Still Lying to Children

How No Child Left Behind Corrupted Education

Expecting all students to be college ready is a hopeless utopian goal that inevitably produces test-score inflation and bad results.

by Sol Stern  

When George W. Bush signed No Child Left Behind legislation into law 10 years ago this week, it seemed like the perfect expression of his brand of “compassionate conservatism,” while also redeeming his campaign pledge to use education reform to overcome “the soft bigotry of low expectations.” NCLB passed Congress by overwhelming bipartisan majorities (87 to 10 in the Senate; 381 to 41 in the House) and a beaming Ted Kennedy stood alongside President Bush at the bill-signing ceremony.

Before NCLB, the federal government had attempted to achieve some degree of educational equity through the Title I compensatory funding program, which sent nearly $200 billion to the nation’s highest-poverty schools over four decades. This massive transfer of funds yielded meager results, however. With the new education law the Bush administration pushed for a results-oriented approach to education reform. The federal government now would require school districts to meet specific goals in return for their Title I funds. The states were required to conduct annual tests in reading and math for all children in grades three through eight, with the results—broken down by race, sex, and socioeconomic status—made public. Narrowing the racial achievement gap framed the measure as a “civil rights” reform that conservatives could easily embrace.

Though well intentioned, NCLB’s perverse incentives left the door wide open to the corruption of educational standards. The law stipulated that all American students must become “proficient” in reading and math by 2014 --- a hopelessly utopian goal – and then set sanctions for those states that didn’t make “adequate yearly progress” in meeting that goal. But the law also allowed each state to determine its own proficiency standard. Since men are not angels, it was inevitable that state and local education authorities would dumb down the tests to make themselves look good to the feds and to the voters.

The best evidence of test-score inflation over the past decade was the growing gap between the number of students that states deemed proficient on their own tests-those administered under the terms of NCLB-and the number deemed proficient by the National Assessment of Educational Progress (NAEP), often referred to as the "nation's report card."

The framers of NCLB might have avoided this outcome if they had familiarized themselves with the work of the great American social scientist Donald Campbell. According to Campbell, “when test scores become the goal of the teaching process, they both lose their value as indicators of educational status and distort the educational process in undesirable ways.” That’s exactly what seems to have happened.

The best evidence of test-score inflation over the past decade was the growing gap between the number of students that states deemed proficient on their own tests—those administered under the terms of NCLB—and the number deemed proficient by the National Assessment of Educational Progress (NAEP), often referred to as the “nation’s report card.” One reason the NAEP tests are the gold standard in student assessment is that they can’t be gamed by teachers or administrators. Every two years, NAEP math and reading tests are given to a statistically valid sample of all fourth- and eighth-grade students in each state. Teachers aren’t able to teach to the test, and school districts can’t offer students practice tests because no one knows ahead of time which students will be tested.

“Since men are not angels, it was inevitable that state and local education authorities would dumb down the tests to make themselves look good to the feds and to the voters.”

Most states in the union have reported huge gains on their own tests while their NAEP results haven’t budged. In New York, for example, the percentage of eighth-graders reaching proficiency on the state’s math test rose from 58.8 percent in 2007 to a stunning 80.2 percent in 2009, while the NAEP math scores remained flat over the same span with less than 30 percent of students deemed proficient.

It’s hard to escape the conclusion that states were gaming their tests—not only to satisfy NCLB regulations, but also to celebrate the education miracles that their elected officials have supposedly worked.

One other perverse incentive in NCLB: Because the law emphasized mere “proficiency” and rewarded schools for getting their students to achieve that fairly low standard, teachers and administrators were pressed to boost the test scores of their lowest-performing students but were given no such incentive to improve instruction for the brightest students – the nation’s future engineers and scientists.

A decade after the signing of NCLB, education reformers finally seem to understand the legislation’s conceptual errors and the degree to which it has contributed to a false picture of education progress. Unfortunately, the Obama administration seems determined to double down on the same flawed approach to federal education policy. The administration has offered waivers on the absurd 2014 proficiency goal, but only if the states accept new federal mandates linked to progress on the same unreliable state tests.

“We have to stop lying to children,” Obama’s education secretary, Arne Duncan, announced last year at a meeting of the National Governors Association. “We have to look them in the eye and tell them the truth at every stage of their educational trajectory.” A nice sentiment, but Mr. Duncan concocted the biggest lie of all when he replaced NCLB’s 2014 proficiency goal with the pledge that all American children will be prepared for college-level work by the year 2020.

Sacred Cows

Let The Market Decide The Post Office's Fate As It Has Kodak's

By THOMAS SOWELL 

The news that Eastman Kodak is preparing to file for bankruptcy, after being the leading photographic company in the world for more than a hundred years, truly marks the end of an era.

The skills required to use the cameras and chemicals required by the photography of the mid-19th century were far beyond those of most people — until a man named George Eastman created a company called Kodak, which made cameras that ordinary people could use.

It was Kodak's humble and affordable box Brownie that put photography on the map for millions of people, who just wanted to take simple pictures of family, friends and places they visited.

As the complicated photographic plates used by 19th century photographers gave way to film, Kodak became the leading film maker of the 20th century.

But sales of film declined for the first time in 2000, and sales of digital cameras surpassed the sales of film cameras just three years later.

Just as Kodak's technology made older modes of photography obsolete more than a hundred years ago, so the new technology of the digital age has left Kodak behind.

Great names of companies in other fields have likewise vanished as new technology brought new rivals to the forefront, or else made the whole product obsolete, as happened with typewriters, slide rules and other products now remembered only by an older generation.

That is what happens in a market economy, and we all benefit from it as consumers Unfortunately, that is not what happens in government.

The post office is a classic example.

Post offices were once even more important than Eastman Kodak, and for a longer time, as the mail provided vital communications linking people and organizations across thousands of miles.

But, today, technology has moved even further beyond the post office than it has beyond Eastman Kodak.

The difference is that, although the Postal Service is technically a private business, its income doesn't cover all its costs — and taxpayers are on the hook for the difference.

