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Obitur Dictum

Sunday, November 24, 2013

Greatest missed opportunities

Why aren't we already exploring the stars? Why couldn't the industrial revolution have begun in ancient Greece, or perhaps ancient Rome? What are some of the great wrong turns taken in history, such that if events had happened differently, we might have come much farther and faster than we did?

Many have speculated about what might have been. Some have written alternative histories that, if done right, can provide some illumination of where we are and how we got here. The misses are usually explained by the lack of key innovative ideas at critical times, but there have also been some active impediments that blocked progress that was already under way.

Some have composed lists, and here is one, with a focus on past impediments resulting from human decisions:

Fall of Athenian klerostocracy. The key event was the replacement with the Four Hundred in 411 BC. Much of it was about the Peloponnesian War, and more about the failure to make needed reforms, but the opportunity was there.

Too-early death of Alexander, 323 BC. We usually just think of Alexander the Great as a conqueror, but he was also a great patron of learning and the arts, inspired by his teacher Aristotle. Unfortunately he made no preparation for an orderly succession that would continue that legacy, and left his empire to his generals, who lacked his vision. Had he lived longer it is likely the Mediterranean Empire would have been Greek rather than Roman, and might have flourished technologically as well as in the arts of governance and architecture.

Fall of Vercingetorix at the Battle of Alesia, 52 BC. Led to the rise of the Caesars and fall of the Roman Republic.

Destruction of the Library of Alexandria. First in 48 BC, during the occupation by Julius Caesar, apparently an accident, and the loss may not have been complete. The second during an attack by Emperor Aurelian on Queen Zenobia in 274 AD. The third by Patriarch Theophilus in 391 AD. A related loss was the murder of the philosopher-mathematician Hypatia in 415 AD, which has been styled as the downfall of Alexandrian intellectual life. The fourth and final destruction was by the Muslim army of Amr ibn al `Aas in 642 AD. The wrong turn here was largely in not having alternate repositories in other locations, so that the only copies of many ancient texts were lost.

Fall of the Roman Republic. This was a series of events, from the assassination of Julius Caesar in 44 BC to the grant of imperial power to Octavian in 27 BC, but perhaps the key event was the Battle of Philippi in 42 BC when Brutus died. Had he defeated and killed Octavian and Mark Anthony, he might have restored the Republic and laid the foundation for a better future for the Mediterranean region. He would have had to overcome some serious problems with the Republic, but he or perhaps someone like him might have done so.

Fall of Boudica, at the Battle of Watling Street, 60 or 61 AD.  Had she defeated the Romans they would probably have abandoned Britain, and if she had then kept the British tribes united, that might have led to a Britain that would emerge stronger and more creative.

First Council of Nicaea, 325 AD. Convened by Constantine to bring peace among warring Christian factions, it chose an imposed orthodoxy instead of creating forums for tolerance, creative diversity, and peaceful debate, which would have led to a climate favorable to innovation and progress.

Abandonment of the Dustur al-Madinah (Constitution of Medina), framed under the direction of Mohammed in 622 AD, it did not survive him, but was replaced as a model of government by his warlord successors, who also developed competing variants of traditional sharia law as tools of political control, but which had the effect of threatening world peace, and crippling Islamic civilization and eventually bringing it down.

Abandonment of Vinland, after about 1000 AD. If the Norse had followed through on their discovery of the New World, or if others, such as the English, had done so, the New World might have been developed 500 years sooner than it was, and by peaceful settlers instead of Spanish or Portuguese plunderers.

Excesses of the Crusades, 1095-1291. Not without some justification as resistance to Muslim imperialism, but that did not justify the degree some of them were conducted, on both sides. The aim should have been a peaceful region tolerant of many faiths, but the excesses led to centuries of further conflict.

Fall of Montfort, at the Battle of Evesham, 1265 AD. Had Simon de Montfort defeated and killed the royalists, and further developed the Provisions that created the first English parliament, he might have established a republic and avoided 400 years of destructive civil conflict that retarded progress there. Those reforms would likely have spread to other nations through the widespread Joachimite movement that looked to Simon as its hope for the end of monarchy and Catholic oppression and corruption. Had Montfort survived at Evesham he would likely have returned to the crusades and conducted them without the excesses.

