The millions of women who … have used the pill to slip the bonds of biology, turning childbearing from an obligation into an option, have utterly reshaped our ideas about sex, marriage, and family.

Which was a major problem for Churches who saw themselves as uttering eternal verities, rather than manifesting evolved social mores anchored in social presumptions whose foundations had been transformed.

But which churches would we predict would handle the change best? Established monopolies (as in Europe) or churches used to religious competition (as in the US)? Clearly, those used to religious competition. Or which can only operate through it—for example, emerging churches such as Pentecostalism.

It is a dangerous foolishness, to infer from the failure of sluggish monopoly Churches of the Europe to deal with dramatic social change based on a new technology, particularly a technology that changed incentives for women—so Churches run by men (in the Catholic Church’s case, celibate unmarried childless men) were particularly likely to be “blindsided”—to some grand social theory about “inevitable tendencies” in social development. The religious impulse is a powerful one, and can find new vehicles to manifest. As, indeed, it is.

But we should always keep in mind the signaling role of norms and how changing what people want to signal will change those norms.

ADDENDA Mary Eberstadt's piece Christanity Lite pointing out that Churches which relax traditional Christian sexual strictures experience declining membership in effect looks at the issue the other way: lessening the signaling value of church attendance discourages church attendance—but that value that can be lessened from within as well as without. Another essay of hers connects secularisation to declining fertility.

The destruction of prudence: understanding the global financial crisis

Prof. Russ Roberts of George Mason University has produced the best single analysis (pdf) (via) of the global financial crisis (GFC) I have read: empirically grounded, with careful, perceptive analysis leavened with moral outrage. (And if you do not have some level of moral outrage, you do not know what went on.)

Over the last 15 years or so, I have had various conversations with people about how the IMF has been injecting moral hazard into the international financial system by acting as “welfare for Wall St” and bailing out banks who loan to developing countries: bailouts which have usually involved major costs to the taxpayers of said countries.

This turns out to be a more general problem. President Bush put it nicely in conversation with the Chairman of the Federal Reserve and his Treasury Secretary:

Someday you guys are going to have to tell me how we ended up with a system like this. I know this is not the time to test them and put them through failure, but we’re not doing something right if we’re stuck with these miserable choices.

(I wonder if he did ever get a good answer.)

Roberts is about finding underlying causes:

Yes, deregulation and misregulation contributed to the crisis, but mainly because public policy over the last three decades has distorted the natural feedback loops of profit and loss. As Milton Friedman liked to point out, capitalism is a profit and loss system. The profits encourage risk taking. The losses encourage prudence. When taxpayers absorb the losses, the distorted result is reckless and imprudent risk taking.

In other words, a system not merely suffering from moral hazard, but increasingly built on it:

The most culpable policy has been the systematic encouragement of imprudent borrowing and lending. That encouragement came not from capitalism or markets, but from crony capitalism, the mutual aid society where Washington takes care of Wall Street and Wall Street returns the favor. Over the last three decades, public policy has systematically reduced the risk of making bad loans to risky investors. Over the last three decades, when large financial institutions have gotten into trouble, the government has almost always rescued their bondholders and creditors. These policies have created incentives both to borrow and to lend recklessly.

At the level of social systems, there is a very large difference between reducing risk and suppressing risk. Reducing risk means one is lowering the level of risk in the general system. One can see that happening over time with the downward historical trends in interest rates, for example.

Suppressing risk
Suppressing risk shifts the risk from certain actions (and thus particular agents) to somewhere else: generally into more concentrated forms in the future. From the beginning of Federation until the early 1980s, Australia was under the Deakinite policy regime of industry protection, wage arbitration, state paternalism, white Australia and imperial benevolence.

Each part of the Deakinite regime was intended to be about reducing risk. Industry protection blocked foreign competition, wage arbitration blocked (low) wage competition, state paternalism reduced risks of aging and ill-health, white Australia blocked competition from “tropical zone” migrants and imperial benevolence sought the protection of friendly Great Power (first Britain, then the US). White Australia was the first part of the policy regime to disappear, being abandoned in the 1966-72 period. It arose because, during the nineteenth and first part of the twentieth century, there were two global labour flows. “Temperate zone labour” from Europe to North America and the Antipodes and “tropical zone labour”, particularly from China and India to various European colonies. It was an urgent demand of the North American and Antipodean working class that it be shielded from competition from “tropical zone labour”, often using the available prop of racial ideology.