Moreover, the government makes it illegal for anyone else to put anything into your mail box, even though you bought the mail box and it is your property. That means you don't have the option to have some other private company deliver your mail.

In India, when private companies like Federal Express and United Parcel Service were allowed to deliver mail, the amount of mail delivered by that country's post offices was cut in half between 2000 and 2005.

What should be the fate of the Postal Service in the United States? In a sense, no one really knows. Nor is there any reason why they should.

The real answer to the question whether the Postal Service is worth what it is costing can be found only when various indirect government subsidies stop and when the government stops forbidding others from carrying the mail — if that ever happens.

If FedEx, UPS or someone else can carry the mail cheaper or better than the Postal Service, there is no reason why the public should not get the benefit of having their mail delivered cheaper or better.

Politics is the reason why no such test is likely any time soon. Various special interests currently benefit from the way the post office is run — and especially by the way government backing keeps it afloat.

Junk mail, for example, does not have to cover all its costs. You might be happy to get less junk mail if it had to pay a postage rate that covered the full cost of delivering it. But people who send junk mail would lobby Congress to stay on the gravy train.

So would people who live in remote areas, where the cost of delivering all mail is higher. But if people who decide to live in remote areas don't pay the costs that their decision imposes on the Postal Service, electric utilities and others, why should other people be forced to pay those costs?

A society in which some people make decisions, and other people are forced to pay the costs created by those decisions, is a society where a lot of decisions can be made despite their costs being greater than their benefits.

That is why the post office should have to face competition in the market, instead of lobbying politicians for government help. We cannot preserve everything that was once useful.

Human Snails

It’s time to mine New Zealand’s potential

by Theresa Clifford 

Following the recent national elections in November 2010, the thorny issue of mining in New Zealand is back on the agenda. NZ prime minister John Key has put economic growth and jobs at the top of his agenda, with the prime slots in his new cabinet handed to ministers whose main role will be to boost the economy. Steven Joyce has been appointed the new jobs tsar’ and given responsibility for lifting economic growth. A key task will be to sell the advantages of mining exploration to the NZ public.

The need to look at mining is now a serious discussion in NZ. New Zealanders know that Australia’s mining industry has been the catalyst for its economic growth in the past decade. Large quantities of minerals and resources are found in Australia and they are in high demand in China. This demand has led to massive Chinese investment in Australia’s mining industry. From 2007 to 2010, Chinese investment in Australia amounted to nearly US$60 billion. Australia’s mineral exports grew by 55 per cent to US$139 billion in 2010 and are projected to reach US$180 billion in 2011, thanks to China’s strong economic performance.

The Key coalition government is keen to emulate Australia’s mining success. In 2009, Gerard Brownlee, the then minister of energy proposed a series of changes to the Crown Minerals Act, which under Schedule 4 protects national parks and conservation reserves from mineral exploration and extraction. He also called for a loosening of access requirements to lands administered by the Department of Conservation.

NZ is rich in natural resources and has great potential for the discovery of new, high-value minerals including platinum, gold and other metals. The mining sector in NZ is currently much smaller than its tourism sector, but its economic impact could triple over the next 20 years. An important report by Richard Barker, a consulting geologist and a trustee for the Australian Institute of Mining and Metallurgy, shows that NZ is sitting on a huge amount of valuable natural resources: US$140 billion of metallic minerals, with brown coal alone worth at least an additional US$100 billion. Plus NZ has great potential for the discovery of new oil and gas resources.

The development of the natural-resource sector would create thousands of new jobs, boost the wider economy and be a key element in the future growth of NZ. The greatest value of the mineral sector to the NZ economy is through its vital, supportive function for other industry sectors and its contribution to export income. Growth sectors such as the dairy industry depend heavily on fertilisers and road transport, for which industrial minerals and aggregates are essential. Coal, lignite, gold, iron, sand and industrial minerals like china clay and bentonite are all in high demand in the export market. Within NZ, industrial minerals can be used for construction, electricity generation, papermaking, manufacturing, steelmaking, gold-ore processing, water treatment and farming.

Investing in this sector could deliver improved export performance, develop key infrastructure within NZ and bring with it huge benefits and advancements in science and technology and other spin-offs, such as the growth of the engineering sector (as can be seen in Australia).

Adding to the case for exploring the mining potential of NZ is the fact that the commodity market (minerals and energy in particular) is now among the most profitable industrial sectors in the world. In February 2011, Jim Rogers, co-founder of Quantum Funds with George Soros, announced that he was setting up a global resources equity index which will focus on the top companies in agriculture, mining, metals and energy sectors. He believes that power is shifting from the financial centres to the producers of real goods, particularly commodities, raw materials and natural resources.

So it would seem a no-brainer for NZ to explore this potentially lucrative market. But environmentalists have been quick to challenge the mining proposals. Greenpeace accused the Key government of attempting to drag NZ back to the nineteenth century. Senior Greenpeace spokesperson, Simon Boxer, claimed that, ‘the National Party’s rudimentary approach to economic development is fast consigning “clean green” New Zealand to the historical dustbin. Its rip shit and bust approach to growth is destroying everything we stand for as a country.’

Forest and Bird, a prominent NZ environmental group, also raised the alarm in 2010, with its estimates that 40 per cent of conservation lands (approximately 14 per cent of the country’s total land area) would fall under Schedule 4 and so ruin many areas of outstanding beauty in NZ. In reality, mining uses less than 0.1 per cent of NZ’s land area and sites of former mines are now rehabilitated for other uses.

Forest and Bird claims that mining has limited potential for NZ’s economy but carries immense costs to the environment. It believes that mining is inherently in conflict with the protection of natural NZ and the ‘100% Pure’ brand that NZ’s tourism, agricultural and innovation industries use to gain market advantage. Again the reality is very different: there are at least 82 mines already operating on conservation land and this has not impacted on tourism. In fact, international tourist numbers to NZ rose from 1.8million in 2000 to 2.45million in 2008, thanks in large part to increasing numbers of visitors from China.