Papal interregnum, 1268-71.  This was a critical opportunity for the Church to elect a reformer, and they failed to do so, leading ultimately to the excesses of the Inquisition, the Protestant Reformation, and centuries of destructive conflict and suppression of new ideas and groups such as the Templars. The failure was one of the impacts of the fall of Montfort, which, had he prevailed, could have led to the election of an English pope and allowing dioceses to elect their own clergy. This would have resulted in a productive diversity of faiths of all kinds without the acrimony.

Chinese abandonment of exploration, 1425 AD.  The Xuande Emperor Zhu Zhanji discontinued the Zheng He voyages, one of which may have discovered the New World about 1421,  although he permitted one last one to the Indian ocean. He thus lost the opportunity to lay the foundations for a wider civilization. After that China turned inward and away from the technological progress it had begun. It can be argued that this was, on balance, a good thing, because the culture was not making needed political progress, but exposure to more cultures might have led to such progress.

Inquisition of Galileo, 1633.  Copernican heliocentrism was on its way to becoming accepted until Galileo's defense of it was perceived as a criticism of the Pope and the Jesuits, who set back scientific progress for some time.

Lilburne outlived by Cromwell, 1657 AD. Had John Lilburne outlived Oliver Cromwell, he likely would have succeeded him, ended monarchy, and consolidated an English Republic that would have made the American Revolution unnecessary.

Failure of Britain to extend parliamentary representation to American colonies, culminating in the Declaratory Act in 1766 and the American Revolution 1776-1783.  Arguably the Revolution and following Constitution was needed and beneficial, but the American reforms might have spread faster to Britain and the rest of Europe.

Excesses of the French Revolution, leading to the Napoleonic Wars, mainly 1789-99, which led to cascading wrong turns in the Revolutions of 1848World War I, 1914-19, the October Revolution in Russia, 1917, World War II, 1939-45, the Chinese Revolution, 1946-50, and the Cold War, 1945-91.  Not everything that happened in these events were wrong turns, but so many things were that they need to be included as a chain.

Excesses of modern imperialism and nationalism. This was a series of wrong turns involving many nations that turned to conquest instead of trade. Most such efforts eventually proved unprofitable, but not without bloodshed and misery. There were also some beneficial results, some from colonialization, but mostly bad. Examples include Nazism, Fascism, the Soviet Empire, the First and Second Sino-Japanese wars, leading to the First and Second World wars and the Cold War.

Wrong U.S. Supreme Court precedents, more than 100 key decisions beginning in 1819.  Usually thought of as largely confined in their impacts to the United States, they actually impact the world and set a bad example for government everywhere. They have also allowed the growth of a government and policies that could ultimately bring down civilization.

Attack on Fort Sumter, 1861, which caused the destructive American Civil War. Although the war ended slavery legally, it left a lasting negative legacy that continues. If war could have been avoided, slavery would have been ended peacefully and without so much discrimination that persists to this day.

Durand Line, 1893. By dividing the Pashtun people it produced more than a century of unnecessary and destructive conflict. Other lines drawn by imperial powers following WWI that did not align with ethnic and tribal boundaries further exacerbated conflicts in ways that continue to this day.

Failure to respond to the Ottoman genocides, mainly of Armenians, 1914-18, and to subsequent genocides, especially the Shoah of 1933-45, the Cambodian genocide of 1975-79, the Rwandan genocide of 1994, and the Bosnian genocides in the former Yugoslavia 1992-95, although there was a late intervention in 1999 in Kosovo. The genocides themselves are wrong turns, of course, but the main missed opportunities were the failure to intervene in a timely manner, and to make an example of the perpetrators that would prevent recurrence. A really strong response to the Armenian genocide might have prevented all the others.

Failure to recognize Viet Minh government of Viet Nam, leading to war, 1954-75, that was not necessary to contain the spread of communism.