As a policy regime, the Deakinite policy regime suppressed risk rather than reducing it in any systemic sense. And it suppressed risk by building a lot of rigidities into the economy. Consequently, the Australian economy handled external economic shocks badly because it lacked flexibility. The greatest achievement in the dismantling of most of the Deakinite policy regime has to been create a much more flexible Australian economy, which has handled both the 1997 Asian Crisis and the more recent GFC and Great Recession not merely well, but better than comparable countries.

[Under the Deakinite regime, regulation and other government intervention blocked the flow of information by blocking action: which inhibited the development of better ways of doing things and effective action in response to sudden changes. The latter in particular led to the Australian economy tending to deal poorly with economic shocks in the period.]

What the history of bailouts and implicit government guarantees that Roberts sets out did is suppressed risk by reducing risk for individual actors thereby massively increasing the level of risk in the financial system as a whole. Suppressing risks for individual acts, which therefore discouraged attention to risk, massively increased the level of systemic risk. [The pattern of action did not reflect the risks inherent in particular investments, as it suppressed seeking such information and acting upon it. What it actually reflected was the implicit government guarantees. Taxpayers were the "backstops" for the actions of others.]

Destroying prudence
Roberts sets out the perverse incentives created:

The punishment of equity holders is usually thought to reduce the moral hazard created by the rescue of creditors. But it does not. It merely masks the role of creditor rescues in creating perverse incentives for risk taking.

These perverse incentives became pervasive, which is precisely the problem:

Because of the large amounts of leverage—the use of debt rather than equity—executives can more easily generate short-term profits that justify large compensation. While executives endure some of the pain if short-term gains become losses in the long run, the downside risk to the decision-makers turns out to be surprisingly small, while the upside gains can be enormous. Taxpayers ultimately bear much of the downside risk. Until we recognize the pernicious incentives created by the persistent rescue of creditors, no regulatory reform is likely to succeed.
Almost all of the lenders who financed bad bets in the housing market paid little or no cost for their recklessness. Their expectations of rescue were confirmed.

Hence:

And what we do is make it easy to gamble with other people’s money—particularly borrowed money—by making sure that almost everybody who makes bad loans gets his money back anyway. The financial crisis of 2008 was a natural result of these perverse incentives.

Roberts uses the analogy of a poker game with Uncle Sam watching (sometimes changing the rules, sometimes guaranteeing players) to illustrate the problems very effectively.

What was going on was not “managing” the market system, it was a profound subverting of it:

Capitalism is a profit and loss system. The profits encourage risk taking. The losses encourage prudence. Eliminate losses or even raise the chance that there will be no losses and you get less prudence. So when public decisions reduce losses, it isn’t surprising that people are more reckless.

Read More...There is also another factor which is implicit in Roberts’ analysis, but he does not bring out. If access to decision-makers increases one’s returns, that will advantage firms with access to decision-makers. The flooding of funds into the financial system and financial markets is hardly surprising in the circumstances. An expansion particularly driven via the underpinning of massive levels of leveraging. Thus:

Without extreme leverage, the housing meltdown would have been like the meltdown in high-tech stocks in 2001—a bad set of events in one corner of a very large and diversified economy.

This was a crisis building for a long time:

The [1984] rescue of Continental Illinois and the subsequent congressional testimony sent a signal to the poker players and those that lend to them that lenders might be rescued.

A signal that was reinforced again and again by subsequent government action:

Continental Illinois was just the largest and most dramatic example of a bank failure in which creditors were spared any pain. Irvine Sprague, in his 1986 book:

“Of the fifty largest bank failures in history, forty-six—including the top twenty—were handled either through a pure bailout or an FDIC assisted transaction where no depositor or creditor, insured or uninsured, lost a penny.”

