Vanishing Children

Brink Lindsey’s 1/3/23 post is “The Global Fertility Collapse”. 

https://brinklindsey.substack.com/p/the-global-fertility-collapse

Declining global fertility is an overdetermined trend.  The Prime Minister of Japan just announced that his country is “on the verge of societal collapse” due to the plummeting birth rate.  It’s Ross Douthat’s second horsemen of decadence from my 4/28/20 post.

…society, has become quiescent (in a state of inactivity or dormancy).  Douthat’s conclusion is depressing but screams to the fortunate few – count your blessings!  We should be grateful for our lucky position in the hereditary aristocracy, while the bottom 80% settles “into the senility of repetition, content to live despairingly but peaceably, paying down, for the last few decades, the accumulated capital of its vigorous and vanished past”.

Sad but true. Thank your lucky stars for who and where you are.

The cause of the collapse of fertility may stem from the other causes of decadence and declining dynamism.  In other words, economic stagnation may cause sterility, not the other way around.  Arnold Kling citing Limon Stone on 1/7/23 writes:

Actual fertility has fallen even as desired fertility has not in most of the high-income countries of the world. Thus, as with marriage, the likeliest story on falling fertility in the last two decades is not one of people simply freely choosing not to have so many children. Rather, fertility has most plausibly fallen because of economic “failure to launch” among young people, long delays in career stability, excessive housing costs, exploding childcare costs, rising student debts, and other adverse circumstances, not least the oppressive panopticon of social media which makes prisoners of us all. 

The decision on whether or not to have children is strategic, based on one’s circumstances.  Our current socio-economic environment makes young people today think it’s not worth it, not in their best interests to “launch”.  That same strategic, interactive calculation impacts all of Brink’s enumerated causes for capitalism’s crisis:

1. Exhaustion of low hanging fruit
2. Mass affluence leads to caution – psychological loss aversion is a powerful force
3. The anti-Promethean backlash caused a cultural aversion to new technology
4. Mass affluence changed our orientation from the real world to the virtual world
5. Capitalism has no systemic competition – there is no rival system
6. The global fertility collapse means a lot less people to work and innovate

Next week, we get to the million-dollar question raised by the above.  Is Capitalism doomed?

P.S. The only solution, or at least amelioration, of The Permanent Problem must involve a change in our cultural attitudes, mores and family values (not Government policy).

https://www.aei.org/articles/the-game-of-life/

https://robkhenderson.substack.com/p/nobody-is-a-prisoner-of-their-iq

Why Do You Keep Bringing Up Game Theory?

For the fun of it, I recently read The Big Bang of Numbers – How to Build the Universe Using Only Math (2022).  It’s a cognitive blast – helped me understand why we need imaginary numbers, among other interesting stuff.  Classic mathematics is fascinating and powerful, but it has limitations.  It is inherently incomplete, as Gödel proved. 

If you’re a regular reader of this blog, you might ask me why I keep bringing up Game Theory.  Because it’s the reason why wealth redistribution public policy is:  1) morally wrong; 2) economically inefficient; and 3) logically flawed. 

Von Neumann and Morgenstern explain why in their classic text Theory of Games and Economic Behavior (1944).  Regular math will do in a Robinson Crusoe economy but not in a multi-participant one:

Consider now a participant in a social exchange economy.  His problem has, of course, many elements in common with a maximum problem.  But it also contains some, very essential, elements of an entirely different nature.  He too tries to obtain an optimum result.  But in order to achieve this, he must enter into relations of exchange with others.  If two or more person exchange goods, with each other, then the result for each one will depend in general not merely upon his own actions but on those of the others as well.  Thus each participant attempts to maximize a function…of which he does not control all variables.  This is certainly no maximum problem, but a peculiar and disconcerting mixture of several conflicting maximum problems.  Every participant is guided by another principle and neither determines all variables which affect his interest.

This kind of problem is nowhere death with in classical mathematics.  We emphasize at the risk of being pedantic that this is no conditional maximum problem, no problem of the calculus of variations, of functional analysis, etc.  It arises in full clarity, even in the most “elementary” situations, e.g., when all variables can assume only a finite number of values.