Failure to follow through on the moon landings, 1972. Although there are unfunded plans to return, we missed a critical opportunity by not proceeding immediately to building a permanent lunar colony, and then a Mars colony. If there is now a global economic collapse, humanity may never become a spacefaring civilization.

Abandonment of Afghanistan, after Soviet withdrawal, 1989, after backing too many of the wrong factions, leading to al Qaeda and the Taliban. 

Failure to immediately follow through on First Gulf War, 1991. Had Saddam been deposed then, the far more expensive and disruptive Iraq war could have been avoided, while realizing most of its benefits.

Now, no one can know whether any of these actually were bad turns, or things whose time had come, or how things might have eventually have turned out even worse. History is irreproducible phenomena, so all we can do is speculate. But speculation that attends to historical detail can be enlightening, so there is value in it.

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Through the keyhole

 Is there a way to avoid the worst effects of the global economic collapse that now seems inevitable? Perhaps not. But I prefer to be optimistic and look for a keyhole that we might be able to get through. It may not exist, but we need to look for it anyway.

There is a tendency for people to recommend courses of action now that should have been taken 40-60 years ago, but which if taken now would precipitate economic collapse and get blamed for it.

There is a way out if we do everything exactly right, but it is not a simple path. It involves separating the productive sector from the financial sector, give the former a new, energy-based currency, then allowing the financial sector and its fiat currency collapse without taking most of the productive sector down with it. If that were done all "wealth" measured in fiats (a good word for fiat currency of all kinds) would be wiped out, but at least farms and factories would continue to meet our essential needs.

Separating the two sectors would be tricky. It has never been done. As it stands now there is nothing to prevent the speculators from scarfing up bitcoins and making them unavailable as an alternative productive currency. The same could happen with an energy-backed currency (denominated in megajoules), so the transition would have to be made fast, within a couple of years.

The problem with precious metals is that the supply of them doesn't grow with the global economy. Energy does, and the cost of most things is roughly measured by the amount of energy that goes into making and delivering them. Energy in most forms is already being traded in terms of gigajoule-equivalents. This would just mean carrying that kind of trading into the consumer sector.

Tuesday, October 22, 2013

Politicians’ Extortion Racket

“Politicians’ Extortion Racket”

It is not a revelation to political insiders that the initiative for undue influence through campaign contributions comes more from candidates than from donors, in what is essentially extortion, and that this has been the pattern for more than a century.

One variety of "milker bill" is called a "fetcher bill" by candidates and "bogeyman bill" by donors, often resulting from agreement between two groups of congressmen whereby each group introduces legislation to scare the donors of the other, enabling each to hit up their donors with the argument that "I need more money to stop that terrible bill."

This came out in a report in the Sacramento Bee about 1997 that Democratic Rep. Robert Matsui warned prospective donors not to reduce their contributions to Democrats, lest bad bills be passed.

One can imagine each house adopting a rule that its members not solicit funds while the house is in session, but such a rule would probably not be enforced.

The real solution is to abandon direct election and use random selection steps, called sortition, in a multi-step process that would make the random selection be from among candidates filtered for reputation as competent and honest. The random steps would make it nearly impossible to influence the final selection by spending money in a campaign, and therefore remove the need to raise campaign funds.

Thursday, October 17, 2013

The Fox and the Hedgehog

The Fox and the Hedgehog

The complexity of human polities makes some reductionism necessary for comprehensible models, but Somin and Schleicher are simplifying beyond necessity.

A human polity, like an ant colony, is composed of many actors, each of which makes decisions locally based on information each receives within their capabilities, mostly from their closest associates. The information may be incomplete and inaccurate, and their intelligence low, but if the situation remains one for which they are adapted, they may be able to solve the problems of that situation. If not, and especially if the situation is one which they themselves created but which they are not capable of understanding, the results are unpredictable, and likely dismal.

We may write the Epitaph for Humanity: "They were smart enough to create problems for themselves they weren't smart enough to solve."