The 50 largest failures up to that time all took place in the 1970s and 1980s. As the savings and loan (S&L) crisis unfolded during the 1980s, government repeatedly sent the same message: lenders and creditors would get all of their money back. Between 1979 and 1989, 1,100 commercial banks failed. Out of all of their deposits, 99.7 percent, insured or uninsured, were reimbursed by policy decisions.

This had utterly predictable effects on the attention of actors in the financial system to levels of risk:

… all profit and no loss make Jack a dull boy.

[The information role of markets and prices were systematically distorted.] It was the systematic destruction, by government policy, of prudence in the financial system:

Each case seems different. But there is a pattern. Each time, the stockholders in these firms are either wiped out or see their investments reduced to a trivial fraction of what they were before. The bondholders and lenders are left untouched.

Tracing the effects of this does have some evidentiary problems. No one is likely to say “yes, I was reckless!” But:

While direct evidence is unlikely, the indirect evidence relies on how people generally behave in situations of uncertainty. When expected costs are lowered, people behave more recklessly.

This was a problem not only in the US. The UK authorities were playing the same game:

The only difference between this scenario in the United Kingdom and the one in the United States is that in the U.S. the Fed came to the rescue and the executives, for the most part, kept their bonuses.

That equity was not guaranteed made much less of a difference than one would imagine. As Roberts points out, equity investors tend to diversify and could use bonds to reduce downside risk.
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Roberts cites a study on the perverse incentives facing executives and concludes that:

This kind of looting and corruption of incentives is only possible when you can borrow to finance highly leveraged positions. This in turn is only possible if lenders and bondholders are fools—or if they are very smart and are willing to finance highly leveraged bets because they anticipate government rescue.

He then considers the case of a couple of the CEOs whose firms were rescued by the government (i.e. the taxpayer):

When we look at Cayne and Fuld, it is easy to focus on the lost billions and overlook the hundreds of millions they kept. It is also easy to forget that the outcome was not preordained. They didn’t plan on destroying their firms. They didn’t intend to. They took a chance. Maybe housing prices plateau instead of plummet. Then you get your $1.5 billion. It was a roll of the dice. They lost.
When Cayne and Fuld were playing with other people’s money, they doubled down, the ultimate gamblers. When they were playing with their own money, they were prudent. They acted like bankers. (Or the way bankers once acted when their own money or the money of their partnership was at stake.)

In other words, behaviour was different in the realms were public policy was not systematically destroying prudence.

Roberts examines various explanations offered for the GFC, concluding that:

These explanations all have some truth in them. But the undeniable fact is that these allegedly myopic and overconfident people didn’t endure any economic hardship because of their decisions. The executives never paid the price. Market forces didn’t punish them, because the expectation of future rescue inhibited market forces. The “loser” lenders became fabulously rich by having enormous amounts of leverage, leverage often provided by another lender, implicitly backed with taxpayer money that did in fact ultimately take care of the lenders.

The systematic destruction of prudence as moral outrage.

Perverse incentives
Roberts then examines the (largely regulation driven) perverse incentives in housing finance and purchase in various markets before examining Fannie Mae and Freddie Mac:

But between 1998 and 2003, Fannie and Freddie played an important role in pushing up the demand for housing at the low end of the market. That in turn made subprime loans increasingly attractive to other financial institutions as the prices of houses rose steadily.

Fannie and Freddie had particular value for policy makers:

… one other group sitting at the table playing with other people’s money: politicians. Politicians are always eager to spend other people’s money. It’s what they do for a living. But it’s an even better deal for politicians if they can hide the fact that they’re spending other people’s money or delay when the bill comes due. That’s what they did with Fannie and Freddie.

We can see clearly from Roberts’s analysis that the suppression of risk actually massively increased the total level of risk in the system. In the housing market, there were massive increases in riskier housing loans.

The story Roberts tells is one of consistent rationality creating perverse incentives, rather than having to posit various levels of irrationality. In particular, he asks the excellent question of why specific types of assets were invested in and not others.

Roberts shows quite clearly that the issue is not merely problems with computer models used in assessing risks, it is the incentives driving the creation and use of models.

How was prudence destroyed? By making the taxpayers the backstop, the guarantors of what wealthy, powerful and connected people were doing:

As in the Fannie and Freddie story, the firms aren’t the real financers of the salaries associated with picking up nickels. The taxpayers ultimately fund picking up of nickels, and the taxpayers get flattened.