Campaigns led by Forest and Bird have already hindered mining development in NZ. Four years ago, controversy erupted over the rare powelliphanta augusta snail. Solid Energy, the largest coal-mining company in NZ and a state-owned enterprise, wanted the coal from the snail’s habitat at Mount Augusta Ridge Stockton mine, the home of 6,000 of these snails. Under pressure from environmentalists and keen to demonstrate its ‘green’ credentials, Solid Energy agreed to remove the snails, with 4,000 relocated and the rest kept in captivity to safeguard the population from extinction. Approximately 1,300 of the evacuated snails are still living in small two-litre ice-cream containers in fridges. A lot of work and money – well over $7million so far - goes into keeping the snails alive. Solid Energy provides regular updates on the progress of the snails on its corporate website and has even produced a DVD of the snails’ adventures!

Reclaiming the word ‘conversation’ from our illiberal rulers.

Declaring war against bluster and rhetoric

By Frank Furedi 

I never thought I would have an allergic reaction to the word ‘conversation’. I have very happy recollections of the intense emotions that can be provoked through delicious, thought-provoking conversations with people on one’s own wavelength. Through intimate conversations, we cultivate the signals that give our personal communication special meaning. Even small talk plays a role in the interchange of thoughts and ideas. Sadly, however, ‘conversation’ has been hijacked by public figures who try to repackage their monologues as genuine dialogue.

Increasingly, the word conversation is used in an entirely rhetorical fashion and has become disassociated from the intimate act of talking between engaged individuals. In the hands of public figures, ‘conversation’ has become a self-conscious, pre-planned exercise in impression-management. I remember feeling that a very human word had been corrupted when Tony Blair launched New Labour’s ‘Big Conversation’ in November 2003. He said his aim was to initiate the biggest-ever consultation exercise with the electorate. In the real world, however, you launch boats, not conversations.

The very idea of ‘launching’ a conversation shows how meaningless and hollowed-out the concept has become. Conversation emerges from human interaction; it is not something that needs to be announced, promoted or celebrated. A public conversation is a contradiction in terms. The real aim of a ‘public conversation’ is to influence public opinion. Those who initiate such an exercise are really taking part in a public performance. Such performances often take the form of an animated public figure having a Q&A with a handpicked audience. Conversation with a capital C has been embraced by a variety of interest groups desperate to convey the idea that they are concerned about our views. But when you have a Big Conversation, can Big Brother be far behind?

Big Conversations are often promoted by people who use that disingenuous term: deliberative democracy. Adherents to the idea of deliberative democracy present it as an enlightened alternative to representative democracy. Deliberative democracy usually involves having a small forum where people can engage in face-to-face conversation and allegedly have time to reason with one another. It is said that deliberative democracy gives meaning to participation, since the participants are involved in a dialogue that directly leads to a discernible outcome. But the consequences these decisions have are rarely discussed. This is not surprising, considering that deliberative democrats believe that deliberation is an end in itself. The focus on consultation displaces the old idea that democracy should be an instrument for genuinely involving the public in the running of society, and replaces it with a stultified, formal ‘conversation’. As one academic study has argued, this approach ‘renders the concept of democracy redundant’ as it turns it into a ‘purely consultative process’ (1).

In these situations, ‘consultation’ is turned into a tool of management masquerading as genuine deliberation. The demand for deliberation always comes from above, and the terms of these ‘public conversations’ are always set by professional consultants. The process of deliberation depends on ‘procedures, techniques and methods’ worked out by experts (2). The exercise itself is overseen by professional facilitators, whose rules are really designed to assist in the observation and management of the participants. These phoney conversations are not forums where the participants interact as equals – rather, skilled facilitators are employed to create the right kind of environment and desirable outcomes. One writer sings the praises of ‘citizens’ juries’ – a common form of deliberative democracy – by saying that such juries rely on ‘trained moderators’ who ensure ‘fair proceedings’ (3). With zero self-consciousness, the writers endorses such a highly manipulative environment as being superior to ‘liberal institutions’, which apparently only encourage passivity amongst citizens (4). What we have is a pretence of deliberation and a reality of manipulation.

Deliberative democracy is neither deliberative nor democratic. Rather, it is about promoting propaganda through the pretence of having an open conversation. However, when it comes to manipulating the public imagination, ‘deliberative polling’ beats deliberative democracy to the finishing line. Deliberative polling stage-manages an allegedly open discussion on a controversial issue in order subliminally to alter people’s views and convictions. According to one of the advocates of deliberative polling, the beauty of this exercise is that ‘many participants changed their voting intentions as a result of the dialogue’. The author, Carne Ross, offers a scenario where, prior to an exercise in deliberative polling, 40 per cent of people surveyed said they would vote for mainstream centrist parties, 22 per cent for socialists, nine per cent for centrist liberals and eight per cent for greens. However, by carefully finessing the wording of the choices available to the participants, the deliberative manipulators successfully increased the number of participants who wanted to ‘emphasise the fight against climate change’ from 49 to 61 per cent (5).

Deliberative democrats are not shy about acknowledging that their support for conversational forums is contingent upon the participants reaching the ‘right’ decisions. Deliberative democracy is often promoted on the basis that it provides an environment conducive to changing people’s minds and having them adopt the ethos of the forum’s organisers. Deliberation is the preferred method of communication, because it can be a useful tool for transmitting the outlook of the organisers. To ensure that this objective is achieved, the group’s interpersonal dynamic is carefully controlled. To prevent the spontaneous emergence of informal group leaders, ‘most moderators are alert to the manner in which deliberations can be dominated by confident and outspoken individuals’, assures one assessment of deliberative democracy (6). It appears that deliberative democracy works best when ‘confident and outspoken individuals’ are put in their place.

The depiction of an exercise in brainwashing as a new form of democracy shows that political rhetoric is just that these days – empty rhetoric. It is a sign of the times that a procedure that could have come straight out of George Orwell’s Nineteen Eighty-Four can be presented as an enlightened alternative to representative democracy. The assumption that the professional facilitator has the moral authority to determine how people should think and emote speaks volumes about the patronising attitude of today’s ‘deliberators’.