Whether you start your analysis at legislators and the laws they adopt, then work back to the people who influence or elect them, and then back to the people and messages that influence them, or work forward to the people who try to carry out or obey the laws (or not), and provide feedback on how well the laws are working (or not), or how each of them decide who to follow as leaders or advisers, we soon confront the larger problem that a polity does not function like an efficient market. Not even close.

It is not just voters who are ignorant. It is also the decisionmakers they elect, who generally lack not only domain knowledge of the issues they confront, but even enough knowledge to decide who the experts are, or at least the moderately more expert, since for most issues there are no experts, and cannot be any.

We are all drunk gunslingers firing incendiary rounds at random in a darkened explosives factory. It is only amazing we haven't already blown ourselves up. So enjoy it while you can. We are evolved for a stone age and to a stone age we are likely to return.

Wednesday, October 16, 2013

Mortgage fraud

When I was a real estate investor and agent back in the 1960s and 1970s in Texas the deed of trust (mortgage) form most of us used for financing real estate was the Texas State Bar form, or the language of it. It was two pages of fine print (consisting of a single sentence!) that enabled state rules for nonjudicial foreclosures by a trustee appointed by the lender but in theory independent of him, with a fiduciary duty to both lender and borrower, and the deed of trust contained provisions that protected the rights of both. For example, it protected the borrower by providing that when the note was paid in full, the trust would dissolve automatically, and the borrower would then have clear title as far as the lender was concerned. It was customary for the lender to also sign an instrument called the release of lien, but that was only to confirm the fact of full payment. In principle, it would also work to return the note to the borrower marked "paid" and signed by the lender or his agent. It also required the lender or his assigns to notify the borrower of any change in his address or that of his servicing agent, and required him to credit any payments sent to that address. That would have protected a borrower who made all payments on time from being foreclosed upon if the servicing agent failed to convey the payments to the owner and holder of the note. It also enabled the borrower to sue to "quiet title" if he made all payments on time and the lender failed to perform according to the terms of the note and deed of trust, or to sue for injunction to prevent an improper foreclosure. If he sued for such an injunction, the lender was required, under the longstanding 'best evidence rule", to produce the original signed note, not a copy or an affidavit that he or his attorney was the "owner and holder" of the note. Each signed note was a separate obligation, and if it could not be produced as evidence at trial, the court would find that the borrower owed no money, and indeed, could get judgment for the return of all sums already paid.

Sometime during the 1980s lenders began using their own deed of trust forms that reduced the protections for borrowers, until now many of them seem to be using forms that provide no protections at all. I have examined at least one that does not even allow the borrower to get clear title to his home if he pays off the note in full and on time. Such degraded "deeds of trust" convert the sale into little more than a long-term lease in which the borrower gets no equity in a home that is enforceable in court. If the lender does finally grant a release of lien, it is an indulgence and not something he may be legally required to do. Such deeds of trust are in my view unconscionable, but courts have little choice but to enforce them as written, or not written.

No one should ever finance the purchase of real estate using such deed of trust forms. Never sign any legal document you have not read and thoroughly understand. If you don't understand it, ask a lawyer to explain it to you. If a lawyer lets you sign such an instrument, he should be sued for malpractice, and disbarred. Lenders who use such forms should have all their notes cancelled, be put out of business, and the loan officers put in prison for fraud.

When I was in the real estate field, especially when I was a buyer, I would usually add provisions to a deed of trust to provide additional protections, to which the lender almost always agreed. You don't have to accept the form the lender provides, and if he does not agree to reasonable added protections to your position, then walk away from the deal. You will likely be better off leasing the property. At least under a lease the landlord will generally be obligated to make major repairs.

