On Keegan’s “The American Civil War”

At some point it came up this summer around the anniversary of the Battle of Gettysburg that I didn’t know who actually won the battle – this despite knowing that it was the anniversary of the battle.

That made me realize that I’m now pretty much a middle age man, so that to go with the reading on the founders in the last couple of years, it was my duty as an American to become an expert on the civil war.

And this book helped. Now I can knowingly make jokes about Lincoln keeping McClellan as the head general too long when there were other more talented and more decisive generals waiting in the wings.

I think that Keegan may be a little too close to some of the nitty gritty here in the first 80% of the book, but that’s where he’s the best so it makes sense that this is where he keeps his focus. (I’ve read other Keegan like “The Face of Battle,” so I already knew I liked his style. That he does get close to the day to day action and does it well is balanced out by the later quintile where he starts to play economist and sociologist where he is not as good. It sticks out in a bad way.

Overall, it was a worthwhile read.

And the winner of the Battle of Gettysburg? The union, of course. Why else would Lincoln go give his address there?

Some thoughts on “Commanding Heights”

Looking back, the “End of History” as identified by the thinker Francis Fukuyama lasted about a decade. It was in this decade that the original book for Commanding Heights was written. The documentary came at the very beginning of a new age of the backlash to globalism that arose with 9/11.

The documentary is very much a product of its time. The source was written when the new economy was ascendant, the Clinton boom meant that the USA was paying back the debt and economists were worried about how to do monetary policy in an era of government surpluses. 

The new millennium made a lot of those issues moot. It wasn’t just 9/11, but the recession that came with the popping of the tech bubble exposing bad accounting from not just Enron but WorldCom and Tyco and Adelphia. All these names made the cover of the news magazines but receded to the collective unconscious. The last third tries to deal with this, but is too close in time to be truly reflective.

What commanding heights is at its core is a celebration of the economy that was in force in 1998. It is a celebration of free markets and the rise of the Austrian school. It is a celebration of Margaret Thatcher waving around a copy of Hayek and claiming, “This is what we believe”. It is a celebration of Reagan, or at least a version of Reagan that ignores pulling back from the tax cuts to a more modest tax reform, a Reagan that ended the cold war standing at the Brandenburg gate telling Gorbachev to “Take down this wall” – and not the Reagan that illegally sold arms to Iran to fund right-wing death squads against an elected government in Central America. And I get it. This time was good for a lot of people up until it wasn’t. It was so good that once it crashed the first time, we doubled down in America by pushing through tax cuts and borrowing more and inflating the deficit so that people could buy houses and we remade the good times.

And then this time it wasn’t good. We’re still coming to terms with the fact that perhaps the return to technology isn’t as high as we want it; that demographic pressures are working against the economy especially if we have less immigration. The tea party and Occupy and Bernie and Trump are two sides of the same coin – the coin being the realization that things are not as we have been told. It is a backlash of the world that is described in Commanding Heights, one that even a decade along after the crash we haven’t come to terms with. If Thatcherism was the English coming to terms with the fact that they were no longer an empire, perhaps that is just the reckoning that Trumpism is, with the red baseball hats and the weird idea that we need to look to the past to remake America in an image of the ideal and not look forward.

One thing that really strikes me is that the Commanding heights set’s up this great clash between Keynes and Hayek. As if Keynesianism didn’t work so this Hayekian version is what we should go with. And looking back now we see that both models of how to let capitalism have their limits. Perhaps the problem lies not with the interpretation of the system, but the system itself.

Two side notes: first one of the things that bugs me is setting up a dichotomy between Keynes and Hayek. They’re not on the same level. There’s a reason that any time a fan of Hayek starts talking about his biography they must rope in the time he was in London and Keynes was at Cambridge. There’s no parallel to people talking about Keynes. Hayek is but a footnote. On the flip side, Hayek does have that “Nobel” prize at least.