Orwell, in his famous 1946 essay, ‘Politics and the English Language’, rightly expressed concern about the standard of political rhetoric in his time. He was also perturbed by the way in which jargon was used to obscure reality. ‘In our time, political speech and writing are largely the defence of the indefensible’, he observed. He noted how things such as British rule in India, the Stalinist purges or the dropping of the atom bomb on Hiroshima were justified through euphemisms and meaningless phraseology. Today, too, political rhetoric continues to be used to justify the indefensible.

My new year’s resolution is to devote more time towards exploring the public language of twenty-first-century society. To that end, I will be writing a monthly column on spiked titled ‘Hollow Thoughts’. The aim will be to re-appropriate the sort of language that could help ensure that public debate really is a debate, rather than an exercise in manipulation and impression-management.

In February’s ‘Hollow Thoughts’ column: Inclusion.

(1) Gorg, C. & Hirsch, J. (1998) ‘Is international democracy possible?’, Review of International Political Economy, vol. 5, no.4.p.598

(2) Pimbert, M. & Wakeford, T. (2001) ‘Overview – deliberative democracy and citizen empowerement’, PLA Notes, 40, February, p23.

(3) Smith,G. & Wales, C. (2000) ‘ Citizens’ Juries and Deliberative Democracy’, Political Studies, vol.4, p.55.

Democracy and Debt

The Broken Link

By Michael Hudson

Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts [1]. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.

This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.

Near Eastern rulers proclaimed Clean Slates to preserve economic balance

Charging interest on advances of goods or money was not originally intended to polarize economies. First administered early in the third millennium BC as a contractual arrangement by Sumer’s temples and palaces with merchants and entrepreneurs who typically worked in the royal bureaucracy, interest at 20% (doubling the principal in five years) was supposed to approximate a fair share of the returns from long-distance trade or leasing land and other public assets such as workshops, boats and ale houses.

As the practice was privatized by royal collectors of user fees and rents, “divine kingship” protected agrarian debtors. Hammurabi’s laws (c. 1750 BC) cancelled their debts in times of flood or drought. All the rulers of his Babylonian dynasty began their first full year on the throne by cancelling agrarian debts so as to clear out payment arrears by proclaiming a clean slate. Bondservants, land or crop rights and other pledges were returned to the debtors to “restore order” in an idealized “original” condition of balance. This practice survived in the Jubilee Year of Mosaic Law in Leviticus 25.

The logic was clear enough. Ancient societies needed to field armies to defend their land, and this required liberating indebted citizens from bondage. Hammurabi’s laws protected charioteers and other fighters from being reduced to debt bondage, and blocked creditors from taking the crops of tenants on royal and other public lands and on communal land that owed manpower and military service to the palace.

In Egypt, the pharaoh Bakenranef (c. 720-715 BC, “Bocchoris” in Greek) proclaimed a debt amnesty and abolished debt-servitude when faced with a military threat from Ethiopia. According to Diodorus of Sicily (I, 79, writing in 40-30 BC), he ruled that if a debtor contested the claim, the debt was nullified if the creditor could not back up his claim by producing a written contract. (It seems that creditors always have been prone to exaggerate the balances due.) The pharaoh reasoned that “the bodies of citizens should belong to the state, to the end that it might avail itself of the services which its citizens owed it, in times of both war and peace. For he felt that it would be absurd for a soldier … to be haled to prison by his creditor for an unpaid loan, and that the greed of private citizens should in this way endanger the safety of all.”

The fact that the main Near Eastern creditors were the palace, temples and their collectors made it politically easy to cancel the debts. It always is easy to annul debts owed to oneself. Even Roman emperors burned the tax records to prevent a crisis. But it was much harder to cancel debts owed to private creditors as the practice of charging interest spread westward to Mediterranean chiefdoms after about 750 BC. Instead of enabling families to bridge gaps between income and outgo, debt became the major lever of land expropriation, polarizing communities between creditor oligarchies and indebted clients. In Judah, the prophet Isaiah (5:8-9) decried foreclosing creditors who “add house to house and join field to field till no space is left and you live alone in the land.”

Creditor power and stable growth rarely have gone together. Most personal debts in this classical period were the product of small amounts of money lent to individuals living on the edge of subsistence and who could not make ends meet. Forfeiture of land and assets – and personal liberty – forced debtors into bondage that became irreversible. By the 7th century BC, “tyrants” (popular leaders) emerged to overthrow the aristocracies in Corinth and other wealthy Greek cities, gaining support by canceling the debts. In a less tyrannical manner, Solon founded the Athenian democracy in 594 BC by banning debt bondage.

But oligarchies re-emerged and called in Rome when Sparta’s kings Agis, Cleomenes and their successor Nabis sought to cancel debts late in the third century BC. They were killed and their supporters driven out. It has been a political constant of history since antiquity that creditor interests opposed both popular democracy and royal power able to limit the financial conquest of society – a conquest aimed at attaching interest-bearing debt claims for payment on as much of the economic surplus as possible.

When the Gracchi brothers and their followers tried to reform the credit laws in 133 BC, the dominant Senatorial class acted with violence, killing them and inaugurating a century of Social War, resolved by the ascension of Augustus as emperor in 29 BC.

Rome’s creditor oligarchy wins the Social War, enserfs the population and brings on a Dark Age

Matters were more bloody abroad. Aristotle did not mention empire building as part of his political schema, but foreign conquest always has been a major factor in imposing debts, and war debts have been the major cause of public debt in modern times. Antiquity’s harshest debt levy was by Rome, whose creditors spread out to plague Asia Minor, its most prosperous province. The rule of law all but disappeared when the publican creditor “knights” arrived. Mithridates of Pontus led three popular revolts, and local populations in Ephesus and other cities rose up and killed a reported 80,000 Romans in 88 BC. The Roman army retaliated, and Sulla imposed war tribute of 20,000 talents in 84 BC. Charges for back interest multiplied this sum six-fold by 70 BC.

