Friday, 28 November 2025

The Madness that is MMT

 Modern Monetary Theory is summarized as follows by Wikipedia- 

MMT frames government spending and taxation differently to most orthodox frameworks.

Some countries have no taxes. They rely on royalties from mining companies. They may have their own currency but that currency may not be deemed to be 'legal tender'- i.e. the Government is not obliged to accept it in payment of taxes.  

MMT states that the government is the monopoly issuer of its currency

It may be. It may not. During the Afghan civil war, there were several different authorities printing the national currency. Equally, a country may licence different enterprises to issue currency. But it may also forego 'seigniorage' and leave it to free enterprise to issue currency. Crypto may evolve in this way.  

and therefore must spend currency into existence before any tax revenue can be collected.

Nonsense! Those with a tax obligation can borrow currency from the Government mint to pay their taxes. The government then spends the currency they have collected as tax revenue. Those who get the currency in exchange for supplying goods and services can sell that currency to those who have tax obligations in the next period.  

The government spends currency into existence

why not lend it instead? That way, smart people who will have a tax obligation borrow it and pay interest on it. But if there is no monopoly of lending in the currency, this means there will be a market for it. This in turn means that when soldiers and policemen are paid in the new currency they don't mutiny. They can see for themselves that they can trade the new currency at a premium for whatever type of money they were habituated to. 

and taxpayers use that currency to pay their obligations to the state. This means that taxes cannot fund public spending in a nominal monetary flow sense,

If you run a big enterprise, you borrow to fund current expenditure. Why? People want to lend to you because it is safer to have an IOU from a big player than to keep your savings under your mattress. Also you get a small amount of interest. 

Governments are very big enterprises indeed. So long as they have an army and a police force which can forcibly extract taxes (tribute was the older term), they will be able to borrow.  

 as the government cannot collect money back in taxes until after it is has been issued into the economy.

This is easily done by lending the currency to guys who will need it to pay their taxes.  

In this kind of monetary system, the government is never constrained in its ability to pay,

In which case, it can pay a higher price to command the loyalty of soldiers and statesmen of other nations and thus conquer those countries without a fight. Consider the Kingdom of Iyerland which I founded after I discovered MMT. I paid ten billion dollars worth of Iyerish currency to all the soldiers and corrupt politicians in the world. They quickly killed off any patriots in their own countries and gladly proclaimed me Emperor not just of this planet but the whole fucking galaxy. 

 rather the limits are the real resources available for purchase in the state's currency.

Why does Keir Starmer not just buy all the property and all the businesses in the UK- and any other country which permits such sales- by printing money? That way, he will own everything. We would all be working for him. He would be the all powerful Dictator of this island. Suppose he wants to get rid of illegal migrants. He can just refuse to rent accommodation to them or to sell them food or to hire them to work. They would have to fuck off or else starve to death.  

The plain fact is, if the Government tries to do something which, rightly or wrongly, people believe is impossible to do, then they can't do that thing. Why? In Econ, Expectations create Reality. That's why if I offer to buy your house for a billion Iyerish pounds (which I assure you are pegged to the US Dollar), you tell me to get lost. This is because you don't expect me to be able to make good my claim. On the other hand, if Bill Gates or Elon Musk offers to buy your house for some multiple of its value, you would be eager to take the deal. Since they are very very rich, you expect them to be able to make good on their offer. 

MMT argues that the primary risk once the economy reaches full employment

Nobody knows when that is achieved. Over-full employment means negative returns- i.e. lower output than what is feasible.  

is demand-pull inflation, which acts as the only constraint on spending.

Sadly, even hyperinflation is not a constraint on spending. 

MMT also argues that inflation pressures can be mitigated by increasing taxes on everyone, to reduce the spending capacity of the private sector,

the Government can ensure 'forced saving' by introducing rationing. This is called 'repressed inflation'. That's what happened during the war. Alternatively, there can be compulsory saving schemes or a licensing system ensuring that fewer consumer goods are produced.  

releasing real resources such that the state can employ them at current prices in a non-inflationary way.

The problem is that taxes have a disincentive effect on work effort. Also, there is a 'crowding out' effect on Investment by the private sector. If the Marginal Efficiency of Capital in the Public Sector is higher- well and good. If not, the country falls behind its competitors.  

The primary demand and inflation management approach advocated by most MMT economists is the job guarantee employer of last resort (ELR) programme.

Sadly, it is cheaper to pay people not to work rather than to provide facilities for them to go through the motions of working. The trick is to 'sign off' more and more people as 'sick'. This reduces the incentive to live off the dole. Why? To be labelled as 'disabled' is demoralizing.  

 This provides a spend-side automatic fiscal stabilisation mechanism and establishes a nominal price anchor, utilising a buffer stock of employed labour.

No. It just means there are a lot of civil servants administering loss making schemes. The country turns to shit. Smart people emigrate.  

This is in contrast to the orthodox monetary dominance approach to demand management which involves adjusting interest rates and utilising a pool of unemployed labour as a buffer against inflationary pressures following a belief in a Phillip's curve trade off between the two.

It is also in contrast to the common sense approach which says that pretending unemployable people are actually productively employed is silly. Ordinary people will soon see that the thing is a con. But, if you think the country is being run by a bunch of clowns, you will expect it to grow poorer and weaker. Since Expectations create Reality, that is exactly what happens. True, if you have a Dictator and a Secret Police and lots of Gulags, nobody would have the courage to give voice to their expectations. But this can't prevent economic conditions from worsening. 

The Phillips curve had broken down by the early Seventies. There is literally nothing modern about 'Modern Monetary Theory'. It is senile shite.  



Thursday, 27 November 2025

Steve Keen's silly Economics

Prof Steve Keen, on Substack, asks-  

Why are Economists Trying to Hide the Simplest Equation in Economics?
Steve Keen
May 18, 2024

Sadly, equations in Econ are examples of the 'intensional fallacy'. In other words, the 'intensions' involved don't have well-defined extensions because they are epistemic and impredicative. Thus there are no sets and no graphs of functions. There is mere hand waving. 

BTW, even tautologies are false where the intensional fallacy raises its ugly head. Why? Leibniz's law of identity is violated. X is not equal to X if X does not have a well defined extension. 

Galbraith once remarked that “The process by which banks create money

they don't. They create credit. A lot of the time, credit is just as good as money but, sadly, it isn't money- i.e. legal tender. That's why, in 1991, my neighbour couldn't pay his taxes with a check drawn on his bank even though he had adequate funds there. This was because the Bank of England had shut it down. He had deposit insurance but that made no difference. He had to borrow cash from friends to pay his taxes and thus avoid prosecution. 

is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent” (Galbraith 1975, p. 22).

The only mystery here is why a Professor of Economics says 'banks create money' when what they do is called 'credit creation'.  

He was right on the first count. Banks operate according to the rules of double-entry bookkeeping,

No. They are in the business of lending money at a higher rate of interest than they offer depositors. Like other businesses, they employ Accountants who keep track of transactions but don't know whether 'equity' will rise or fall over the quarter. It is only at the 'Trial Balance' stage that decisions are made as to whether to show equity as having increased or decreased. The Accountant may counsel prudence and suggest that greater provision should be made for write downs or with respect to contingent liabilities.  

the key rules of which are (a) to record all financial transactions twice, once as a debit (DR) and once as a credit (CR);

That is the journal entry. But it isn't set in stone. At the trial balance stage, adjustments are made. There are write-downs or a booking of profits.  

and (b) to ensure that the record of every transaction follows the rule that Assets minus Liabilities Equals Equity.

But we don't know whether a transaction will produce income (e.g. a loan to a guy who pays interest promptly) or whether it will lead to a write-off (i.e. a decrease in the Bank's equity).  

Take the statement by the Bank of England that “bank lending creates deposits” 

i.e. modern banks create a deposit in the name of the borrower equal to the loan being granted. However, this isn't always the case. The borrower may not, for legal reasons, be permitted to have a deposit with the lending bank. Here a dummy account is created. 

 

Put into a double-entry bookkeeping table, this is as shown in Table 1:

Table 1: The double-entry bookkeeping for the Bank of England's statement



The rules about when you record something as a Debit (DR) or a Credit (CR) are quite confusing,

Not if you are an accountant. When doing your trial balance, you have to reverse some of your Journal postings because things didn't turn out the way your enterprise had hoped.  Why? Well, your customers had the same problem. They expected one outcome but got another. Ex ante isn't ex poste. It is at the trial balance stage that this becomes clear.

but there’s another way to record this: use a plus key for anything that increases an account, and a minus for anything that decreases it, and make sure that the equation “Assets-Liabiities-Equity equals Zero” is obeyed.

We don't know for sure what will increase or decrease the balance on any account. Thus all three items in the equation are unknown.  

That is shown in Table 2.

Share

Table 2: Bank lending using + and - rather than DR and CR


This may be fine for Cash flow statements but you do need to work out the Profit & Loss before doing your Trial Balance. In practice, you may fudge things and book notional profits so as to show no decline in equity. But, will your auditors let you get away with it?  

The equation describing this process is simply the translation of the Bank’s English into the formal language of mathematics. The verbal expression is “The rate of change of Deposits equals Lending”.