Notes on "The Corporation" (2003)

The movie "The Corporation" is available here for now:

Overall, this is the kind of documentary that is in my wheelhouse. It has some of the big names I like – Howard Zinn, Michael Moore, Noam Chomsky – and a bunch of other people as well, just sitting around and calling the current organization model of the corporation a psychopath if it is a person.

What’s missing is a lot in the timing. In the movie, corporation is almost at its peak. It is before the financial crisis, but it is before the Citizen’s United Case, allowing corporate speech in the form of money, and it is largely before the rise of social media. If the film were to be updated, I feel that these aspects would really push the case more towards what the producers were trying to prove. 

As a historical form of organizing capital, it might not have started badly. The documentary speaks of early joint stock organizations (but for some reason leaves out the Dutch and English East India Corporations, huge malefactors in their own right) and then moves towards the more contemporary world. In this world, the corporation is global, so even individual states have less power of what they can do in terms of exploiting the people and the land for their own ends, ignoring the externalities they generate so that they can grasp at these short-term gains. We look at intellectuals from think tanks giving cover to sweatshops as job creators to learning how Monsanto only paid 80 Million Dollars to the American victims of agent orange but there was nothing for the Vietnamese people. All these are costs of doing business for the corporation, a soulless entity given personhood in a perversion of the 14^th amendment.

It is biased, and if you go in knowing that, it’s’ not that much of a problem for me. What is a problem being that the documentary takes pains to show what a soulless beast the modern corporation is, but it doesn’t directly address the economic system that the corporation is working within? I wish I had a concordance of the script of the movie, but it struck me about half of the way through that no one said the world “capitalism” at all. It eventually came up, but only at the very end. By my count it was mentioned four times, and one of those four times was when it was shown written out on a billboard in the shot. This is important because the corporation didn’t just happen. Growing from the enclosure movements to global corporations takes a whole ideological system that encompasses the economic and political systems – it is this ideology of capitalism is the true thing that trickles down and makes the concept of the corporation seem like it has always been here. It is this ideology that is so persistent that we don’t even question it even in a documentary critical of its fruits.  

The Economist as Scientist, Historian, and Philosopher

The persistence of one thinker in economics over another is something I have been wrestling with, but haven’t come to any sound conclusions. In reading the big names over the last couple hundred years, you can see the threads of who influenced whom and who dropped out of importance. Either their ideas were dead ends to most people and thus remain a historical curiosity like the Classicals, or they have been explained better. We still talk of Keynes but don’t use his models.

It strikes me because what is appealing to me is that Economics is a field still under contention. When I was a kid in undergrad studying Chemistry, part of what was alienating was that most of the big questions had been answered, or so it seemed. To really understand the interactions of particles at these nano-scales you had to get into physics and then into probabilistic math – once you’re thinking of electrons as probability fields and not point particles, a lot of the simple models seem like child’s play even if they’re fairly accurate representations of how the world works.

And it’s this piece of how does the world work is why I keep learning and exploring. I doubt I’ll ever scratch but the surface, but it is a fun journey. So it circles back to economics – we build models to formalize the narratives we were looking at. These models have assumptions built in and should have much fewer graduations of meaning than the slippery human language. The problem I worry about is if this reliance of the mathematical models takes us away from the larger picture. You build the model and look at the data and see if the data fits the model in the past and then see if it fits it going forward. Then if it does or it doesn’t, we can still have argumenta about the model or the data you chose or if it falls prey to Goodhart’s law or the Lucas critique.

Because here’s what I image is the ultimate endpoint in mathematical economics: assume an all-powerful super-computer with access to all the economic data points ever collected. With these powers, it is able to build a model so complex that no living human mathematician can even begin to understand it. But it is perfectly predictive and adaptive to outside shocks and following the recommended policy put forth from this machine maintains low inflation and full employment.

Here’s the question though – would you trust it if no one could explain why it came to those conclusions? I don’t know if I would. And this is why straight mathematical reliance seems to me a dead end. We have to be scientists, yes, but also historians and philosophers to know what the math is really saying. That means not losing contact with the past.