In praise of peddlers, merchants, and money lenders

Cavemen and Middlemen

By Richard W. Fulmer

If a caveman could specialize in a single craft, such as making obsidian knives, he would likely become skilled through sheer repetition.  He would soon learn to create better products more quickly and with less effort than if he had to spend potential knife-building time hunting, fishing, gathering food, constructing shelters, building fires, and crafting baskets, pottery, and clothing.  Specialization, however, would only be possible if there were sufficient demand for his tools.  If the caveman’s clan were small, demand would be limited, making it unlikely that he would be able to trade his knives for enough food, clothing, and other goods to ensure his survival.

The size of the market determines the degree of specialization possible and therefore the productivity of the caveman’s clan.  Its productivity in turn determines how well the members live.  If the market could be expanded, a higher degree of specialization would be possible, raising both productivity and living standards.

Suppose that Rok, an itinerant caveman, notices that his clan makes particularly good knives, another, miles away, makes excellent bone needles, and that still another makes fine loin cloths.  Rok is lucky in a hunt one day, killing a large deer.  He trades most of the meat for stone knives reasoning that he can easily transport the knives to the other clans and exchange them for needles and loin cloths, which he can then bring back and trade for even more knives – which he can trade with the other clans for still more goods.

Dynamic Process Unleashed

Rok has done far more than simply transport products between clans.  He has unleashed a complex dynamic, iterative process.  First, by expanding the marketplace to three clans, he has enabled more cavemen to specialize, increasing their productivity and raising the welfare of their clans.  By opening trade between the clans, he has increased each clan’s chances for survival.  If a hunt goes badly for one, it may be able to trade for food with another that has had better luck.

In addition Rok has introduced clans to goods they have never seen before, sparking new ideas and planting the seeds for improved and perhaps entirely new products.  If he profits by the exchanges he makes, he also provides an example to others who may go into direct competition with him, increasing the volume of trade among the three clans, or who may open trade with still other clans, potentially discovering new products and ideas.

No Value Added?

Unfortunately Rok also sparks anger among some clan members.  A few cavemen believe Rok is cheating them out of the full value of their labor.  They see that he is simply transporting goods between the clans and making a profit even though he does not improve the goods in any way.  They do not see that he adds value to the goods by moving them from where they are valued less to where they are valued more.  Nor do they, along with Rok himself, see the subtle, though critically important, processes he has unleashed by expanding each clan’s market, nor the clans’ greater resilience and rising prosperity through increased specialization and communication of ideas.

Rok moreover is seen as an outsider to the members of two of the clans with which he trades.  People’s natural distrust of strangers, their resentment of Rok’s “exploitation,” and their envy of his relative prosperity may lead them to drive him away.  If so, they may later wonder why their living standards fell after Rok’s exile and will probably see no connection.  These clans are far less likely to survive and prosper than those that welcome, or at least tolerate, Rok and other middlemen.

Rok’s descendants are what Thomas Sowell called “minority middlemen”: Jews across the world, “Armenians in the Ottoman Empire, Ibos in Nigeria, Marwaris in Burma, overseas Chinese in Southeast Asia, and Lebanese in a number of countries.”  A significant number of people from each of these groups have for a variety of geographical, cultural, and historical reasons, worked far from their homelands as peddlers, merchants, and money lenders.  They and other middlemen helped bring mankind out of caves and into prosperity. In return they have been reviled, persecuted, and killed.

Laughing In The Face Of Goliath

The Virtue Of Fighting Back

By Brandon Smith
With the passage of the National Defense Authorization Act and all the malicious intent contained within its virulent pages, many in the Liberty Movement, once relegated as “extremists” in documents such as the MIAC Report and the Virginia Fusion Center white papers, now find themselves faced with the very real possibility of being targeted as “enemy combatants” in their own country and in their own front yards.  No longer is the fight between globalist and Constitutionalist obscured in the mire of cold war style information drilling and propaganda.  Today, it’s all out in the open, and it’s nothing to be taken lightly.  Unfortunately, however, an incessant belief remains amongst a large subsection of Americans, who assume that there is no need to act, or to choose sides.  Apathy and fear cling to our culture like manure to a new leather shoe.

In my years as an analyst and activist, I cannot possibly estimate how often I have heard cries of nihilism, futility, and submission.  The redirections and rationalizations used by naysayers and quivering weaklings at the onset of any social crisis always carry the taste of logic, but in those of us who have resolved to stand firm in our principles, such excuses elicit reactions of utter disgust.  There is nothing more distasteful to the courageous than being presented with a man who would sell his own soul (or the souls of others) for a few extra minutes of oxygen.

Life is inherently dangerous.  Always has been.  Always will be.  Regardless of the time or place in which we live, the threat of calamity is ever present.  American culture has strained every sinew and burst every blood vessel trying to wrap itself in a bubble of artificial safety…to no avail.  While we live, there is no permanent escape from struggle, beyond increasingly brief moments of calm.  At bottom, those who embrace the reality of danger and conflict, and who have the will to see it through, are the men and women who are most likely to make a difference in this world.  Those who run, hide, or easily surrender, matter little in the grand streams of history.  They become cannon fodder buried in the dreary dust bowl pages of abandoned encyclopedias, and nothing more.

As the preeminence of this cold hard truth dawns on us, we are faced with what amounts to a very simple choice, at least, in my mind.  Terror or valor.  Slavery or freedom.  Obedience or defiance.

The stature and vicious nature of our opponent appears overpowering, just like any other monster worth the effort to slay.  The greatest enemy of the citizenry, though, has never been the leviathans of establishment and oligarchy, but the apprehensions of the people themselves.  Let’s examine this concept more thoroughly by confronting the attitudes of some activists towards the very solutions that could save them and their country if they only had the guts to hold fast…

Organization

In the Liberty Movement, more than any other political and philosophical social shift I can think of, the process of practical organization has been ridiculously subdued.  The alarm that arises over the possibility of being added to multiple arbitrary lists of alphabet agencies from the FBI to the DHS has until recently inspired a sort of proactive paralysis.  In most situations, whether we like it or not, activism involves exposure, and risk.  Sorry folks, that’s just how it goes.  Frankly, if you are not on a government list somewhere, then you probably aren’t much of a threat, and therefore, need to try harder.