A particularly striking expression of the popular misunderstanding which the purpose of social effort is the “greatest possible good for the greatest possible number.”  A guiding principle cannot be formulated by the requirement of maximizing two (or more) functions at once. Such a principle, taken literally, is self-contradictory.  [pg. 10-11]

The reason I bring all this up while following Brink Lindsey is because it bears on “The Permanent Problem”.  How society should be organized, so we can all live wisely, agreeably and well, is not a simple utility maximization problem.  There are an extraordinary number of variables, conflicting interests and dynamic complexity.  Back to Von Neumann and Morgenstern:

Our approach should be compared with the widely held view that a social theory is possible only on the basis of some preconceived principles of social purpose.  These principles would include quantitative statements concerning both the aims to be achieved in toto and the apportionment between individuals.  Once they are accepted, a simple maximum problem results.

Let us note that no such statement of principles is ever satisfactory per se, and the arguments adduced in its favor are usually either those of inner stability or of less clearly defined kinds of desirability, mainly concerning distribution.

Little can be said about the latter type of motivation.  Our problem is not to determine what ought to happen in pursuance of any set of – necessarily arbitrary – a priori principles, but to investigate where the equilibrium of forces lies. [pg. 42-43]

That equilibrium has been achieved, right here, right now, naturally.  Even if the initial historical acquisition of property rights was violent and unjust (it was), it’s not so now.  Read that David Friedman article from my last post.  We are all bound together by a set of mutually reinforcing strategic expectations.  The Game Theory tool of Schelling points (not traditional math) leads to the conclusion that property rights are: 1) moral; 2) efficient; and 3) reflective of actual reality.  OK, back to our regularly scheduled programming Tuesday.

Your Wealth Is Secure

Brink Lindsey’s 11/29/22 post is “The Absence of Systemic Competition”. 

https://brinklindsey.substack.com/p/the-absence-of-systemic-competition

It’s a good news/bad news message for my clients.  The good news is – you get to keep your wealth, without fear that private property rights will be abolished or that your assets will be confiscated for handouts (more than then they already are).  The bad news is that we probably could be living in a much richer, much more inclusive world with a broader sharing of economic flourishing if it weren’t for capitalism’s dominance and lack of competing ideologies.  A big reason for both messages is that since the fall of communism over 30 years ago, capitalism lacks any competition from any rival system.

Game Theory is the only way to understand one’s position in this competitive political economy.  We have reached Nash Equilibrium in the non-cooperative multi-player game of life.  You cannot make some better without hurting others.  Critical thinking exposes the truth and logic of this reality.  “Progressive” thinkers do not like this state of affairs.  They deem language and logic as merely wielding power, the “Mater’s Tools”.  As that Quillette article I cited last week puts it:

… the new puritanism can only be sustained where critical thinking is absent. Language is reduced to a series of cyphers intended only to bolster oppression or resist it.

Well, it doesn’t work that way outside the bouncy castle, here in the real world.  We get to keep our wealth within the current socio-economic system, which is not going to change.  The barriers to institutional and systemic change/innovation are insurmountable at this point.  There is plenty of competition within our capitalist system but no competition with the system itself.  Capitalism has no serious rival.  Bad news for losers (Locke’s querulous and contentious).  Good news for winners (Locke’s rational and industrious). 

This is the dilemma that Brink and others face when searching for a solution to the Permanent Problem.  Game Theory exposes the extraordinary triple coincidence with the world’s wealth distribution – it is:  1) moral; 2) efficient; and 3) what we observe to be the case.

http://www.daviddfriedman.com/Academic/Property/Property.html

Our wealth is safely protected, securely locked behind an impenetrable Schelling Fence.

Leftists’ Cognitive Bouncy Castle

Brink Lindsey’s 11/21/22 post is “The Retreat from Reality”. 

https://brinklindsey.substack.com/p/the-retreat-from-reality

I think it’s best read along with N.S. Lyons’ 2/16/22 post “Reality Honks Back”:

https://theupheaval.substack.com/p/reality-honks-back

The essence of both essays is the stark contrast between: 1) the hard, non-negotiable authority of the physical world; vs. 2) the soft, eminently resistible authority of the social world.  We have transitioned from a society once organized to solve problems in the physical world to one that delves into problems inside our heads.  There are still many people who work in the physical world but more and more, elites have retreated into a virtual bubble – a cognitive bouncy castle, detached from reality.