Veblen in Modern Economics: Category Error?

Before this section, I only really knew two things about him.

The first was that he wrote the book the Theory of the Leisure class and that the idea of conspicuous consumption is tied to his work. And that’s not bad. If in 100 years the only thing that a reasonably educated person knows about me is a book I wrote and a concept from it, I’d call that a win. We can’t all be Marx, right?

But what really struck me was how contemporary the description of him by the authors and his work excerpted in book actually is. If you’ll forgive me, Veblen is nothing if he is not “Woke”.

That made me wonder why he doesn’t really pop up more. The authors say on one hand one reason that even contemporary socialists don’t cite him more is that he was too pessimistic.

But I think it could be something else. I think it’s a categorization issue. Because the math revolution was taking off, a more subjective narrative-based economics didn’t fit the bill. So he gets shuttled aside to sociology and anthropology programs and the economists don’t look at him.

This could be indicative of a larger problem. Economics sees itself as the queen of the social sciences and thus will look at other fields and try to apply their methods to them, instead of learning what can be useful in analyzing the world from the fields themselves.

Is Veblen’s current marginalization in the halls of deliberate, or just an oversight?

Hang the Venture Capitalists

“Something Ventured” is a documentary celebrating Silicon Valley venture capitalists. The movie made me angry.

I have to first admit, I am not sympathetic to the people on this movie. Now, they come across as nice enough in the edited version of their conversations, but when at the close they do that thing where they show the characters at the end of the movies and give a capsule synopsis of what happened after that’s what make me think something’s off. One of the guys had built and operated the world’s first fully computerized yacht. Another noted that his favorite charity was the Ayn Rand institute. They literally must have called this guy up after most of the production was done and basically asked him “what do you want to be your legacy?” and he said the Ayn Rand institute.

Here’s the problem with that. You can talk about how good these guys are since they helped lend expertise and cash to companies at early stages when they needed the capital to grow. Perhaps we can see them as something like the Walrasian crier, helping the market work. But to think that they’re the ones with the new idea, the ones really taking risk to the point where they identify with Randian principals is laughable. The Objectivism ideal is that it is the entrepreneur who is taking the risk, the individual superman who is making the world going. If anything, the VC people are parasites and leeches on the people who are making contributions to society. For every Genentech where the VC helped and ended up saving lives, there’s an Apple or Cisco where the founder was kicked out unceremoniously. That’s not making the economy work better, that’s predatory.

And then we have to struggle with the fact that VC as an industry has not been around forever. Now it is attached to Silicon Valley, but the question I had when I was watching this was “Where was the VC that helped Edison?” Business formation happened before these vulture funds came to being. But an even bigger question in terms of business formation is why has it dropped? If VC funds are really making the economy more efficient, there would be more jobs created by these new firms. So a chart like the one below would trend up, and not down (there are a lot of variables having an effect here, not just VC firms).

It also made me think about what kind of distortions these funds have on the market. There is money to be made, but there are very few Googles. So the firms have to spread their money around, hoping to have a major hit that makes up for their losses elsewhere. This does two things that I can think of. First, it takes away the incentive to go public and face the reporting requirements that that brings. Second, it increases valuations all around, boosting balance sheets on companies that really haven’t figured out how to make a profit. I’m thinking here specifically of Uber, which is using flows of VC money to undercut the taxi industry worldwide and it’s going to be horrible to see that bubble pop and all the diminished capacity that exists because everyone was chasing this phantom yield.

And finally, we have to ask if they’re even that good. Most of the top flight people with long experience interviewed in this film were lamenting that they didn’t give money to apple. Why didn’t they see the promise in what is now one of the largest companies in the world? Jobs and Wozniak were smelly hippies with poor time management skills and assholes to boot. So these titans of foresight and capital allocation didn’t give them money.

Look, in a capitalist economy, incentives need to be in place so that capital is allocated to the place where it will benefit the most people. The profit motive is strong and there are a lot of winners – some much bigger than others. But we don’t need to celebrate these people as heroes.