Solid organization does not necessarily require centralization or a top down command structure.  In fact, the more decentralized a group or network is, the more flexible and durable it becomes.  What is required, though, are common objectives and consistent leadership through example.  In a movement at odds with itself at the most basic level, the juggernaut of elitism rolls forward unimpeded across lands of ghosts and jello.

Without mutual aid, mutual defense, and synchronous strategies, individual proponents of Constitutional law and transparency will find themselves completely isolated from one another.  Faces in a crowd of destitute and hungry.  Ultimately, what the government does or does not do when it comes to categorizing our movement is not our concern.  Safe haven relocation, barter networking, open protest, neighborhood defense, will attract negative responses from elitists because these strategies WORK.  When faced with the potential of full spectrum national collapse and economic implosion, federal intervention or demonization becomes a rather puny concession in comparison.  Our very first concern should be that of local insulation and survival in the wake of financial Armageddon, not the chest beating of overconfident bureaucrats.

Protest

Protest, for the most part, has become a completely ineffective tactic for legitimate change, not because it is passé, but because the methods used today have not evolved for several decades.  Public demonstrations in modern times in the face of technically advanced media manipulations must assert a specific objective in order to be successful.  The objective could be as simple as refusing to move from a particular place despite the perceived consequences, or preventing an opponent from finishing a task.  Signs and slogans are meaningless compared to the act of drawing a line in the proverbial sand and denying the enemy access.  The problem is, many protest groups in these times are afraid to commit so completely too any redress of grievances.

A peaceful protest requires incredible courage, including the courage to get arrested, or to take a beating.  It demands an unwavering sense of urgency.  That which can be accomplished today MUST be accomplished today, or not at all.  There may not be an opportunity tomorrow.

Subtergenekon and Other Crimes

In Turkey, alleged terrorism requires a brand-new vocabulary

By Claire Berlinski

George Orwell’s greatest act of genius was the invention of Newspeak, the official language of Oceania, devised to meet the ideological needs of “Ingsoc,” or English Socialism. Explaining the nature of a mass trial in Turkey likewise requires the construction of a language all its own. Of late, journalists’ trials have received particular notice in the foreign press, but only because the arrest of journalists excites other journalists. In fact, early-morning raids, mass arrests, detentions without trial, and mass trials are a common feature of the Turkish landscape—for academics, students, suspected members of the so-called KCK (the urban wing of the terrorist Kurdish group PKK), lawyers of suspected members of the KCK, heads of soccer teams and their associates, members of parliament, generals, admirals, and an indeterminate number of unfortunates who just got sucked up in the vacuum.

It’s relatively fortunate to be a famous arrested journalist: at least there’s hope that someone will notice you’re in jail. The Turkish government denies that the arrested journalists were arrested for journalism—or rather, it says that only eight of them were; the others, it says, are in jail because they are terrorists. This is where a new language must be invented, because the word “terrorist” doesn’t do justice to the concept that the government has in mind. Take, for example, Interior Minister İdris Naim Şahin’s recent explanation of the concept:

The efforts of the terrorist group are not limited to vicious attacks. . . . There is psychological terror, scientific terror. There is a backyard feeding the terror. There is the terror propaganda. There is an effort to portray it as innocent, reasonable and right. . . . Some support terror by seriously distorting it, making it sound reasonable by inventing excuses. By drawing pictures, reflecting it onto canvas, writing poems, reflecting it onto poems, writing daily columns. . . . They try to demoralize the military and the police fighting against terror by making them subjects in their artistic work. In such ways, they take on those who fight terror. The backyard is Istanbul, Izmir, Bursa, Vienna, London, Washington, university lecterns, associations, NGOs. They have infiltrated all these places. Sometimes it is the cultural center, educational association. Other times it is a think tank.

Let us say, then, that the accused have been charged with the crime of subtle terrorism—what an official of Oceania might have abbreviated to subter.

Just how many journalists are in jail for subter? The number is in dispute. Not long ago, the Turkish Journalists’ Union put it at 72, but Justice Minister Sadullah Ergin explained that “three don’t exist, six were never arrested, and 48 are terrorists.” Of the 48, no one knows how many have been charged with subter, as opposed to realter. That debate was overtaken by events when recently 49 more members of the media were detained and 36 of them arrested. This probably sets a new record, not to mention a new challenge for record-keepers.

This week, ten journalists—including the two most famous ones, Ahmet Şık and Nedem Şener—are on trial. They’re not being tried for journalism, of course; they are, according to the indictment, members of Ergenekon, a shadowy, ultranationalist group that has been endeavoring to foment a coup against the Turkish government. This crime, too, cries out for a name of its own: subtergenekon, say. It is exceedingly subtle, you see, because Şık is best known in Turkey for having written the definitive two-volume exposé of Ergenekon. That, according to the indictment, was his cover—an interesting example of prosecutorial subtergiversation. The indictment focuses on Şık’s latest, unfinished book, The Imam’s Army, which claims that the followers of Fethullah Gülen—a Turkish preacher living in self-imposed exile in Pennsylvania—have infiltrated the police. Şık describes a close relationship between the AKP (Prime Minister Recep Tayyip Erdoğan’s party) and the Gülenists, arguing that the former has used the latter to bring the security forces under its control. The government seized and banned Şık’s draft of the book, but it has since been published in Turkey. If the writing of the book is an act of subter, as the indictment claims, it is a very subtle subter indeed; I myself read a good deal of it without suffering any harm at all; it is even available now in the Atatürk Airport bookstore, an odd place to sell such a lethal weapon. Yet Şık remains in jail.

Şener, too, has been charged with subtergenekon. He is best known for researching the murder of the Armenian-Turkish journalist Hrant Dink and for proposing that the police and the state were involved in it. Şener’s trial coincides with the trial of Dink’s alleged murderers.