Lindsey writes:

Our cultural retreat to the virtual has thus left us with an economy less dynamic and productive than it otherwise could be. More fundamentally, it has warped how we think. Living in a world of artifice, no longer exposed to the unyielding hardness of physical reality, our minds now operate in a kind of cognitive bouncy castle — where all sharp edges have been eliminated and pratfalls are more exciting than dangerous. Outside on solid ground, truth amounts to correspondence with a non-negotiable reality that does not bend to suit your feelings. Inside the bouncy castle, where reality consists only of what’s inside your and other people’s heads, the truth is always negotiable — to the point where the very idea of objective truth can be dismissed as a negotiating tactic. 

He cites a study on the dramatic change in language use from thinking words to the language of feeling.  And this is very much a leftist/woke phenomenon.  They are the ones twisting language in attempts to impose an ideology that’s not real.  Deliberately restricting knowledge produces epistemic closure – a zipped up bouncy house – you’re not allowed to play in it unless you accept leftist orthodoxy without question.

https://quillette.com/2023/01/06/a-puritanical-assault-on-the-english-language/

It’s all fun in the bouncy castle until you step out and cold, hard reality smacks you in the ass.  Concerns about “diversity, equity and inclusion” are now prioritized over actual work and education.  The University of Michigan spends $18 million annually on DEI salaries, enough to pay tuition for 1,075 students.  There are real hard costs to all of this nonsense.

https://www.nationalreview.com/corner/the-high-cost-of-the-leftist-takeover-of-scientific-research/

Motivated reasoning has warped the marketplace of ideas.  Lindsey cites many of the same authors I like, including Scott Alexander, to demonstrate that we are trading our common pursuit of truth for the incoherent babble of “my truth”.  The decline of dynamism is the direct result of “bouncy castle epistemology”.  He links an article on today’s profound unseriousness by Tom Nichols:

https://newsletters.theatlantic.com/peacefield/617c7b245793d600215d2b35/peacefield-post/

Leftists bounce around like children and cannot seem to rouse themselves to the requisite seriousness.  They continue with habitual lying, manipulating, and bullshitting.

Next week, more on The Permanent Problem.

What If…?

This image is from Brink Lindsey’s 11/15/22 post “The Anti-Promethean Backlash”. 

https://brinklindsey.substack.com/p/the-anti-promethean-backlash

It’s a graph of U.S. energy consumption per capita from 1800-2000.  He borrows it from J. Storrs Hall’s Where Is My Flying Car (2021).  The red line is where we could have been if energy progress had continued unimpeded by the anti-promethean backlash and energy crisis.

Lindsey explains that capitalism has not just stumbled, it had its legs broken.  His prior essays identify two reasons for this:

1. The exhaustion of low hanging fruit
2. The growing power of loss aversion amidst material plenty

This post identifies a third – the self-inflected cratering of human innovation and advancement to master the physical world.  He uses a variety of concepts to shed light on this:

1. Environmental Kuznets Curves – we’ve reached the tipping point
2. Fear of new energy as inherently menacing
3. The Machiavelli Effect – innovation is now an uphill struggle because those threatened by it are real and known, while its beneficiaries are future and unknown

Lindsey has some interesting thoughts on the Environmental movement.  He sees it ripening into a kind of Baptists and Bootleggers alliance on cultural attitudes:

1. The high-minded broadening of moral horizons and greater empathy for the “other” and environmental concerns
2. The self-regarding “I’ve got mine, Jack” stance that regards change as not worth the bother if it carries any possibility of loss.

Both sides of this alliance resist radical economic change; one to protect the planet, the other to protect what they’ve legally acquired from Government theft. The second is a much more powerful driver of the current socio-economic environment.  Wealthy people with connections are more powerful than idealistic tree huggers. Those of us who were lucky enough or hardworking or smart enough, or all three, don’t trust the high-minded, utopian visionary, social engineers with a massive reallocation of resources.  A free-market capitalist revolution swept the world 50 years ago, and all of us live under its sway.  Some like to imagine an alternative or parallel economic universe in which we are all much better off.  The world today may very well be much poorer than it otherwise could have been.  However, the existence and extent of the possible massive opportunity loss is invisible.