This is sheer nonsense. The rate of change of a thing may be related to the rate of change of another thing. It can't be equal to the thing itself.  Suppose Deposits rise by ten percent will new Loans equal one tenth of total Deposits? No. Don't be silly. Deposits may go up because everybody is putting money in the bank. Nobody is borrowing to spend. 

In the symbols of mathematics, the “fraction” d/dt stands for “the rate of change of”, and the equals sign “=” for “equals”. This equation then is the mathematical form of the Bank of England’s declaration that “bank lending creates deposits”:

d/dt Deposits = Lending

This is clearly false. Deposits can rise when nobody is borrowing.  

Notice that there is no role for Reserves in that equation.

Notice the equation is utter shit.  

That, according to mainstream economists, is the problem, because they have been teaching for decades that Reserves play an essential role in bank lending.

Banks know, from long experience, that most inter-bank transactions (e.g. my writing a check to a guy who banks with a different bank) net out such that only a very small percentage of total transactions give rise to flows of money. But this is also the reason most businesses have very little cash relative to the volume of business they do. 

In what they call “Fractional-Reserve Banking”, banks are supposed to take in deposits by the public, hang onto part of that as Reserves, and then lend out the rest.

No. It is simply an empirical observation that well run banks will 'net out' the vast majority of transactions. Actual cash flows between them will be small. A badly run bank- one which lends to losers- will find there is a continuous net outflow of cash. It needs to get a fresh infusion of equity and reform its lending practices. 

But the same thing is true of a brokerage or market-maker. Indeed, any company with a cash flow problem will have its credit downgraded. Why? The Expectation is that it will go to the wall unless it changes its ways. Credit is just another word for 'belief', 'faith' or 'expectation'.

This is how the popular textbook by Mankiw puts it:

Kids read textbooks. Once you start working for a living, you are expected to show some basic common sense.  

Eventually, the bankers at First National Bank may start to reconsider their policy of 100-percent-reserve banking.

Fuck off. Banking evolved out of business enterprises with certain types of economies of scope & scale which noticed that cash in hand falls in proportion to volume of transactions. Why? People trust you. Also, they are using your IOUs. You can make a bit of money by doing the 'netting out' yourself.  

Leaving all that money idle in their vaults seems unnecessary. Why not lend some of it out and earn a profit by charging interest on the loans?... if the flow of new deposits is roughly the same as the flow of withdrawals, First National needs to keep only a fraction of its deposits in reserve. Thus, First National adopts a system called fractional-reserve banking. (Mankiw 2016, p. 332)

This is a 'just-so' story. It is something you tell kids. The moment you start working you realize that empirical regularities are what business models are based on. Moreover, the thing is 'Muth rational'- i.e. everybody understands why the empirical regularity works most of the time and why and when it can break down. This is why there will be a market for 'money at call'. What was helpful for Western economies was the Government creating 'riskless assets'- gilts, Treasury Bills etc- which was helpful for portfolio choice and the emergence of sophisticated financial markets. 


Trying to put “fractional reserve banking” into double-entry bookkeeping terms causes immediate problems.

Nobody knows how much cash in hand you will have on a specific day. 'Fractional reserve banking' is merely an empirical regularity which fluctuates. It doesn't drive decisions. You don't say 'our reserves are up- lend more!'. You say 'lend more if you get good quality loan applications'. That's your core business. If you are successful in it, you can get liquid assets quite cheaply.  

If you try to show the loan increasing Deposits,

a loan increases deposits and is shown as doing s in the Journal 

then you violate the rules of accounting: the row does not sum to zero, as it should.

Yes it does. You have an asset- viz. the loan- and an equal and opposite liability- viz. the deposit upon which the borrower can draw on.  (Actually, you are also posting a revenue item (interest & fees owed) and an expenses and a profit item. But if the loan ceases to perform, you will have to reverse some of those items.


Table 3: The obvious accounting error in the Fractional Reserve Lending model



The line also shows the borrower getting the money—the Deposit account increases—but there’s no debt recorded by the bank against the borrower’s account. There must be a missing step here.

There is a loan account. It is the corresponding asset.  

And there is, but you won’t see this explained in any mainstream economics textbook,

because guys who teach economist live in a fantasy world.  

because they don’t really care about money: the whole point of mainstream models of money is to justify not including banks, and debt, and money in macroeconomic models.

The only point of macro models is making good- or useful- predictions. Nobody cares how the sausage is made.  

Once they have that excuse—even if it’s a bad one—then they can persist with their preferred model of capitalism as a barter system, in which money plays no essential role.

That's not the problem. It is that Knightian Uncertainty (the fact that we don't know all possible future states of the world or what probability is associated with them)  is neglected. Only if it didn't exist could 'Accounting identities' constrain decision making. It is easy to make fun of the 'just so' stories Econ students are traditionally told. But this dude is saying something infinitely stupider and more mischievous. 

It also suits their anti-government ideology. There are two control mechanisms in the model of “Fractional Reserve Banking”, both of which are under the control of the government: the creation of Reserves, and the fraction that banks are required to hang onto of any deposit.

Very true. If the Govt. says 'you need only hold 0.0001 percent in liquid assets, then the Banks will go around lending millions to hobos. It won't occur to them that a hobo aint going to repay a loan. The thing simply won't be profitable.  

If there’s too much money—and therefore inflation—it’s the government’s fault;

Yes. Government's issue fiat currency. If they flood the market with currency, it will lose value- i.e. prices go up.  

if there’s too little money—and therefore deflation—it’s the government’s fault.

It may be. It may not. There is such a thing as a liquidity trap- i.e. people just hold extra money. They don't spend or invest it.  

The private banking sector gets off scot-free.

It either makes a profit or goes bankrupt or gets disintermediated.  

That is the real reason that they’re trying to hide this simple “bank lending creates deposits” equation, whether they’re aware of it or not. If you take this equation seriously, then you have to include banks, and debt, and money, in macroeconomic models.

To my certain knowledge, in the UK, macro models have had M3 since 1973. That was more than 50 years ago. 

Neoclassicals leave all three of them out, and yet purport to be modelling capitalism.
The missing steps in “Fractional Reserve Banking”

I took the standard Econometrics course at the LSE in 1980-81. It was fucking obvious that the 'fraction' was variable. Indeed, money was becoming more Kaldorian- i.e. endogenous- because of Goodhart's law which was propounded in 1975. 

If they took money seriously, they’d notice the flaw in Table 3 and realise that two amendments were necessary: firstly, to make the line obey the Laws of Accounting, falling Reserves can be paired with rising Loans. Secondly, for the borrower to actually get any money, the loan must be in cash (or some other negotiable instrument): the borrower has to receive cash in return for accepting the liability of the loan from the Bank.

Why? I get a home improvement loan and write checks to the builder on that account. It keeps things simple for me. 


Table 4: The Banking Sector's view of Fractional Reserve Banking done properly



Table 5: The private non-banking sector's view of Fractional Reserve Banking done properly



So at least two tables are needed to show the process fully (Table 4 and Table 5), whereas one was enough for the real-world process shown in Table 1. Then the model works, and the equation gives Reserves a necessary role in lending.

They have no role. There is an empirical regularity but it fluctuates. This is related to the velocity of circulation which varies seasonally.  

There’s just one problem: when was the last time you (or anyone else) got a loan in cash? That’s the province of loan sharks these days, not banks, who directly credit the account of the borrower when they make a loan—or they credit the account of a merchant when you swipe your credit card to buy something at a shop.
What they’re leaving out

What this cretin is leaving out is the fact that there is a fucking loan account which is the Bank's asset and the borrower's liability.  

By omitting banks, private debt and money from macroeconomics, Neoclassical economists are leaving out of their analysis the main factors that cause booms and busts in a capitalist economy.

Leave out Knightian Uncertainty and you have a Society where there is no need for language or education or scientific research. All information is encoded in the Arrow-Debreu model. You know the day and time of your death as well as the birthday of your distant descendant in the 31st century. Naturally, you can't explain anything in the real world if you assume we live in fairy-land. 


You might think that describing capitalism’s cycles accurately might be of some importance to Neoclassical economists. And it is, but only so long as the explanation fits within their paradigm. Part of that paradigm is that money doesn’t have what they call “real” effects—by which they mean cause changes in factors like GDP and employment.

Nonsense! Pigouvian 'real-balance'  effects are perfectly Neo-Classical.  Maybe this dude means 'super-neutrality' or some such shite. But nobody making money in the field bothers with shite like that. 

So they ignore data like that shown in Figure 1 and Figure 2, which are copied from my post “Why Credit Money Matters” (posted here on Patreon and here on Substack). Ultimately, they’ll ignore the Great Recession/Global Financial Crisis, the same way they ignored the Great Depression.
If you like my work, please enable me to continue doing it by supporting me for as little as $1 a month (or $10 a year) on Patreon, or $5 a month on Substack.

This isn't work. It is a wank. The odd thing is Australian economists tend to be smart. Maybe this whole thing is some elaborate practical joke. 



Tuesday, 25 November 2025

Akerlof on Procrastination

 


Akerlof's 'Procrastination & Obedience' paper was, he says, prompted by an occasion when he was working in India and had promised to send a colleague in the US some clothes he had left behind. Akerlof knew that getting anything done in India would take an inordinate amount of time and thus kept putting off the task till he bumped into a man who was returning to America and was prepared to take the clothes with him. In the US, it would only take five or ten minutes to mail a parcel of clothes and, what's more, you could be sure the parcel would actually be delivered. The high and uncertain cost of mailing things to a foreign country in India caused both Indians and Americans to put off chores which brought them into contact with a Byzantine bureaucracy. Procrastination is about high cost relative to benefit. It is rational because it is regret minimizing. You'd feel a fool if you spent a day or two running around filling in forms to send a parcel of clothes if, at the end of the day, the parcel is never delivered. 