The subter trials commence with the reading of the indictment aloud, a particularly lengthy process in the case of these journalists, as it contains several years’ worth of quotations from the journalists’ tapped phone conversations, including every detail of their vacation plans, weight-loss regimens, and grocery purchases, which the prosecutors claim are cryptic descriptions of their plot to topple the government. Prosecutors, for example, found damning evidence in this comment: “He brought watermelon and bananas. You send the melons, then eat the bananas.” Evidence of subtermelonkon?

The prosecutors accuse the journalists of “preparing the political environment for a junta” and of being members of a “fake terrorist organization.” A fake terrorist organization? No one knows what that means. I was following the reading of the indictment on Twitter until the judge banned Tweeting from the courtroom. (In a separate trial of another group of journalists, the judge banned food from the courtroom on the grounds that it represented a poisoning risk.) The journalists covering the case—presubtergons, we might call them, as they are likely to face arrest soon—have become adept at Tweeting covertly, despite the threat of a six-month prison term. Tweets from the courtroom stopped briefly when undercover cops began looking for the malefactors, then began again as the malefactors further refined their covert Tweeting, then stopped again as the indictment droned on. The reading of conversations 15,916, 15,917, and 15,918 began to wear everyone down. Pro-government countergenekon journalists, meanwhile, accused the presubtergon journalists of being part of the illegal network. They were, after all, lending support to subtergenekon, a crime that we might call supsubtergenekon.

Ece Temelkuran, a prominent columnist from the mainstream daily Habertürk, had a hard time explaining the proceedings for the press overseas: “The international media seems to be confused about the bizarre arguments in the indictment. So are we as Turkish journalists.” I’ve read the indictment myself, and I can testify that if you’re trying to understand it, you might as well read it backward. A new word is required here, too, to indicate a legal argument so weird that everyone believes something is being lost in translation—except that it’s not. Let’s call it an argument that’s been ergenerated.

Still, some of the Tweets that Temelkuran has translated make a comic sort of sense, like this one: “Right now in Turkey journalists in the courtroom being asked ‘why did you write news?’ Not a joke! Real!” Others make sense but aren’t funny at all: “Relatives, friends of arrested journalists are trying to have a word in the court after months of isolation.” And then there’s this one: “Arrested journalist Doğan Yurdakul . . . sits with a gloomy, tired face. Wasn’t allowed to see his wife before her death.” Yurdakul’s wife died of cancer in September. When the court asked him to state his marital status, he answered, “I was married. Now I am a widower.”

Something is rotten in the United Kingdom

Revelry and Mayhem

 

By Theodore Dalrymple

Is that British youths enjoying themselves—or killing someone?
The full beauty and refinement of contemporary British culture were evident in a short item in the Guardian this week:

Four people died at the weekend following attacks during New Year’s Eve parties in Luton, Sheffield, London, and Toft Monk in Norfolk. A teenage girl and boy were arrested in Bedfordshire after a 42-year-old man was found stabbed outside his partner’s house in Luton, and a man in his 20s is in custody in north London after a 22-year-old man died of shotgun wounds in Clerkenwell. In Sheffield, a man died following a confrontation at the Stars and Mayfair Party suites, and in Norfolk two men aged 38 and 45 are in custody after a man in his 20s died outside a pub in the village of Toft Monk.

Four murders in a population of more than 60 million is not very many. Yet this is to miss their emblematic quality. The undertow of aggression and violence in what passes for social life in Britain (a country that not so long ago was remarkable for its low level of public disorder) is so obvious that only those with their eyes shut could miss it. Nowadays, wherever the British gather socially, you get the feeling that things could get nasty at any moment. The young British get drunk en masse, they scream and shout en masse, they make fools of themselves en masse, and they become aggressive and paranoid en masse.

Indeed, it has become increasingly difficult to distinguish between the sound of young British people enjoying themselves and the sound of young British people committing murder in the street. I do not exaggerate. Twice in recent years I have heard the “normal” sound of drunken revelry outside in the early hours of the morning, only to discover later that it was the sound of someone being stabbed or beaten.

The citizenry either joins in the menacing revelry itself or retires behind closed doors like the Transylvanian peasantry avoiding Dracula after dark. Our supine leaders do nothing, afraid of appearing old-fashioned and stuffy and perhaps of offending the alcohol industry, which actively promotes mass drunkenness. Their paralysis in the face of so simple a problem to solve does not augur well for their ability to confront the much more serious and complex problems confronting the country.

Is Ron Paul 2012's Black Swan?

The Great Non Debate

by Tyler Durden

For five years, the writing on the wall has been crystal clear. As 2007 began, the US Foreclosure Market Report for 2006 showed that foreclosures for the year had reached 1.2 million, an increase of 42 percent over the 2005 figure. In early February 2007, in the midst of a growing rash of bankruptcies among small US sub-prime mortgage issuers, New Century Financial announced that it was “recalculating” its “profits for the previous three quarters. New Century was one of the three biggest mortgage brokers in the US. In two days, its stock price dropped 40 percent. Six months later, President Bush was calling the now obvious collapse in the US real estate market a “blip” on the US economy. Two months after that, the stock market peaked. A year after that, in September/October 2008, the global economy froze solid and was only thawed by the biggest explosion of money creation in history. Now, here we are at the start of 2012. Nothing has changed. No positive steps have been made. The symptoms have been disguised under an avalanche of palliatives but the disease continues to eat away at the substance of the system on which it feeds. The major effort of government and “mainstream” analysts everywhere has been to avoid, deflect and actively silence any nascent discussion of the root of the problem.

The root of the problem is perfectly illustrated in the fact that since August 1971, the funded debt of the US government has risen from $US 400 Billion to $US 15,236 Billion. The severity of the problem is illustrated by the fact that with Mr Obama having yet to complete his third full year as President, he has presided over $US 4,600 Billion (or almost one-third) of that increase. The root of the problem is the abandonment of money - the final legal connection between Gold and the US Dollar was ended in August 1971. The severity of the problem is the grotesque expansion of what has taken its place.