I’m not willing to bet the wealth of my clients and family on a revolutionary disruption of the status quo in order to pursue a possibility that it could make things better.  There is no such thing as overall marginal utility.  We are each economic volitional agents competing for scarce resources.  I’ve got mine, Jack.  Keep your hands off my stack.  Communal sharing can never work because of the free loader problem and its inherent economic inefficiency via the destruction of incentives.  All the recent hype about wealth inequality is political bullshit.  Here’s John Cochrane’s recent take:

https://johnhcochrane.blogspot.com/2022/12/calomiris-on-gramm-ekelund-and-early-on.html

As Bastiat wrote in 1848, Government is the great fiction by which everyone seeks to live at the expense of everyone else.  Well, they’re not getting into our War Chests to pursue that possibility.

Why We Protect What We Have

Brink Lindsey’s 11/7/22 post is “Loss Aversion (by Any Other Name) and the Decline of Dynamism”. 

https://brinklindsey.substack.com/p/loss-aversion-by-any-other-name-and

It’s an intuitive, common sense, obvious aspect of human psychology.  People get attached to what they have and don’t like losing it.  Technically it’s called loss aversion – status quo bias – psychological inertia – the endowment effect.  All lifeforms want to keep what they got (big cats protect fresh kills from other animals) but humans have an especially powerful sense that the pain of loss is much greater than the pleasure of an equivalent gain.  Although it’s tempting to think ‘no– duh’ and move along, it’s helpful to understand this phenomenon more deeply because modern mass affluence has made it more important.  It is exacerbating a growing class divide.

Lindsey points to a 1979 article, Prospect Theory:  An Analysis of Decision Under Risk, to underscore how vital this idea is in understanding human wealth.  It is the most cited paper in all of economics and the third most cited in all of psychology.  Think about that.  After discussing that article, the remainder of the post identifies three examples of societal loss aversion:

1. NIMBYism and increasingly restrictive land use regulation.
2. The decline in geographic mobility – people are staying put.
3. The enormous escalation of priority now assigned to health and physical safety.  

Lindsey concludes by pointing to the massive build up of “distributional coalitions” – narrow economic interest groups in the political economy.  He agrees with the ideas in Mancur Olson’s book, The Rise and Decline of Nations:  Economic Growth, Stagflation and Social Rigidities (1982).  “The longer peace and prosperity persist, the more groups with a stake in the status quo will arise and figure out how to organize themselves – getting rich means more people with more to lose and thus with a motive to band together and defend what they got”. 

Next week, we see how loss aversion is taking away mankind’s motivation, as the bible urges, to fill the earth and subdue it.  We are no longer Promethean.  Humans are losing their ability to be rebelliously creative and innovative because we have more and more to lose, so want to protect it more and more.

Stuck

Brink Lindsey throws a tangential post out 10/24/22 on Brad DeLong’s new book Slouching Towards Utopia (2022).  Both authors take a similar approach to socio-economic philosophy.  I’ll accept Arnold Kling’s advice that DeLong’s book is “500 pages of intellectual over-confidence that seems to be the occupational hazard of left-of-center economists.”*  I’ll keep reading Brink, not Brad.

Brink’s 11/1/22 post is “The Age of Stasis”.  He cites a 7/24/22 essay, which I (a conservative) see as a bit disconcerting:  The End of the Conservative Age:  After Fifty Years of Stasis, We Are Called to Be Radical Again

https://ryanavent.substack.com/p/the-end-of-the-conservative-age

I agree with these writers’ diagnosis of our unhealthy societal decadence but worry what their “radical” cure might be.  The cure would likely be much worse than the disease (at least for those of us who are already successful and secure).  As we saw in Ross Douthat’s The Decadent Society (2020), our cultural decadence/moral torpor/age of stasis is overdetermined.  Lindsey cites that book on 10/5/22, 11/1/22 and 11/7/22.  Let me reiterate the structure of it:

Part 1 – Defines decadence and proves that we are living in a decadent society

Part 2 – Explains why this decadence may continue for a long time

Part 3 – Speculates on how our decadence may end

Douthat uses a biblical metaphor, The Four Horsemen of the Apocalypse:  1) Pestilence; 2) War; 3) Famine; and 4) Death.  The Four Horsemen of Decadence are:  1) Stagnation (economic); 2) Sterility (social); 3) Sclerosis (political) and 4) Repetition (cultural and moral torpor).  His book carefully tracks the development, origin, dimensions and sustainability of societal decadence.