Akerlof writes-

In this lecture I shall focus on situations involving repeated decisions with time in-consistent behavior.

All decisions have this feature because we live in a world of Knightian Uncertainty.  

Although each choice may be close to maximizing and therefore result in only small losses, the cumulative effect of a series of repeated errors may be quite large.

Or it may not. In any case, 'many a mickle makes a muckle'. Small numbers add up to large numbers as time goes by.  

Thus, in my examples, decision makers are quite close to the intelligent, well-informed individuals usually assumed in economic analysis, but cumulatively they make seriously wrong decisions that do not occur in standard textbook economics.

It is rational to procrastinate where cost is uncertain. Indeed, Uncertainty reduces economic activity as well as interactions of a purely personal kind.  


This lecture discusses and illustrates several "pathological" modes of individual and group behavior: procrastination in decision making,

which isn't pathological. It is regret minimizing because of uncertainty.  

undue obedience to authority,

a habit of obedience has survival value. We are a self-domesticated species.  

membership of seemingly normal individuals in deviant cult groups,

like Christianity? Yet such membership has had survival value. In any case, it heps pass the time.  

and escalation of commitment to courses of action that are clearly unwise.

with hindsight after a state of the world, which was not conceived of previously, has prevailed. If I had known Beyonce would become a global superstar, I wouldn't have snubbed him when he was still known as Bakul Joshi and wanted to attend my lecture-demonstrations of twerking at the London School of Economics. Admittedly, I was drinking quite heavily at the time and my memory is unreliable.  

In each case, individuals choose a series of current actions

unless they aren't 'choosing' at all. Choice is cognitively costly.  

without fully appreciating how those actions will affect future perceptions and behavior.

Sadly, nobody knows how present actions will affect them in the future.  The best you can do is make a guess or do what smart people have done or are doing. 

The standard assumption of rational, forward-looking, utility maximizing is violated.

Because of Knightian Uncertainty (i.e. we don't know all possible future states of the world or what their probability is) Utility maximization has to yield to something like Regret Minimization.  

The nonindependence of errors in decision making

arises because of multiple realizability and the fact that, for coevolved processes, we only have access to correlation, not causation.  

in the series of decisions can be explained with the concept from cognitive psychology of undue salience or vividness.

Or laziness 

For example, present benefits and costs may have undue salience relative to future costs and benefits.

Present benefits and costs are less uncertain than those in the future. Akerlof behaved differently in India- a poor country where public services where unreliable- than he would have back in America where things were much more predictable.  

Procrastination occurs when present costs are unduly salient in comparison with future costs, leading individuals to postpone tasks until tomorrow without foreseeing that when tomorrow comes, the required action will be delayed yet again.

No. We can foresee that. But we can also foresee that all sorts of unforeseen things may occur albeit this is less true of highly developed countries with very dependable enterprises.  

Irrational obedience to authority or escalation of commitment occurs when the salience of an action today depends upon its deviation from previous actions.

i.e. if something irrational is 'salient', then irrationality occurs.  

When individuals have some disutility for disobedience and a leader chooses the step sizes appropriately, individuals can be induced to escalate their actions to extraordinary levels;

We may pretend this is the case but history tells us that any evil shit people did while 'following orders' was also done by similar people when there were no fucking orders.  

the social psychologist Stanley Milgram (1975) led subjects to administer high levels of electrical shock to others in fictitious learning experiments.

Those same subjects had grown up reading comic-books in which 'joy-buzzers' were advertised.  

The subjects were induced into actions that were contrary to their true moral values.

I suppose pedagogues need to pretend that young people have truly lovely moral values. The truth, sadly, is that they are little devils. 

In the latter half of the lecture I will give examples to illustrate how sequences of errors, each error small at the time of the decision, cumulate into serious mistakes; these decisions also illustrate how laboratory conditions of isolation, carefully engineered in the Milgram experiment and necessary for the type of behavior he induced, in fact commonly occur in nonexperimental situations.

The reason kids stop punching each other is because they become aware of the possibility of revenge,  draconian punishment, or ostracism. 

Thus the sequences of errors that are the subject of this lecture are not rare and unusual, only obtainable in the laboratory of the social psychologist, but instead are common causes of social and economic pathology.

Pathology is about reduced survival value. Sadly, both procrastination- e.g. putting off murdering your boss- and obedience- e.g. doing your fucking job- have survival value. 

Although an analysis of behavioral pathology might initially appear to be out-side the appropriate scope of economics, I shall argue that, in important instances, such pathology affects the performance of individuals and institutions in the economic and social domain.

Incentive matter. One could say that bad mechanism design is 'pathological'. But, chances are, bad mechanisms get weeded out as good mechanisms have a competitive advantage.  

Examples include the poverty  of the elderly due to inadequate savings for retirement,

caused by inadequate earnings before retirement.  

addiction to alcohol and drugs,

which is still better than topping yourself.  

criminal and gang activity,

you join a gang to get protection from other gangs. Crime does pay- for some.  

and the impact of corporate "culture" on firm performance.

A culture of doing stupid shit can tank the company.  

Economic theories of crime, savings, and organizations are deficient and yield misleading conclusions when such behavior is ignored.

No. What is deficient is provision of negative incentives- i.e. penalties. If you keep killing bad actors or inefficient cunts, the proportion of such people in the economy falls.  

The behavioral pathologies that I will describe also have consequences for policies toward, for example, savings, sub-stance abuse, and management.

A National Insurance scheme represents compulsory saving. Negative real interest rates discourage saving. Substance abuse declines if addicts are beaten or killed.  

Individuals whose behavior reveals the various pathologies I shall model are not maximizing their "true" utility.

They aren't doing what Akerlof thinks they should be doing. The only reason I am not a bigger super-star than Beyonce is that people don't know that 'true utility' can only be derived by watching my booty-shake.  

The principle of revealed preference cannot therefore be used to assert that the options that are chosen must be preferred to the options that are not chosen.

Very true. The fact that girls reveal a preference to run the fuck away from me doesn't meant they don't prefer to use me as a sex-object.  

Individuals may be made better off if their options are limited and their choices constrained.

Some young gang-bangers may be better off if they are put in prison between the ages of 15 and 45.  

Forced pension plans may be superior to voluntary savings schemes;

Both may be mismanaged.  

outright prohibitions on alcohol or drugs may be preferable to taxes on their use reflecting their nuisance costs

The cost of enforcing Prohibition may be too high.  

to others; and an important function of management may be to set schedules and deadlines and not simply to establish "appropriate" price-theoretic incentive schemes to motivate employees.

Akerlof doesn't understand that not meeting deadlines leads to getting fired. That's price theoretic. The wage is the price of labour. Still, it must be said, shooting slackers works even better than firing them.  

I. Salience and Decisions

A central principle of modern cognitive psychology is that individuals attach too much weight to salient or vivid events

i.e. information conveyed in that manner. But that costs money.  

and too little weight to nonsalient events.

This can change quite rapidly. 

Richard Nisbett and Lee Ross (1980) de-scribe the following thought experiment, that they consider the "touchstone" of cog-nitive psychology, just as the shifting of a supply or a demand curve is the central thought experiment of economics.

'Let us suppose that you wish to buy a new car and have decided that on grounds of economy and longevity you want to purchase one of those stalwart, middle-class Swedish cars-either a Volvo or a Saab. As a prudent and sensible buyer, you go to Consumer Reports, which informs you that the consensus of their experts is that the Volvo is mechanically superior, and the consensus of the readership is that the Volvo has the better repair record. Armed with this information, you decide to go and strike a bargain with the Volvo dealer before the week is out. In the interim, however, you go to a cocktail party where you an-nounce your intention to an acquain-tance. He reacts with disbelief and alarm; "A Volvo! You've got to be kidding. My brother-in-law had a Volvo. First, that fancy fuel injection computer thing went out. 250 bucks. Next he started having trouble with the rear end. Had to replace it. Then the transmission and the clutch. Fi-nally sold it in three years for junk."

[quoted in Nisbett and Ross, p. 15; from Nisbett, et al., 1976, p. 129]

You understand that this guy you met may be reporting a highly untypical outcome. Still, you change your behaviour for 'regret minimizing' reasons. Having ignored a warning and then having got stuck with a 'lemon' will make you feel worse about yourself than just having been unlucky.  

The status of this additional information is only to increase the Consumer Reports sample by one. Mean repair records are likely to remain almost unchanged. Yet Nisbett and Ross argue that most prospective car buyers would not view the new information so complacently.

Why? It is because, in an uncertain world, regret minimization is second nature.  

An experiment by Eugene Borgida and Nisbett (1977) confirms the intuition that salient information exerts undue influence on decisions. Freshmen at the University of Michigan with a declared psychology major were chosen as subjects. Students were asked to express preferences concerning psychology electives. Before making this decision, a control group was given only mean psychology course evaluations; others were, in addition, exposed to a panel discussion by advanced psychology majors selected so that their course evaluations corresponded to the mean.