In Yoram Barzel’s property rights analysis of firms, the boundary of the firm is the boundary the guarantee offered by the equity capital. The owner of the risk exposure in lending is whoever provides the debt guarantee. That turned out to be the taxpayers. The system systematically nationalised risk, and operated as chaotically as any command economy does. [For it had the same underlying structure: those making the decisions about capital did not have to bear the costs of what they did while information was being systematically blocked or distorted.]

In particular, it destroyed prudence.

Bloating perversity
Part of what went on was the creation of complex financial instruments whose attributes were not clear to the “owners” of said instruments. But, if someone else is providing the ultimate guarantee, how hard are you going to bother to look (or even worry)?

Roberts’ analysis leads him to a very scary place:

An unpleasant but unavoidable conclusion of this paper is that Wall Street was (and remains) a giant government-sanctioned Ponzi scheme.

But, if one wants to know how the financial system became so huge, then this analysis explains why. The advantages of access to policy makers both causing, and combining with, the implicit (and increasingly explicit) taxpayer guarantee. As Roberts notes:

There is an old saying in poker: If you don’t know who the sucker is at the table, it’s probably you. We are the suckers. And most of us didn’t even know we were sitting at the table.

This is not a good place for democracy to be:

Rescuing rich people from the consequences of their decisions with money coming from average Americans is bad for democracy.

Just as the IMF has been bad for global governance because it has been doing the same thing, only more so, and gouging taxpayers a lot poorer than the average American taxpayer.

The consequences for democracy are indirect, the consequences for the economy much more direct:

Rescuing people from the consequences of their decisions is bad for capitalism.

What we do not need is replacing “bad” people with “good” ones. We need better ideas and much better public policy incentives.

Maybe it is as simple, as the cases of Canada and Australia suggest, of just having good prudential regulation in the first place. (A model, which does not, alas, work for the IMF.)

The massive destruction of prudence, and the subsequent creation of high levels of systemic risk (including sovereign debt issues—themselves an issue of a lack of fiscal prudence—which Canada and Australia have also managed to avoid), perhaps explain the fearfulness of monetary and banking authorities, such as the Bank for International Sentiments recently endorsing fiscal and monetary tightening in a situation of serious deflationary pressures. (Since one would have to be something of an obsessive idiot to be worrying about inflation in the current situation: though (re)fighting the last war you won has notoriously held a certain attraction.)

Roberts quotes Milton Friedman putting the point well about not just hankering for the “right” people:

The way you solve things is to make it politically profitable for the wrong people to do the right things.

That is, after all, the way Madison designed the constitutional structure of the American Republic. What is needed is ways of discouraging politicians from continuing to systematically destroy prudence in the financial system.

ADDENDA: Roberts' analysis can be taken as something of a case study for Jeffrey Friedman's argument (pdf) (via) for the cognitive superiority of markets over politics.

FURTHER ADDENDA: Having now read Hayek's The Meaning of 'Competition' (which, Jeffrey Friedman is completely correct, should be read in conjunction with Hayek's The Uses of Knowledge in Society), I have extended the post somewhat by the sections in [square brackets].

What is wrong with worrying about Western-sins-first, revisited

There is a notion among Western progressivists that we in the West should concentrate on Western sins first because those are the ones that we can do most about. (I critiqued it in this post but want to put the problems with this notion more directly.)

There are several things problematic about this claim.

First, it rates victims, not by their degree of oppression, but by who is oppressing them. Can there be anything more belittling than to imply the most important thing about a victim is who is oppressing them? That they are to be situated, not by their suffering, but by who is causing it? That the perpetrator is the person who sets the effective moral parameters? What has often be criticised as the implicit racism of uneven progressivist moral concern flows directly from this.

Second, it directs moral attention according to the convenience of the observer, not the urgency or importance of the oppression. Instead of directing attention to what ways might be sought to relieve the worst oppression, it asks what expressions or actions of concern are most convenient to oneself. There is a moral convenience in this that leads easily to moral vanity: to conspicuous compassion as a mode of convenience, not serious moral action.