None of this has been or is being discussed because the establishment in the US and everywhere else does not want it discussed. A REAL “black swan event” - an event that deviates by 180 degrees from what is “normally expected” - would be a political debate over root causes and basic principles. The great merit of Ron Paul - and the great service he is giving to his own and every other nation - is the fact that he is doing everything he can to raise the debate to that level. That makes Dr Paul a unique politician, a man who tells people what most of them DON’T want to hear or understand.

Or at least they don’t think they want to understand it. Dr Paul’s great and merited attractiveness to a growing number of admirers has a very simple source. He is that rarest of creatures - a FREE man. He is beholden to nobody. He has developed his ideas and his convictions over a long and fruitful life of independent thinking. He does not compromise. He homes in on the fundamental issue and principle of any political issue and serves it up without salt or other “seasoning”. He says what he means and he means what he says. He is the living embodiment of the “dream” that most Americans have long since given up on as they saw it slip further and further beyond their grasp. He is the only prominent person who is doing everything he can to turn the non-debate which masquerades as the “mainstream” in the US and global political economy into something of substance. That, far more than the presidency, is his goal.

Baking a Cake

Finance in Parrot Talk

By Anthony de Jasay

Part I

George Stigler, the 1982 Nobel laureate, was almost as great a humorist as he was an economist. His deadpan irony was devastating. In his The Economist as Preacher and Other Essays he speaks of "that most irresistible of all the weapons of scholarship, infinite repetition."(1)

I call "parrot talk" the loud and relentless repetition of some plausible fallacy that is first launched as an original and debatable notion by some minor authority or small group, often with an axe to grind, and then, by a mysterious process of perverse selection, is taken up and hammered home by public intellectuals and the media, triumphantly becoming a firmly established truth. When used as prophecy or forecast it is liable to be self-fulfilling. When used as explanation and diagnosis, it dictates the remedy. In either case, it is capable of causing deep and lasting damage in political thought and the public policy the thought tends to shape.

In the present column I will be dealing with a few particularly insidious and dangerous subjects of parrot talk. I will first recall a few that I had identified in earlier writings. Then I will present some more recent untruths, such as the idea of "financial capitalism", the supposedly vital need, to stock up the banks with extra capital, monetisation of the debt, and the alleged vices of modern capitalism, such as speculations and short-termism.

Fundamental Fallacies(2)

Among my Collected Papers there is an essay entitled "Parrot Talk."(3) It treats a number of fallacies in political philosophy that, looking plausible and pleasing to most people's ears are being repeated on every possible occasion with an air of assured conviction. Each time they are declared, more academic parrots take them up and relay them in ever wider circles until they become ineradicable common knowledge that feeds prevailing political thought.

One of these fallacies, pilloried in "Parrot Talk," is the separateness of production and distribution. The gross national cake is first baked according to the laws of economics, and then sliced and distributed according to the collective decisions of society. It remains unsaid that the very reason why a cake of a certain size is baked at all (rather than a sweeter, bigger or smaller one or indeed none) is that its distribution will be of a certain kind and not a different one. Income is not a grabbed and redistributed with impunity without reacting back on production.

Another fallacy, often repeated to reassure the voter called "liberal" in English English that he has little to fear from the candidate called "liberal" in American English, is that it is possible to bring about equality of opportunity without enforcing equality of outcomes. It takes a minute of extra thought to realise that once preceding outcomes are allowed to be unequal, current opportunities cannot possible remain equal.4 But this extra minute of thought is suppressed by the rising noise of parrot talk. Finally, the essay notes that the most widely accepted modern theory of justice lays down, as its first principle, that everybody must have a right to the greatest possible liberty compatible with the same liberty for everybody else. One may ask why having a right to liberty is better, or different, than having liberty itself. Adding the "right to" should raise suspicious second thoughts, or perhaps it is just empty verbiage—but having a right always sounds nice, and passes well in parrot talk.

Must Safety-First Economics Prevail?

What the earlier "Parrot Talk" essay sought to do in political thought, the present one aims to do in the current language parrots use about finance. It is written by taking as read certain well-established theses of neo-classical economics that are basic to what in English English is called "liberalism".

Thanks to incessant repetition in the last few years, public opinion is now convinced that risk is a bad thing and ought to be purged from the economy as far as possible. Economics, on the contrary, teaches that some risk is inevitable because the future is not predictable, and necessary for efficiency. The size and severity of risk and its price should and under a regime of free contract would adjust to each other. The wish to avoid risk by paying the market to bear it (e.g. by hedging, forward dealing or insurance) would, in equilibrium, be equal to the willingness of the market to assume that risk. This situation is an optimum, because neither the marginal risk-avoider nor the marginal risk-bearer can expect to do better by moving away from it. The spectacular stock and bond market losses of 2008-2009 showed that the expectations of large operators, such as the insurer as AIG, may occasionally be spectacularly wrong (especially if biased by existing regulations and Fannie Mae activities, as was the case in the U.S. residential mortgage market), but they did not invalidate the theorem. The losses were the outcomes of zero-sum games and as far as one can tell, they involved no destruction of tangible value. As Milton Friedman would say, for every loser, there was a gainer. Damage did occur due to massive mismanagement of the shock waves, but not because risk was allocated by price in the first place. After all the ensuing parrot talk, the received truth now is that risk is bad and almost reprehensible and should be purged from the system. Poor system! Risklessly, it would be heading for an unpromising future.

Europe is getting old

World GDP

By The Economist

THE world’s recovery from recession is slowing, according to The Economist’s measure of global GDP, based on 52 countries. Third-quarter growth expanded by 3.6% across the world, down by 1.5% from the same period in 2010. The last 12 months have seen the developing world expand at about 7%. Developed countries, meanwhile, have been dragging their heels, weighed down by the euro crisis. Qatar and Ghana are predicted to be the fastest growers of 2011, with GDP increases of 19% and 14% respectively. At the other end of the spectrum, war-torn Libya and debt-laden Greece will both shrink by around 5-6%. In absolute terms, the world will produce $70 trillion worth of goods and services in 2011, according to IMF forecasts, up from $63 trillion in 2010. Around two-thirds of this will come from developed economies, a proportion that will shrink over time.