One group got less information than the other. No surprise that the more favoured group performed better.  

As in the Volvo thought experiment, vivid information played a greater role than pallid information; compared to the control group, those exposed to the panel chose a higher fraction of courses rated above average.

The more costly type of information presentation proved superior. Big surprise. 

I. Procrastination

may be pathological. You may be suffering a mental illness. Consult a Doctor.  Alternatively, you may simply be a lazy sack of shit. 

Procrastination provides the simplest example of a situation in which there are repeated errors of judgment due to unwarranted salience of some costs and benefits relative to others.

There is uncertainty regarding those costs and benefits. Something like the maximum uncertainty principle applies. Do nothing today because you may be hit by a bus tomorrow.  

In this case each error of judgment causes a small loss, but these errors cumulatively result in large losses over time and ultimately cause considerable regret on the part of the decision maker.

If you put off completing the work you have been assigned, you ma

Let me illustrate with a personal story and then show how such behavior can be modeled. Some years back, when I was living in India for a year, a good friend of mine, Joseph Stiglitz, visited me; because of unexpected limitations on carry-on luggage at the time of his departure, he left with me a box of clothes to be sent to him in the United States.

This was in the late Sixties. Akerlof would need to firstly get the parcel properly packed- i.e. sewn into white canvas with red lacquer seals on the seams. The seals were required to be 'forgery proof'. Then, there was the matter of the Customs Declaration form which, for old clothes, would not have been much of a problem. Still, the fact is the package could take six months to arrive by sea-mail- if it arrived. The sensible thing to do was hang on to the clothes till some colleague or friend was flying back to the States. The clothes would get to their owner faster. 

Both because of the slowness of transactions in India and my own ineptitude in such matters, I estimated that sending this parcel would take a full day's work.

It would have been better to get an Indian colleague to send the parcel because foreigners sending parcels were under more scrutiny. The colleague could send a peon. But the Indian would tell Akerlof that sea-mail was slow and uncertain. Just wait till one of your USAID people turns up for a conference. He will be happy to do a favour for two distinguished colleagues.  

Each morning for over eight months I woke up and decided that the next morning would be the day to send the Stiglitz box. This occurred until a few months before my de-parture when I decided to include it in the large shipment of another friend who was returning to the United States at the same time as myself.

There are economies of scope and scale in such transactions. Come to think of it, the correct solution would have been to send the clothes by diplomatic bag. The US mission in India had great respect for economists. Galbraith had been a very successful Ambassador. Guys like Akerlof or Stiglitz might hold senior positions in the Administration within a few years.  

The preceding story can be represented mathematically in the following way.

It can't be represented mathematically because the probability of a successful outcome (e.g. the parcel reaching Stiglitz within a month) was unknown. Nor was the probability of bumping into a guy at an Embassy party who's be leaving for home in a couple of days and who had space in his suitcase for a parcel of clothes. 

Moreover, Akerlof was doing his own work conscientiously. He wasn't really a 'procrastinator' putting off mission critical tasks. 

The box was left with me on day 0. At the end of the year, at date T, the box could be costlessly transported.

More importantly, it would be transported with high certainty of success. What was unknown was when the parcel would reach Stiglitz if sent by sea-mail.  

The cost of sending the box on any day prior to T was estimated at c, the value of a day's work.

This is silly. Akerlof was a foreigner. An Indian colleague would have been happy to take on the task though, as I said, he would have advised Akerlof to ask at the Embassy if they could send the parcel by bag. After all, Indian Professors sent abroad by the Indian Government often availed of this facility to save money on postage.  

I estimated Joe's valuation of the use of the contents of the box (which was the same as my value of his use of the contents) at a rate of x dollars per day. I saw no reason to attach any discount rate to his use of the box. However, each day when I awoke, the activities I would perform if I did not mail off the Stiglitz box seemed important and pressing, whereas those I would undertake several days hence remained vague and seemed less vivid. I thus overvalued the cost of sending the box on the current day relative to any future day by a factor of 8. This caused me to procrastinate.

It is obvious to me that Akerlof was operating under conditions of 'brain fog' or 'culture shock'. When you live in America and need to send a parcel, you just pop into the post office. You don't go to see your Senator or Congressman. But, if you are an American Professor in Delhi in 1968, you get stuff sent home by diplomatic bag- which always goes by air, not sea. 

Akerlof had come into possession of Stiglitz's clothes by chance. Chance might offer him a way to get them to Stiglitz with high certainty. After all, in Delhi, there were always plenty of Americans coming and going. There were also plenty of young Indian students going to the US on scholarship. They would be delighted to do a favour for a pair of rising young Professors. 

On each day t, until date T-c/x, I made the dynamically inconsistent decision that I would not send the box on that day, but would instead send it the very next day.

This is not dynamically inconsistent. It is like 'Kafka's toxin'. Akerlof had the wrong econ theory- viz one which neglected Knightian Uncertainty. So, he found a work-around- viz. affirming that tomorrow he would be a different man from the one he is today. But we all do this all the time.  

Ultimately, I decided to simply wait and send it costlessly at my departure.

No. If he bumped into a guy who was heading home, he'd have asked him to take the clothes. It may be that Akerlof didn't want to take favours from the Embassy. Back then, academics wanted to keep CIA types at arms length. 

Consider my decision process. On each day t, I awoke and

forgot that the American Embassy was at his disposal. Economists like him were important. Don't just get your parcels sent by diplomatic bag. Insist on getting Bourbon whiskey on a regular basis.  

made a plan to send the box on date t*. I chose t* to minimize V, the costs net of the benefits of sending the box.

Had there been any 'benefit' in sending the box, Stiglitz would have reminded him to drop off the parcel with the Embassy.  

My procrastination was costly.

It really wasn't. Stiglitz wasn't upset with him. It was obvious that sending stuff by sea-mail from a Turd World shithole country was sub-optimal.  

Procrastination with Deadlines.

Genuine procrastination. The other thing is 'preference falsification' or simply hypocrisy. Tomorrow I will give up smoking. But tomorrow never comes.  

The preceding model of procrastination has the special feature that if the task is not done in a timely fashion, it does not need to be done at all.

Because there was never any genuine need to do it.  

It is like the referee's report that the editor angrily sends to another reviewer after too long a lapse. However, many tasks have deadlines. For our students, the cost of procrastination involves "pulling an all-nighter" to get the term paper (conference paper) done on time.

The paper may be better in consequence. What we are dealing with is uncertainty.  Who can say why a particular paper they wrote was great while others were trash? 

A.   Stalin's Takeover

My first example concerns Stalin's ascension to power in Russia. The history of the Bolshevik party and the history of Synanon are strikingly similar.

No. Synanon was a cult. Communism was a political ideology which, in Russia, seized power and held it for seven decades.  

(I take the Bolshevik history from Isaac Deutscher, 1949). Initially, there were the early days of reformist zeal, of meeting secretly in lofts, ware-houses, and other strange places.

The Bolsheviks were revolutionaries, not reformists. Stalin had robbed banks and escaped countless times from Siberia. As an ethnic Georgian, he was able to give the Bolsheviks the appearance of having transcended Greater Russian Chauvinism. Stalin's theory of nationalities and his willingness to grant relative autonomy to Language 'added value'. By contrast, Trotsky appeared the 'Napoleon' of the movement who would want a war of conquest against more advanced economies to the West of Russia. Bukharin was associated with the NEP which was bound to collapse in a second 'scissors crisis'. Collectivization was inevitable otherwise the regime would be vulnerable to a peasant insurrection spearheaded by Cossacks. Famine and the liquidation of the kulaks killed off the spirit of Pugachev and rendered the rural masses docile.  

But, in addition, and most importantly, there was commitment to the organization. To the Bolsheviks, this commitment was of paramount importance. Indeed, it was over the constitutional issue as to whether party members should merely be contributors (either financial or political) or should, in addition, submit to party discipline that split the Russian socialist workers' movement into two parts-the Mensheviks and the Bolsheviks.

Nonsense! The Bolsheviks wanted a small, professional, party. The Menshiviks wanted a big 'mass contact' party similar to the Narodniks. But the industrial proletariat already had 'division of labour and specialization'. Its leaders were bound to be professionals- either Labour organizers/lawyers or else Communist cadres- whereas the peasants were likely to select their own leaders and cooperate selectively on specific issues. But this was also their weakness. The Red Army, thanks to its control of the railways and the munition factories, could hit one region after another while the peasants were on the defensive. Moreover, the village was a house divided against itself. Targeting priests, kulaks and grain merchants appealed to the poorer folk and the riff raff. 

This loyalty to party discipline, useful in the revolution, ultimately enabled Stalin to take over the party and pervert its ideals.

Sadly, the opposite was the case. He took the land from the peasants and forcibly extracted surpluses from the primary sector which he used to import capital goods. The proletariat really had gained the type of power previously possessed by the landed aristocracy. The Criminal Justice system took account of 'class origin'. If you were a poor proletarian by birth, you could be rehabilitated. If you were upper class, you got short shrift.  

It underlay the acquiescence of his tough comrade revolutionaries in the scrapping of the original principles of Bolshevism: open intraparty debate and dedication to the cause of the workers and peasants.

The other great thing about Stalin was that he was against Jews, Homosexuals, and 'modernist' artists.  