Lindsey explains that the burden of knowledge means ideas are getting harder to find.  Diminishing returns and the exhaustion of low hanging fruit make innovation more difficult.  As human knowledge frontiers advance, the “years of study and training needed to reach the frontier – and thus be in a position to make a contribution of one’s own – necessarily increases over time”.  Progress gets harder over time leading to torpor and stasis.  Ordinary people can’t contribute, so the world is now controlled by and run for the benefit of extraordinary people.  Ordinary people are stuck in the mud.

My 4/4/18 three-part post analyzed, via Patrick Deneen citing John Stuart Mill (1806-1873), how the “best” dominate the “ordinary”.  Our liberal system was designed in this manner:  “…in order to liberate the small number of extraordinary people (the smartest, most educated, creative, adventurous, diligent, etc.) they must be freed…[from constraint]”.

Next week, Brink adds another piece to the puzzle that is particularly important to my moderately wealthy clients.  People get attached to what they have and don’t want to lose it.

* I abhor intellectual arrogance and will readily change my mind about anything as soon as I encounter contrary knowledge, which is why I obsessively put dates down here for books, blogs and articles I cite, including my own. 

The Insignificance of Ordinary People

Brink Lindsey’s 10/17/22 blog post is “The Political Marginalization of Ordinary People”. 

https://brinklindsey.substack.com/p/the-political-marginalization-of

 

It caught the attention of another one of my favorite bloggers, Arnold Kling:

https://arnoldkling.substack.com/p/links-to-consider-1020

 

In fact, Kling cites Lindsey approvingly again on 11/21/22 and 11/29/22 (we’ll get to those).  One commenter calls Lindsey the most improved intellectual player today.  That’s why we’re following him and others who Kling refers to as his “Fantasy Intellectual Team”. 

 

Here’s a brief summary of Lindsey’s logic, followed by my loosely quoting him to flesh out each argument:

Complexity is a subsidy to people who can navigate it; they make things more complicated than need be for their own benefit, rendering ordinary people insignificant.

When the political process is dominated by actors from a certain narrow group, the results of the process tend to get skewed to conform to that group’s outlook and interest.  …the entire political system has been captured by highly educated managerial and professional elites and is now run according to their narrow and well insulated points of view.

 

 

 

The transition from “survival” concerns to “self-expression” concerns is causing a crisis of class division between elites and less educated/skilled people.

The gap between the political class and the citizenry is not just financial and educational; there is also a yawning gap in deeply and passionately held beliefs about good and bad, right and wrong.  Elites are increasingly drawn to ridiculously stupid “luxury beliefs” (e.g. defund the police, abolish ICE, sex changes for minors) that most of us view as absurd.

 

 

Battle lines changed from a class/wealth war to a culture/belief war, resulting in ordinary people being marginalized.

All of this hurts the socioeconomic position of ordinary people.  The elevation of culture-war over class-war has split working class constituencies that might otherwise have united on behalf of their economic interests.  Although most people’s absorption in cultural conflict is completely sincere, the fact remains that this absorption gives the rich and powerful a crucial political advantage:  It allows them to divide and conquer.  And that they have done, with gusto.

 

 

Elites have conquered ordinary people, making them insignificant.  And by “elites” I don’t mean us (the mass affluent).  By elites, I mean powerful leftists controlling government, media and academia.  In the last post Lindsey quoted himself from 8/30/17 referring to us as elites:

 

Outside a well-educated and comfortable elite comprising 20-25 percent of Americans [that’s us], we see unmistakable signs of social collapse. We see, more precisely, social disintegration – the progressive unraveling of the human connections that give life structure and meaning: declining attachment to work; declining participation in community life; declining rates of marriage and two-parent childrearing.