Here are the key provisions you should insist in including in a deed of trust:

  1. Upon payment of the note in full according to its terms, or if late payments are accepted by the owner and holder of the note, or his servicing agent, the deed of trust is dissolved, and the lien must be released.
  2. The borrower must be notified of any changes of ownership of the note, and of any changes in the servicing agent, including the address to which payments are to be made, before the next payment is due, and the address for service of process if a legal action is taken.
  3. The owner and holder of the note is required to credit all payments made to and accepted by the the lender or his servicing agent at his last known address, even if the servicing agent fails to deliver the payments to the owner and holder of the note.
  4. Reasonable attorney fees of up to 10 percent of the remaining balance on the note may be added to the end of the note only if the borrower refuses or is unable to pay, and not for a dispute concerning credit for payments made or the amount of the remaining balance.
  5. In the event of legal action by the owner and holder of the note, he must produce the original signed note, not a copy or an affidavit.
  6. The owner and holder of the note may not assign the note to a party out of state without the signed consent of the borrower. 
  7. Charges for things like taxes, insurance, or reasonable repairs, shall be paid only out of a fixed escrow account, bearing no interest, and not added to the balance of the note, although the escrow balance may be required to be paid before the lien is released, and the borrower always has the option to pay all such charges directly.

There should also be a warranty deed that provides:

  1. The seller (grantor) is the sole owner, with power to sell and convey.
  2. There are no prior liens or other claims on the title to the property.
  3. The seller will pay all costs to settle any such prior claims to the title or any part thereof, or if unable to defend them, to refund all sums paid and any consideration received, plus ten percent interest from receipt thereof.
  4. The seller has secured the deed, at his expense. with a title policy from a title insurance company able to cover all claims and to defend the title in court.
  5. If the buyer (grantee) incurs any cost to defend his title, that cost must be compensated by the seller, with interest and reasonable attorney fees.

If enough people, or the courts, had insisted on such terms, we could have avoided the financial crisis of 2008 that almost collapsed the world economy, and which still threatens it. People have the power to prevent another world depression if they only demand non-fraudulent mortgages and other credit instruments at the inception. Speculative securitization could have been prevented had people made more educated choices, or gotten better legal advice.

If you are threatened with foreclosure, don't fall for some of the schemes that some people are peddling.  Yes, something like a quiet title action might work in a case where the deed of trust provides you some protections, or in a state that upholds the "best evidence rule" and the lender can't produce the original note, but otherwise you are at the mercy of the lender and if the lender won't renegotiate, you are better off saving your money and walking away and renting.

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Sunday, October 13, 2013

To avoid pathological outcomes

Sortition is proposed as a remedy to some pathologies in our present constitutional systems, but if not done well, it could introduce some pathologies of its own. Some of these have been discussed, but we need to focus for a moment on how it could go wrong, and what we could do to avoid that.

Sortition and pillage

Sortition is often offered as a way to avoid having those elected pillage the public fisc for their own benefit or that of their constituents, sometimes called patronage. Public choice theory examines how special interests invest more than most others to influence public decisions for their benefit, by both the selection of decisionmakers and pressure on them to favor those interests to retain office or advance in office. Once elected, officials become a special interest unto themselves, and public choice processes operate within government institutions as well as on elections.

Sortition is proposed as a way to reduce the influence of special interests on who become decisionmakers, and by having sortition-selected officials serve for only short periods of time, with no prospect of being retained in office, or advancing to other offices. But it also removes an important method of holding them accountable. What is to prevent officials selected by lot from simply seizing the public treasury and leaving the country with it, after passing a law that makes that legal?

The design of the U.S. Constitution was to avoid this kind of abuse by separating the kinds of decisions that could be made among different bodies: One house of Congress required to initiate appropriations, both houses and the President required to confirm such proposals, the Executive Branch to actually do the spending, and the Judicial Branch to decide disputes and charges of misconduct (although the Framers omitted needed provisions that would enable making many kinds of official abuses crimes). Such a framework seems unavoidable, at a minimum, even if election is replaced by sortition, entirely or in part.

An important component of the U.S. Constitution, less appreciated today, was the requirement for oaths of office, which according to the beliefs of the Founders, would subject officeholders to eternal damnation if they abused their authority. Enough of the early candidates for office shared that belief for the oath to be an effective constraint on their behavior, but of course it was never fully effective, and seems not to be any kind of constraint today. So how do we constrain narcissistic sociopaths or at least those with no fear of hell, especially in an urban world in which we raise new generations with the highest ambition of becoming successful drug dealers?