In the 1920's and 1930's, as Stalin collectivized the peasants and tyrannized over dissidents, these old comrades stood by, perhaps not quite agreeing, but not actively disagreeing either, much like Milgram's passively obedient, passively resistant subjects.

Stalin had spent a lot of time escaping prison or Siberian exile. He made sure his penal system kicked ass. Why did he gain supreme power in 1929? The answer is that if he was toppled, Trotsky would return. But this raised the spectre of a second war with neighbours to the West- a war the Soviets were bound to lose. 

The reason a Mafia boss, or Dictator, stays in power is because of the uncertainty as to what happens if he is toppled. Better the devil you know.  

Even Trotsky in exile did not unambiguously oppose Stalin until the purges had begun as a series of decisions were made that increasingly brutalized the peasantry and cut off political debate.

Russia and China had always faced the threat of a peasant rebellion. Stalin and Mao ended that threat by fucking over the peasantry so badly they remained supine forever thereafter. Stalin began industrialization in 1928. Where were resources for it supposed to come from? The answer was obvious. The primary sector had to be squeezed like a lemon. Under the first five year plan, some five million tons of agricultural produce was exported till output collapsed because of famine. But even as the Holodomor was raging, about a million tons were exported. After 1933, there was no possibility of a peasant uprising. 

Incidentally, in Eurasia, 'political debate' is a fucking nuisance. It only occurs when a regime is on the point of collapse. 

The exception to the lack of dissent proves the rule. Nadia Alliluyeva was

a nobody. She married a notorious philanderer at the age of 18. Her health was poor. She shot herself at the age of 31. Nobody cared.  

the daughter of one of the founding Bolsheviks and thus an heiress by birth to the ideals of the party.

Her dad was a pal of Stalin. But he wasn't important.  

She was also Stalin's wife. When Stalin collectivized the peasantry, moving perhaps 80 million from their farms in six months' time, she voiced her disapproval at a party-he replied savagely. That night she  committed suicide.

This is nonsense. Neither she nor other members of her family gave a damn about the peasants. She killed herself because her health was poor and her hubby was having affairs.  

This behaviour contrasts with the party leadership who,

knew that if the peasants took power, their own throats would be slit. Kulaks don't like atheists. 

like Milgram's subjects, had been participating in the decisions that were being taken.

The big decision was to get rid of Trotsky because he looked like he might become the Napoleon of the Russian Revolution. After that, there needed to be an autocrat. Autocracies can be run no other way. It isn't the case that Putin is constantly consulting with peasants and proletarians. Nor is Chairman Xi.  

At each juncture, they were confronted by the decision whether to break ranks with the increasing brutalization of the peasants

which they fucking loved! They knew that the Cossacks would take their time with them before chopping them into kebabs.  

and the choking off of dissent, or to remain loyal to the party.

i.e. continue to get paid and have access to a nice dacha.  

By acquiescing

cooperating.  

step by step to the crescendo of Stalin's actions, they were committing themselves to altered standards of behavior.

Hilarious! These guys had waded through a sea of blood to ensconce themselves in the Kremlin. Ivan the fucking Terrible was a pussycat compared to the average Bolshevik Commissar.  

In contrast, Nadia Alliluyeva, who had withdrawn from the decision-making process

she was sacked from the Party in 1921 because she was stupid and useless. As her hubby's star rose, so did that of her family. But, some were killed during one of Stalin's purges.  

to be wife and mother,

and spokesperson of disabled lesbian peasants who were being brutalized and subjected to body shaming by evil Capitalist bastids. 

could feel proper revulsion at the deviation of the party's actions from its prior ideals.

Very true. When Lenin said, in August 1918,  "Hang (hang without fail, so the people see) no fewer than one hundred known kulaks, rich men, bloodsuckers" what he actually meant was 'give cuddles and kisses to peasants. They are so nice.' Also, the Tzar and his family weren't shot. They died of pure joy because of all the cuddles and kisses they were receiving. 

Standard economic analysis is based

on identifying opportunity cost and trying to minimize it.  

upon the Benthamite view that individuals have fixed utilities which do not change.

That is an assumption. But it is known that some goods & services change preferences as they are consumed.  

Stigler-Becker and Becker-Murphy have gone so far as to posit that these utilities do change, but that individuals are forward looking and thus foresee the changes that will occur.

Indeed. That's why you hand over your car-keys to the bar-keep and book a taxi home.  

A more modern view of behavior, based on twentieth-century anthropology, psychology, and sociology is that individuals have utilities that do change

people change. What is useful to you today may be useless to you tomorrow.  

and, in addition, they fail fully to foresee those changes or even recognize that they have occurred.

Knightian Uncertainty is a bitch. We don't have a Momus window into our own hearts. We come from the unknowable and go to the unknowable and such knowledge as we have is a delusion or a dream.  

This lecture has modeled such behavior in sequences of decisions, given examples from everyday life, indicated the situations in which such behavior is likely to occur, and, in some instances, suggested possible remedies.

Sadly, there are no such 'sequences' because there are no well defined sets or graphs of functions.  

The theory of procrastination and obedience has applications to savings, crime, substance abuse, politics, and bureaucratic organizations.

But it cashes out as mere mechanism design. But that assumes a 'Revelation principle' and so the same problem with 'revealed preference' returns. One may as well admit that 'preferences' or 'utility' or 'capability' or 'regret' are all epistemic 'intensions' which don't have well defined extensions. For some particular purpose, a good enough approximation may be useful. But the thing will be arbitrary. What matters is whether it pays for itself.  

Sunday, 23 November 2025

Foucault's Governmentality

Foucault tried

' to show how governmentality

'the conduct of conduct'- which is not a function of government. Punishment of misconduct, however, is a legal matter.  

was born out of, on the one hand, the archaic model of Christian pastoral,

There was Roman Governmentality long before Christ was born. Indeed, there was Egyptian Governmentality before Moses was born. The Babylonians conducted their first census in 3800 BC. As for the 'Christian pastoral' - it existed in Ethiopia as much as it did in France.

Perhaps Foucault means that pre-Revolutionary France, as a Catholic country, was divided into parishes with the Catholic clergy discharging some administrative functions- e.g. registering births and deaths, provided relief to the indigent, etc. In Japan, the Buddhist clergy played a similar state sanctioned role. But in both countries, a professional bureaucracy took over administrative functions. In poorer countries, governments did not have the resources to do so. But, such countries tended to get conquered or witnessed demographic replacement by those able to manage those resources more efficiently. 

and, on the other, a diplomatic-military technique, perfected on a European scale with the Treaty of Westphalia;

No such thing occurred. The Holy Roman Empire remained a very messy place. Sweden was a big player, gaining territory and a seat on the Imperial Diet. But Sweden, whose territory had experienced a bad famine, lost the Great Northern War and thus its gains were reversed. Spain, too, ceased to be a great power after a succession war and the Treaty of Utrecht. 

and that it could assume the dimensions it has only thanks to a series of specific instruments,

seventeenth century 'instruments' were shitty. Sweden & Spain declined.  Absolutism was a terrible idea if the King was stupid or mad or useless. But Poland's 'golden liberties' were equally ruinous. Holland too stagnated. It exported its one good King to England but that country did even better under Hanoverian nonentities.

 Cromwell's England had showed that aristocratic Cavaliers were no match for middle class Puritan 'Roundheads'. The Glorious Revolution presaged the American & French Revolutions of the next century. Since 'conduct' altered economic outcomes, the 'conduct of conduct' was best left to competitive forces. Tardean mimetic effects, not surveillance or bio-politics, spread a habitus favourable to thrift, hard-work and enterprise. Sadly, this did mean that Marquis de Sade was discouraged from reduplicating the feats of a Giles de Retz. This wasn't because of 'governmentality'. It was because people don't want their kids raped or tortured. 

whose formation is exactly contemporaneous with that of the art of government and which are known, in the old seventeenth- and eighteenth-century sense of the term, as police.

Politia. In English this is policy or politics, not police which meant 'public order'.  

Foucault believes that these three things made possible 'the production' of the 'governmentalization of the sate'. Yet, States have existed for thousands of years. They have solved 'collective action problems'- regarding defence, public order, health, indigence etc.- or else they have succumbed to invasion or insurrection or else suffered depopulation under despotic rule.

The problem with Governance is that it costs money. The trick is to use tax revenue to raise productivity. This involves getting smart people- not paranoid imbeciles teaching nonsense- to do 'Political Arithmetic'. Another great wheeze is 'taxation with representation'. If the guys paying the taxes get to decide how the tax money is spent, chances are they will do things which raise total factor productivity. 

Educated Europeans learnt Latin and a little Greek. They knew that governments had existed before Christ- indeed, there was a census in Palestine around the time Jesus was born- and that some such governments had been richer and more sophisticated than anything Europe could show even into the eighteenth century. Indeed, Paris's population only exceeded ancient Rome's around 1845. What changed over the course of the long nineteenth century was science and technology such that economies of scope and scale became available in the production of both goods and services. Advances in Statistics and Operations Research were incorporated into Accountancy, Actuarial Science and Management practices. The first world war marked a turning point when State capacity greatly increased. The question was whether the 'war against poverty' could be won by the same methods used for or against the Kaiser. The answer, by and large, was 'not yet'. There were too many people stuck in the primary sector. In France, even in 1950, 30 percent were farmers. Still, the example of America showed there were 'low hanging fruit' which France was able to harvest for les Trente Glorieuses- three glorious decades.