 

Why do leftists ignore or deny this?  I addressed it here on 5/24/20.  Leftists don’t listen to reality because it’s not in their interests to do so:

…academics, media elites and politicians cover their ears and ignore unpleasant facts. It’s because certain facts are “deeply subversive of opinions and beliefs to which many highly intelligent and well-informed people are wedded, and without which the world would perhaps be unendurable for them.”  … there is a continuing cultural crisis in personal responsibility, a failure of moral agency among the underclass.  The poor do not have a proper psychological orientation toward the future like those of us with War Chest values do. 

No Respect

Brink Lindsey’s 10/11/22 blog post is “The Declining Status and Leverage of Ordinary People”. 

https://brinklindsey.substack.com/p/the-declining-leverage-and-status

There are enormous changes occurring now in the nature of work, respect, status and knowledge.  Lindsey writes:  “…as the industrial working class dissolved and the new elite bulked up, being outside the “meritocracy” started to feel more and more like failure”.  That phenomenon has been well documented by, for example, Tyler Cowen’s The Great Stagnation (2011), Average Is Over (2013), and The Complacent Class (2017). 

The concept of Meritocracy is vital to understanding these tectonic shifts in reality and wealth inequality.  This is a short shadow post of Brink’s work because I’ve already exhaustively analyzed Meritocracy here by plowing through three books from leading thinkers on the matter:

The Tyranny of Merit (2020) 4/13/21 – 6/15/21

The Meritocracy Trap (2019) 6/22/21 – 7/27/21

The Aristocracy of Talent (2021) 8/3/21 – 11/2/21

Next week, we descend further into the world of ordinary people – less skilled, less educated, marginalized and… really pissed off.  Comedian Rodney Dangerfield would say they get NO RESPECT!  As we’ll see later, there are many complex reasons for this, and one simple one –  respect must be earned, not doled out by a tutelary State.

American Dream Warrior

Brink Lindsey’s 10/5/22 blog post is “The Nature of the Crisis”.  Many of these ideas are from chapter 1 of his book, The Captured Economy (2017), “Rigged”.  Lindsey’s writing is compelling because he explains when, how and why he changes his mind as he goes along.  He and others (Seven Pinker, Deidre McClosky, etc.) saw capitalism as the most wildly successful economic system humanity has ever known – bringing material plenty to billions.  Everything was awesome!  But now, something has gone very wrong.  We are in the midst of a global crisis.

He uses the word crisis, not decline or decadence, because of his optimism that we can get through it.  The Captured Economy explored the twin ills of slow economic growth and high inequality.  “Capitalism’s capacity for both dynamism and inclusion is being systematically throttled by wealthy and powerful interests, which dominate policymaking processes to skew rules to shield themselves from competition and redistribute income and wealth up the socioeconomic scale”.  The crisis is more than economic.  It’s political, cultural and psychological. 

I’ve written extensively here about wealth inequality.  Lindsey frequently cites inequality scholar/huckster Thomas Piketty.  Capitalism’s failure of inclusion is not a crisis of sustainability.  There’s nothing unsustainable about inequality and marginalization.  But (and here’s where I will disagree with Brink) he writes “the perpetuation of mass exclusion and marginalization is a choice – a collective choice that is the end product of untold millions of individual choices, but a choice nonetheless”.  It’s not.  Game Theory renders the idea of a collective choice meaningless. 

Thomas Schelling (1921-2016) taught us that there is a huge difference between perceived individual interests and some larger collective bargain.  “What we are dealing with is the frequent divergence between what people are individually motivated to do and what they might like to accomplish together”.  I wrote here way back on 1/7/15 that the American Dream is much more difficult for families to achieve.  It’s getting worse.  It is sad that the Dream is so far out of reach for so many.  But economics is warfare, best viewed as competition and understood by Game Theory.  We are American Dream Warriors, protecting and building cumulative advantage by constantly stocking our War Chests with wealth and knowledge.

Lindsey despises the powerful interests who have captured the economy – but if you were in their position – able to legally secure and grow your wealth and power – …wouldn’t you do the same?  He concludes this post by noting that the permanent problem is here, urgent and fiendishly difficult.  I look forward to riding along on his journey through the crisis.