It is worth examining the way in which the original Athenian demarchy was eventually overthrown and not re-instituted. It was not immune to the ambitions of powerful factions, either while it was in place, or afterward. Plague and war was only two factors.

A critical element would seem to be to find ways to make building and keeping a public reputation more important than wealth or influence, both by preventing excessive and unbalanced concentrations of wealth and influence in institutions as well as in people, making reputation something wealth and influence can't buy, and making wealth and influence dependent on good reputation. Trust must to to the trustworthy.

Sunday, September 22, 2013

Practice to deceive

Oh what a tangled web we weave
When first we practice to deceive.
 — Sir Walter Scott (Marmion, 1808) 

Deceptive advertising is deeply ingrained in our modern culture. We are inundated by messages that appeal to our emotions and try to trick us with logical fallacies.

One of the greatest salespersons I have ever known was my mother, a real estate agent. No one could resist her pitch, not even me. She used to say, "Don't sell the house, sell the dream." She also used to say that before she could sell something, she had to sell herself on it. Fortunately for her prospects, she was also scrupulously honest, and never sold anything the buyer couldn't afford or enjoy. But not all pitchmen are so ethical.

Attractiveness sells

The features that make people attractive are features that evolutionary development has come to associate with fitness, even if the correlation is imperfect. Our genes tell us to follow the lead of those most likely to help us produce offspring that survive.

Diffusion of innovations

A study at the University of Chicago in the 1950s found that the main mechanism for the propagation of innovations, such as products or services, was not broadcast advertising, but imitation of those who had adopted previously, and persuasion by influential acquaintances. People tended to fall into a hierarchy of adopters, from early adopters at the top, to secondary adopters, tertiary adopters, and so forth.

The process gets more complicated when there are competing innovations, and we get competitive diffusion processes. The war in Viet Nam was the playing out of competing diffusion processes, and nationalism had a higher coefficient of diffusion than republican governance.

People adopt pitches for things they have adopted and get in advertising and and use them to persuade acquaintances. So advertising often works not by directly persuading, but by training volunteer salespersons.

Cognitive dissonance

"Cognitive dissonance" is the tendency for persons who incur a tension between what they do and what they think or feel to discharge the tension by changing not their actions, but their feelings, beliefs, perceptions, and understandings.

People who take a job selling something often come to sell themselves on it.

People who join a company often come to believe in that company and its products even when they did not before they joined.

Why repetition works

Annoying or humorous pitches don't persuade, but they do make people remember the brand, and most people, rationally ignorant and unwilling to take the time or effort to investigate, seek the security of the herd, and subconsciously perceive repetition as herd validation.

Credibility of money

Political marketing works by creating an impression the candidate who can afford the most advertising has the most support because he has the most money, and that he has been vetted by his donors.

People also tend to think that an advertiser that can afford the most advertising must be the most successful and have the most satisfied customers.

Selling the campaign

"Studies have shown" that pitchmen are more susceptible to fall for pitches than most, including their own.

Salesmen sell themselves and their services to their clients. That can be campaigns that don't work but which the client has little way to confirm their effectiveness.

One of the challenges to marketers has come from online ads that provide immediate feedback from clicks on their effectiveness, which indicate that most of the money spent on broadcast advertising is wasted.

Classic case was the selling of Steve Jobs on turning his company over to the management of a guy whose success was in selling sugar water, and how he sold Scully on taking the job. He had first sold himself on the fallacy that someone who was good at selling soda pop would be good at selling computers, and that he would also be good a managing a company that made computers, instead of just taking over the marketing department. Talk about buyers remorse!

Ads in everything

Ads are not always clearly marked. Almost all of the communications we receive contain efforts to persuade us of something. Most "news" reports start as press releases that are often just reprinted without change, attempting to sell the reader on how to think about their subjects. Even weather reports are attempts to sell you.

The wise recipient of any message always asks, what is it trying to sell me, who is funding it, and who stands to benefit.