What of India under the British? It was the classic 'nightwatchman state' (the main grievance of the Bihari, Rajendra Prasad told Gandhi, was having to pay a 'chaukidar' tax). The country was simply too poor to afford very much governance. Yet it had a census by about 1881. There was some basic famine relief- if there was money in the kitty- but precious little 'bio-politics'. Nevertheless, Indian academics are happy to take over Foucault's paranoid theory of governmentality and surveillance and 'power-knowledge' (le savoir-pouvoir). 

I suppose Foucault was writing at a time when people assumed that greater and greater affluence would be supported by a larger and larger Public Sector. This was Wagner's law coupled with Director's law. Government expenditure would rise as proportion of GNP such that the middle classes received more and more benefits. Another name for the middle class is the bourgeoisie. They are very evil. We should 'épater '  them by doing weird, sexual, shit. That will totes undermine Ordoliberalism- right? 





Saturday, 22 November 2025

Borges & Leibniz's two labyrinths

There is a famous sentence in Leibniz's Platonic dialogue Pacidius Philalethi-
Duo sunt nimirum labyrinthi humanae mentis, unus circa compositionem continui, alter circa naturam libertatis, qui ex eodem infiniti fonte oriuntur" which translates in to English as:
"There are, of course, two labyrinths of the human mind, one concerning the composition of the continuum, the other concerning the nature of liberty, which arise from the same source of the infinite".
Borges's "The Two Kings and the Two Labyrinths" features a King of Babylon who constructs an intricate labyrinth. He tells a visiting Arab monarch to enter it. The Arab manages to find his way out. He tells the Babylonian that he too has a labyrinth in his Kingdom which, if God so wills, the Babylonian will experience for himself. Then the Arabs conquer Babylon. Its King is taken, by camel, into the middle of the  desert. There he is abandoned to die of hunger and thirst. 

One might say, the Babylonian labyrinth is a test of ingenuity. There is some sequence of choices which enables one to survive it. Free Will can triumph if it is coupled with certain admirable qualities of heart and head. The Arab King is intelligent. He has fortitude. He survives the Babylonian labyrinth. By contrast, Allah's labyrinth appears to be an implacable destiny. But is this really so?

 I suppose, if the Babylonian is physically fit and wise in the ways of the Bedouin, he too has a chance to escape. As the Prophet said, the camel freely wanders the desert and can survive without an owner. It is not inconceivable that such a camel chances upon the Babylonian and rescues him. Alternatively, if some Arab clan sees an advantage in keeping the Babylonian King alive, they might search him out. But, we suspect, God has not willed any such outcome. Equally, one might say, the Babylonian monarch had the chance to acquire qualities of heart and head such that he might effect his own rescue or motivate others to do so. 

The continuum is a useful hypothesis just as the skill of finding water in the desert or of befriending passing camels is a useful skill. But it is not a necessary hypothesis for the same reason that one can survive quite well in Babylon without learning the ways of the Bedouin. Moreover, what is useful pertains to the finite and the contingent not the infinite or the essential. Thus Leibniz's two labyrinths are mere sketches- dessins d'enfants- of the idea of the labyrinth. But what is that idea? On the one hand, there is a shortest path- an Ariadne's thread- and on the other a longest path, which may be infinite if one goes round in circles. But space too is is defined by a 'least action' metric. It may be finite but unbounded.

In a paper titled 'Brouwer meets Husserl' Mark Van Atten writes-
There is an age-old problem in mathematics how to analyse the straight line (‘the continuum’). Traditional mathematics thinks of the straight line as a large number of isolated points lying next to each other, like grains of sand. As Aristotle already pointed out, the problem is that this isolation breaks the line’s continuity. A line is continuous through and through; a continuum is not made up from grains of sand but rather from strings of melted cheese. The mathematician L.E.J. Brouwer was the first to show how to rectify the situation mathematically: his choice sequences provide a means to give a mathematical form to the strings of cheese.

The question is whether the sequence is law-like or 'lawless'. If choices are being made to maximize or minimize an objective function, I suppose one could say there is a 'natural' (non-arbitrary) sequence which, in some sense, is 'law-like', provided the objective function concerns something genuinely useful.  

Mark Van Atten seeks a 'phenomenological' (in the style of Husserl) account of choice sequences. I think, Utility supplies it. The problem is that co-evolved processes are difficult to represent mathematically. It is likely that the thing will be 'multiply realizable' and anti-fragile. In other words, there will be lots of different phenomenologies or, indeed, none at all. People just imitate what smart people are doing. 

Borges, in conversation with Herbert Simon, confessed to being a 'compatibilist'. Freedom was a necessary illusion compatible with belief in a deterministic universe. But, the opposite could be equally true. One might think all one's actions were determined by some occult force while also believing that the universe is wholly random if not illusory simply. The question is, is it useful to have such beliefs? For some people- sure. Borges did very well out of Leibniz's two labyrinths. Did he, like Socrates, discover that he himself was the Minotaur? If so, he was too well bred to tell the tale. That was his charm.

.

Mamdani on Good Muslims.

Back in 2002, Mahmood Mamdani published the following article in 'American Anthropologist'. 

Good Muslim, Bad Muslim:

whereas all Kaffirs are bad and should be killed 

A Political Perspective on Culture and Terrorism

Mamdani isn't a politician. He is a shithead.  

ABSTRACT The link between Islam and terrorism became a central media concern following September 11,

No. Islamic Terrorism became a major concern. Why? President Bush launched a War on Terror. It is believed that 1.3 million, mainly Muslim, lives were lost as a result. Tens of millions were displaced.  

resulting in new rounds of "culture talk".

Military and intelligence operations. Shitheads may have indulged in culture talk. Nobody cared.  

This talk has turned religious experience into a political category, differentiating 'good Muslims" from "bad Muslims, rather than terrorists from civilians.

No. Military and intelligence operations needed to differentiate terrorists from those who posed no threat. Why? Killing people is expensive. You need to pretend you are killing really bad hombres.  

The implication is undisguised: Whether in Afghanistan, Palestine, or Pakistan, Islam must be quarantined and the devil must be exorcized from it by a civil war between good Muslims and bad Muslims.

No. That was the ideology of the Islamists. Bush merely wanted regime change followed by the new regime dealing with its militants in its own way. 

This article suggests that we lift the quarantine and turn the cultural theory of politics on its head.

What would be the point? Mamdani & Co had no power. They may as well have made miaow miaow noises.  

Beyond the simple but radical suggestion that if there are good Muslims and bad Muslims,

which is what Osama believed. The Saudi King was a bad Muslim. He himself was a good Muslim. Mamdani, obviously, was a bad Muslim. His wife was not 'kitabi'- i.e. not Christian, Jewish or Muslim. His son was illegitimate.  

there must also be good Westerners and bad Westerners,

If they are kaffirs- they are all bad.  

I question the very tendency to read Islamist politics as an effect of Islamic civilization

Mamdani would tell Osama that his politics wasn't an effect of Islamic civilization. It was an effect of Scandinavian Lesbian Civilization. Osama would cry and cry.  

—whether good or bad—and Western power as an effect of Western civilization. Both those politics and that power are born of an encounter, and neither can be understood outside of the history of that encounter.

Nonsense! The encounter didn't matter very much.  

Cultural explanations of political outcomes tend to avoid history and issues.

Which is why this cretin can provide explanations of no other type.  

Thinking of individuals from "traditional" cultures in authentic and original terms, culture talk dehistoricizes the construction of political identities.

It may do. It may not.  

This article places the terror of September 11 in a historical and political context.

That would require intelligence. Mamdani has none. Osama & Co wanted the US out of Saudi believing they could take over the Kingdom. America did move to Qatar but the Saudis turned out to be really good at using the carrot and stick to get rid of extremism.  

Rather than a residue of a premodern culture in modern politics, terrorism is best understood as a modern construction.

D'uh! Aeroplanes didn't exist in ancient times. Nor did sky-scrapers.  

It must be said, there were a lot of silly books and articles about the supposed affinity between Wahhabi or Salafi Islam & terrorism- because that was a claim made by particular Wahhabi or Salafi terrorist outfits- but there were plenty of suicide bombers from other sects or ideologies running around. In any case, the US was keeping its alliance with Saudi Arabia & Qatar while targeting Ba'athist (i.e. Secular) Iraq & Shiah Iran. 

Even when it harnesses one or another aspect of tradition and culture, the result is a modern ensemble at the service of a modern project.

Just like everything else. We live in the modern world and thus have modern projects.  

MEDIA INTEREST IN ISLAM exploded in the months after September 11. What, many asked, is the link between Islam and terrorism?

Killing kaffirs is considered a good thing. Also, martyrs get 72 virgins in Paradise.  

This question has fuelled a fresh round of "culture talk": the predilection to define cultures according to their presumed "essential" characteristics, especially as regards politics,

Mamdani is Muslim. That's why he praises Idi Amin and hates Museveni. Don't get him started on Israel.  

An earlier round of such discussion, associated with Samuel Huntington's widely cited but increasingly discredited Clash of Civilizations (1996), demonized Islam in its entirety,

Whereas Mamdani demonizes all non-Muslims.  