Thirdly, it distorts one’s sense of what actually makes things better. By any measure, Western liberal democracies are the most successful (and the most morally tender) human societies—indeed, a recent study points out (pdf) that the more Westernised a society, the more prosperous it is (via). If one defines moral concern against the most successful societies, one will be naturally inclined to end up promoting a lot of failure, since the prime examples of social and moral success become the prime objects of moral critique and thus the salient examples of moral failure. So, even where one does engage in moral action, it is likely to be ineffective or even disastrously counterproductive. Indigenous policy motivated by the aim of entrenching differentiation of indigenous folk from the mainstream provides plentiful drear examples of this, but so does development policy and advice more generally.

Fourthly, it is disingenuous self-justification. It is clear that what really drives such selectiveness is ideological convenience (typically, some sort of anti-capitalism and/or highly selective anti “imperialism”) and sense of status.—since what really counts for status is asserting oneself against folk around you. It is about feeling morally superior to their own society. Which both motivates and aggravates all the above identified problems.

There is no better case in which to identify these dynamics than Western progressivist critique of Israel. Is such criticism remotely proportional to Western progressivists actual capacity to influence Israeli policy? Clearly not. But Israel provides a splendid butt for all sorts of progressivist moral hobbyhorses. How Western nationalism (e.g. Zionism) is unacceptable, though non-Western nationalism (e.g. Arab nationalism) is just fine; endorsement of pride in non-Western cultures, and the grievous failings of Western cultures; focusing on the evils of Western “imperialism”, particularly “settler” imperialism. And so on.

It also allows progressivist Europeans in particular—with their ambition of being the moral elite for the globe—to exorcise the embarrassing historical reality of the Holocaust. By projecting all sorts of Nazi imagery and analogies on Zionism, the spectre of the Holocaust is projected outside Europe. That the projection is loaded on the Jewish state makes it emotionally so much more effective (and morally disgusting, but if you “get” that, you are not one of the “virtuous”).

Besides, thinking Israel may have a case raises all sorts of worrying issues about Europe’s own growing Muslim minorities and suggests that the world is not hovering on the edge of a future without war. There are a lot of progressivist demons that anti-Zionism exorcises.

It also justifies and reinforces anti-Americanism, further identifies (Western) nationalism as the great evil (the thing the EU exists to stop, hence the importance of EU elites "restraining" popular sentiments, which becomes circumventing citizen control—the "democratic deficit" as feature not bug, a feature globalised through the increasing internationalisation of policy), supports abhorring of military action as the product of moral failure and allows vote-getting deals with Muslim countries in international forums: hence the viciousness of anti-Israeli sentiment in Europe. As is noted here:

Israel is the only state in the world whose legitimacy is widely denied and whose destruction is publicly advocated and threatened; Israelis are the only citizens of a state whose indiscriminate murder is widely considered justifiable.

This attempt to bundle together anti-Zionism and anti-Americanism in order to “escape from the burdens of history” (part of a general escape that is the aim of the EU itself) is in fact a pathetic failure, part of a wider failure in Europeanist outlooks. After all, holding that:
(1) The world would be better if run according to how Europeans say;
(2) Colonials are vulgar, uncultured brutes;
(3) The masses should do as their moral and intellectual superiors say; and
(4) Blame the Jews!
hardly represent new departures in European history or thinking. It is just relabelling of some very old, and noxious, ideas. The notion that this represents “cutting edge” moral virtue, a new achievement in moral understanding, would be utterly pathetic if it was not so sad (and so noxious).

None of this is some call for any belief in Western moral perfection. It is a call for moral judgements to be made according to moral criteria: nothing more, nothing less.

It is a call for us to be moral cosmopolitans (using the language of Martha Nussbaum in her updating of Stoic outlooks) not moral patriots or (even more pathetically) moral anti-patriots.

Patriotism, as an emotional and political attachment to one’s own country, may well be a necessary glue in political life. It should not be confused with some strong moral claim, however. But anti-patriotism—an attachment to making strong moral claims against one’s own society—is simply contemptible at so many levels. A destructive and self-indulgent arrogance that is not "reality" based at all, but a flight from reality into a fantasy of moral perfectionism and cognitive superiority.