Its place has been taken by a modified line of argument: that the terrorist link is not with all of Islam, but with a very literal interpretation of it, one found in Wahhabi Islam.

The Brits and the Egyptian Khedive had allied against the Wahhabis in the early nineteenth century. The Brits used the term 'Wahhabi' for followers of Sirhindi & Waliullah in India more particularly in the aftermath of the Mutiny.  

First advanced by Stephen Schwartz in a lead article in the British weekly, The Spectator (2001), this point of view went to the ludicrous extent of claiming that all suicide couriers (bombers or hijackers), are Wahhabi and warned that this version of Islam, historically dominant in Saudi Arabia, had been exported to both Afghanistan and the United States in recent decades.

The Arabs in Afghanistan tended to be Hanbali rather than Hanafi and this may have caused some friction.  

The argument was echoed widely in many circles, including the New York Times

But the Saudis and Qataris- both Wahhabi nations- got the upper hand with their extremists. By contrast, the Pakistanis- who were Hanafi and had a Bahrelvi (pro-Sufi) majority, were playing a double game. Iran, though Shia, too was quietly helping Al Qaeda.  

Culture talk has turned religious experience into a political category, "What Went Wrong with Muslim Civilization?" asks Bernard Lewis in a lead article in The Atlantic Monthly (2002).

What went wrong with Mamdani? Why is he now praising Idi Amin? The truth is there is nothing wrong with Islam or any other Religion. What matters is whether countries do sensible things as opposed to crazy shit. It turned out that the 'War on Terror' was crazy shit.  

Democracy lags in the Muslim World, concludes a Freedom House study of political systems in the non-Western world,3 The problem is larger than Islam, concludes Aryeh Neier (2001), former president of Human Rights Watch and now head of the Soros-funded Open Society Foundation: It lies with tribalists and fundamentalists, contemporary counterparts of Nazis, who have identified modernism as their enemy.

Salafis want to return to an older way of life. Nothing wrong with being pious and hard working. But for a country to prosper the participation rate for women needs to rise. Where this happened- e.g. Bangladesh- per capita income began to rise.  

Even the political leadership of the antiterrorism alliance, notably Tony Blair and George Bush, speak of the need to distinguish "good Muslims" from "bad Muslims,"

It turned out trusting the Pakistanis was a mistake. They were sheltering Osama.  

The implication is undisguised: Whether in Afghanistan, Palestine, or Pakistan, Islam must be quarantined and the devil must be exorcized from it by a civil war between good Muslims and bad Muslims.

There already had been such a war in Algeria.  

I want to suggest that we lift the quarantine for analytical purposes, and turn the cultural theory of politics on its head.

Just say 'kaffirs should be killed' and be done with the matter.  

This, I suggest, will help our query in at least two ways, First, it will have the advantage of deconstructing not just one protagonist in the contemporary contest—Islam— but also the other, the West, My point goes beyond the simple but radical suggestion that if there are good Muslims and bad Muslims, there must also be good Westerners and bad Westerner.

The contractors getting rich off the war on terror were bad Westerners.  

 I intend to question the very tendency to read Islamist politics as an effect of Islamic civilization— whether good or bad—and Western power as an effect of Western civilization.

You can't separate Islamist politics from Islam as a religion which created a relatively homogenous civilization.  

Further, I shall suggest that both those politics and that power are born of an encounter, and neither can be understood in isolation, outside of the history of that encounter.

This is nonsense. American politics has had no such encounter. Nor is it the case that the British Tory party was created by an encounter with an odalisque.  

Second, I hope to question the very premise of culture talk/ This is the tendency to think of culture in political—and therefore territorial—terms.

Yet cultures are associated with specific territories. Britain has British culture. India has Indian culture.  

Political units (states) are territorial; culture is not.

No. A culture is embedded in a society which in turn is associated with a specific territory.  

Contemporary Islam is a global civilization: fewer Muslims live in the Middle East than in Africa or in South and Southeast Asia.

But Indian Muslims have a different culture from Arab Muslims.  

If we can think of Christianity and Judaism as global religions

but we think of Anglicans as different from Ethiopian Christians because there is a difference in language & culture.  Similarly, Jews differentiate between Ashkenazis, Sephardics, Mizrahis, Fallashas etc. 

— with Middle Eastern origins but a historical flow and a contemporary constellation that cannot be made sense of in terms of state boundaries—then why not try to understand Islam, too, in historical and extraterritorial terms?

History is about what happened in different territories.  

Does it really make sense to write political histories of Islam that read like political histories of geographies like the Middle East, and political histories of Middle Eastern states as if these were no more than the political history of Islam in the Middle East?

Yes. Pakistan has a different history from Iran. Both may be Muslim but their cultures are different.  

My own work (1996) leads me to trace the modern roots of culture talk

which is older than the Old Testament 

to the colonial project known as indirect rule,

Two thirds of India was under direct rule. There was no difference in 'culture talk' between the directly ruled areas and the Princely states.  

and to question the claim that anticolonial political resistance really expresses a cultural lag and should be understood as a traditional cultural resistance to modernity.

Some anticolonial resistance did have this characteristic.  

This claim downplays the crucial encounter with colonial power,

There was no such encounter in Saudi Arabia- unless you mean Ottoman rule in the Hejaz.  

which I think is central to the post-September 11 analytical predicament I described above, I find culture talk troubling for two reasons, On the one hand, cultural explanations of political outcomes tend to avoid history and issues.

Nonsense! Cultural explanations are based on historical events and their consequences. Thus, to explain why England is Protestant, you have to mention Henry VIII and his need for a male heir.  

By equating political tendencies with entire communities denned in nonhistorical cultural terms, such explanations encourage collective discipline and punishment—a practice characteristic of colonial encounters.

I suppose this could be said of Islamic colonialism. Kaffirs are bad. Kill them if they don't convert.  

This line of reasoning equates terrorists with Muslims,

No. It equates Muslim terrorists with Islamist politics- if that is what those terrorists themselves claim.  

justifies a punishing war against an entire country (Afghanistan) and ignores the recent history that shaped both the current Afghan context and the emergence of political Islam.

Pakistan began training Islamist Afghans in the early Seventies. Then a crazy American educated Communist launched a coup. The Soviets intervened to get rid of that maniac. America gave the Pakistanis a lot of money to help the Afghan resistance. The Soviets withdrew and the warlords took over. The Taliban, with Pakistani help, suppressed the warlords but had trouble with the Tajiks and Hazaras. The killing of Ahmad Shah Massood by Tunisian Islamists secured Taliban support for Osama and thus paved the way for September 11 which in turn permitted a largely peaceful replacement of the Taliban government by moderates. Unfortunately, the Americans did stupid shit- e.g. toppling Karzai for the utterly useless Ghani- and thus the Taliban is back in power. 

On the other hand, culture talk tends to think of individuals (from "traditional" cultures) in authentic and original terms, as if their identities are shaped entirely by the supposedly unchanging culture into which they are born.

Sadly, Mamdani's Muslim identity seems to have prevailed- which is why he is now praising Idi Amin and condemning Museveni.  

In so doing, it dehistoricizes the construction of political identities, Rather than see contemporary Islamic politics as the outcome of an archaic culture, I suggest we see neither culture nor politics as archaic, but both as very contemporary outcomes of equally contemporary conditions, relations, and conflicts.

Which is what the CIA does. There may be some smart academics who can advise them. Sadly, Mamdani isn't smart.  

Instead of dismissing history and politics, as culture talk does, I suggest we place cultural debates in historical and political contexts, Terrorism is not born of the residue of a premodern culture in modern politics, Rather, terrorism is a modern construction.

It is ancient. Mamdani must have heard of the sect of the Assassins from which the Aga Khans descend.  

Even when it harnesses one or another aspect of tradition and culture, the result is a modern ensemble at the service of a modern project

Like Field Marshall Munir gassing on about Fitna Al-Khawarij. Incidentally, Oman, which is very peaceful, has a type of Islam descended from the Kharijite sect. 

CULTURE TALK Is our world really divided into the modern and premodern, such that the former makes culture in which the latter is a prisoner?

No. Don't be silly.  

This dichotomy is increasingly prevalent in Western discussions of relations with Muslim-majority countries.

Nonsense! Economic and geopolitical considerations feature in such relations.  

It presumes that culture stands for creativity, for what being human is all about, in one part of the world, that called modern, but that in the other part, labeled premodern,'' culture stands for habit, for some kind of instinctive activity whose rules are inscribed in early founding texts, usually religious, and mummified in early artifacts. When I read of Islam in the papers these days, I often feel I am reading of museumized peoples, of peoples who are said not to make culture, except at the beginning of creation, as some extraordinary, prophetic act. After that, it seems they—we Muslims—just conform to culture.

This is what happened to Mamdani. He now praises Idi Amin to the skies. Why? Amin was Muslim. Mamdani is Muslim. Connect the fucking dots.  

...We are told that there is a fault line running through Islam, a line that separates moderate Islam, called "genuine Islam, from extremist political Islam.

Nothing wrong with that. Genuine Islam is about piety, thrift, hard-work, family values, being charitable. There is a collective duty to fight but no individual or group of individuals can make that decision for themselves. But this is also the view taken by the State. If our country goes to war, then we can join the army and fight. We can't do so on a whim.  

The terrorists of September 11, we are told, did not just hijack planes; they also hijacked Islam, meaning "genuine" Islam.

Saudi Arabia is genuinely Islamic. They dealt with their extremists using a carrot and stick approach. On the other hand, an Al Qaeda offshoot has come to power in Syria. Trump has welcomed its leader to the White House.  

I would like to offer another version of the argument that the clash is inside—and not between—civilizations.

Mamdani will contradict himself almost immediately.  

The synthesis is my own, but no strand in the argument is fabricated, I rather think of this synthesis as an enlightened version, because it does not just speak of the "other," but also of self, It has little trace of ethnocentrism. This is how it goes: Islam and Christianity have in common a deeply messianic orientation, a sense of mission to civilize the world.

In which case they are bound to clash.  

Each is convinced that it possesses the sole truth, that the world beyond is a sea of ignorance that needs to be redeemed.

I suppose both religions have their share of missionaries. The difference is that Christian missionaries tend to be more useful in terms of providing education and medical care. In India, everybody wants to send their kid to a 'Convent' school. Madrasas are the worst option.  

In the modern age, this kind of conviction goes beyond the religious to the secular, beyond the domain of doctrine to that of politics, Yet even seemingly secular colonial notions such as that of a civilizing mission"—or its more racialized version, "the white man's burden"—or the 19th-century U,S, conviction of a "manifest destiny" have deep religious roots.

Only in the sense that Communism and Capitalism and Consumerism have deep religious roots.  

Like any living tradition, neither Islam nor Christianity is monolithic. Both harbor and indeed are propelled by diverse and contradictory tendencies, In both, righteous notions have been the focus of prolonged debates, Even if you should claim to know what is good for humanity, how do you proceed? By persuasion or force? Do you convince others of the validity of your truth or do you proceed by imposing it on them?

Islam has tended to go with the latter method. I suppose, Christians in an earlier age were just as bad. But Christianity improved over time. Islam didn't.  

Is religion a matter of conviction or legislation?

In Pakistan, it is a matter of legislation. That is why Qadianis are not allowed to call themselves Muslims.  

The first alternative gives you reason and evangelism;

and terrorism. If you are convinced you will get 72 virgins in Paradise, why not blow yourself up?  

the second gives you the Crusades and jihad.

The Crusades ended in 1291. Jihad we still have with us. Western Christians understood that raising productivity is the royal road to prosperity and national security. This involves, inter alia, raising the participation rate for women. Religion is a service industry. It can have high income elasticity of demand. As productivity rises, people can spend more on high quality religious services. We understand that it is better to go to the Church, or the Mosque, than to go to the brothel or the crack den. There is a positive externality associated with religious piety. Equally, cracking down on homicidal maniacs- regardless of their religion- is beneficial for society. Muslims understand this perfectly well. There are plenty of Islamic countries where non-Muslims are eager to work and to live. Moreover, many Muslim countries are badly affected by climate change. The city of Teheran may have to be evacuated because of acute water shortage. Thus Iranians and Iraqis and Moroccans and Indonesians have a common interest in developing or applying new technologies so as to deal with an existential threat facing the whole of Humanity. 

 How do you make sense of a politics that consciously wears the mantle of religion?

The hope was that such a politics would be favourable to free enterprise and the rule of law. The problem with religion is that it introduces too many 'wedge issues' into politics. In America, it is abortion. Elsewhere it is homosexuality. Once you get to purdah and mandatory beards, you are going down a rabbit hole.  

Take, for example the politics of Osama bin Laden and al-Qaeda; both claim to be waging a jihad, a just war against the enemies of Islam.

They thought they could take over Saudi Arabia once the Americans withdrew. They were wrong.  

To try to understand this uneasy relationship between politics and religion, 1 find it necessary not only to shift focus from doctrinal to historical Islam, from doctrine and culture to history and politics, but also to broaden the focus beyond Islam to include larger historical encounters, of which bin Laden and al-Qaeda have been one outcome

Al-Qaeda was the outcome of the anti-Soviet Afghan war.  

THE COLD WAR AFTER INDOCHINA Eqbal Ahmad draws our attention to the television image from 1985 of Ronald Reagan inviting a group of turbaned men, all Afghan, all leaders of the mujahideen, to the White House lawn for an introduction to the media. "These gentlemen are the moral equivalents of America's founding fathers," said Reagan (Ahmad 2001), This was the moment when the United States tried to harness one version of Islam in a struggle against the Soviet Union.

Carter & Brzezinki had already had the idea of applying a Green Islamic belt to the soft underbelly of the Soviet Union. The hope was that the pious 'bazaari middle class' would rebel against Soviet style military dictators or their progeny (the Shah's dad started off as a military dictator). 

Before exploring its politics, let me provide some historical background to the moment, 1 was a young lecturer at the University of Dar-esSalaam in Tanzania in 1975, It was a momentous year in the decolonization of the world as we knew it.

It was a horrible year for Ugandans. The Brits had done a far better job running the country.  

1975 was the year of the U,S, defeat in Indochina,

combat troops had left in 1973.  

as it was of the collapse of the last European empire in Africa.

Portuguese rule was on its last legs. Could things get worse? Yes.  

In retrospect, it is clear that it was also the year that the centre of gravity of the Cold War shifted from Southeast Asia to southern Africa.

No. South East Asia was lost after the Tet offensive. Southern Africa didn't matter very much.  

The strategic question was this; Who would pick up the pieces of the Portuguese empire in Africa, the United States or the Soviet Union?

Nobody would pick up the pieces. Things would go from bad to worse.  

As the focal point of the Cold War shifted, there was a corresponding shift in U,S, strategy based on two key influences, First, the closing years of the Vietnam War saw the forging of a Nixon Doctrine, which held that "Asian boys must fight Asian wars." The Nixon doctrine was one lesson that the United States brought from the Vietnam debacle.

No. The Nixon doctrine was to do with befriending China as a counterweight to the Warsaw pact. It didn't work. China was too poor to be of much use. Nixon had to abandon Pakistan- which was even more useless.  

Even if the hour was late to implement it in Indochina, the Nixon Doctrine guided U,S, initiatives in southern Africa.

No. The Americans looked after their economic interests in that part of the world. They weren't going to be dragged into a bush war by the Boers.  

In the post-Vietnam world, the United States looked for more than local proxies; it needed regional powers as junior partners, In southern Africa, that role was fulfilled by apartheid South Africa.

That may have been the Tanzanian view. The Chinese had just finished building the Tanzam railway but it wasn't particularly successful. White South Africans were considered good at fighting. They could look after themselves.  

Faced with the possibility of a decisive MPLA victory in Angola, the United States encouraged South Africa to intervene militarily.

They needed little encouragement because they were administering Namibia. But they did get American support.  

The result was a  political debacle that was second only to the Bay of Pigs invasion of a decade before.

Nonsense! Nobody greatly cared.  

No matter its military strength and geopolitical importance, apartheid South Africa was clearly a political liability for the United States.

That only became the case in the mid-Eighties.  

Second, the Angolan fiasco reinforced public resistance within the United States to further overseas Vietnam-type involvement, The clearest indication that popular pressures were finding expression among legislators was the 1975 Clark amendment, which outlawed covert aid to combatants in the ongoing Angolan civil war.

The CIA was in bad odour. Carter appointed Admiral Turner head of the CIA to carry out a massive purge.  Still, the CIA was able to get around the provisions of the Clark Amendment through third parties. 

The rest of Mamdani's essay is devoted to instances of the US helping various 'terrorist organizations'- including Al Qaeda. His mistake is to think that the US created these movements. They would have existed in any case. Consider UNITA- now the second largest party in Angola. It was initially assisted by the Chinese before coming under US and South African patronage. However, this was withdrawn after 1992. A pointless war dragged on till UNITA lost its military capacity. Still, since UNITA represented the largest ethnic group (some 38 percent of the population)  it would remain a force to be reckoned with. 

With hindsight, one might agree with Obama who said US foreign policy consists of doing stupid shit. The problem is that if your rivals are doing stupid shit, you feel you too must do so. This is FOMO- fear of missing out. But, the fact that you do stupid shit doesn't mean you create the world in which stupid shit is done. 

Mamdani ends his essay on a note of pure farce. 

 Islamist organizations will have to consider seriously the separation of the state from religion

In other words, they should stop being Islamic and say 'we don't want a Caliph or 'Supreme Guide'. Let's abolish Sharia.'  

notably as Hezbollah has in Lebanon.

Hilarious! 

Instead of creating a national political Islam for each Muslim-majority state, the real challenge faced by Muslims is to shed the very notion of a nation-state.

Tear up your passport. Don't pay your taxes.  

Whatever the terms of the nation-state—territorial or cultural, secular or religious—this political form exported by the modern West to the rest of the world

Very true. CIA created the first Pharaohs. Who built the Pyramids? It was Halliburton.  

is one part of Western modernity that needs to be rethought.

Zohran should get all New Yorkers to tear up their passports. They should refuse to pay Federal Income taxes.  

The test of democracy in multireligious and multicultural societies is not simply to get the support of the majority,

No. That is what Democracies must do. 

the nation, but to do so without losing the trust of the minority—so that both may belong to a single political community living by a single set of rules.

That's why Mamdani's hero is Idi Amin. Uganda was a paradise under his benevolent rule. He was a good Muslim. Zohran should take him as his role-model.