The Pentagong Show

The Pentagong Show
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Thursday, April 23, 2015

Equation of Inequality is not a bug: it's a feature.

Elle Presidente: Yeah, that's right Jebbush the Nebbish, it's ON!

Perhaps in the phrase "Time is Money", resides the true nature of Money that we are trying to tease out, and with it, going a little into the math of the subject, as opposed to Math as a subject, which is the only way far too many of us see it, we can decipher its tendencies and what their meanings are in the light of Hillary Clinton statement of surprise that money's so inequitably distributed, despite the fact that the "Fickle Finger of Fate" points to her husband's administration for its culpability in exaggerating exactly that inequality which she is now using as her pretext for needed Change while she pretends to ladle out Hope as she starts to stump the country.

Although I can't remember who said it, I came upon a quote from a man in the financial sphere claiming that, contrary to popular belief, most of the advances in mathematics during the last century or so came, not from the scientific field, but from the realm of economics/finance. Nassim Taleb (author of Black Swan, Fooled by Randomness, and Opacity) would perhaps be more in tune with this phenomena, as well as a good example of its veracity, but the formula which I've been lately interested in refutes that belief, as it is the most famous one in the history of mathematics, namely Einstein's E=MCsquared.

We often forget that within this formula is embedded the concept of energy as a function, not only of matter, (the E and the M), but also, as represented by C, given that it is the speed of light, of time, as it contains within it the distance that light travels as measured in a snapshot of time, namely, the 186,000 miles it travels in 1 second. You can therefore solve the problem, not only for matter, but for time instead, such that E/M=C(squared), making it mathematically obvious that if time is indeed money, then money, and its velocity, is indeed a function of both energy and matter.

Although this seems a bit abstracted and even beside the point, prompting one to perhaps ask, "What does it matter?", if not "What is the Matter?", there are two other important bits to be considered. First, that information is physical, and second, the second law of Thermodynamics, which states that states of low entropy always degrade to those of high entropy without an external source of constraint. Hydrogen atoms will never coalesce into helium without the incredible forces of gravity that pack them so tightly they form a new structure, helium, with the aid of nuclear fusion, in the heart of stars.

In other words, money, a form of energy, doesn't by its nature accrue into the hands of a few without the economic system in which it is active being structured in such a way as to concentrate it in that arrangement. Then, once so concentrated, it would, in obedience to the second law of thermodynamics, of its own accord, become less concentrated, unless there were an opposing force that kept it from doing so. Therefore, since its conglomeration has undeniably been, like climate change, accelerating, (I mean, if a presidential candidate is addressing the problem, it must be real, n'est-ce pas?) then like climate change, the fact that it isn't being addressed, and the underlying causes investigated, there has to be a reason for this laxity. Someone who we might think would want to know why this is happening, must instead, like Hillary Clinton herself, be profiting from the phenomenon they are supposed to be so concerned about but, because it is a boon to their own circumstances, is not only uninterested in ferreting out it roots, but is, on the contrary, intent on keeping them as opaque as possible.

A business is a good example of what, in the classical capitalistic systems, we can liken to the stars' engine. Whereby initially, dollars are concentrated for the intended purpose of building a factory that manufactures pants, let's say. The investors deliberately concentrate the disparate dollars into investment pools, which are then disbursed to the various entities that have to be brought together to build the plant, and then to the workers who run it, the consumers being the method by which those invested dollars are then attracted back to the factory owners just as hydrogen is gravitationally pulled further into the heart of a star.

Now, just as a star accumulates in its center, via a gravitational pull so intense it further restructures the atoms in order to avoid collapse, into other elements, the business accumulated gold, usually referred to as profits, and did so in such an excess, its gravitational pull being irresistible, that keeping all that gold was beginning to take more of the company's resources than it was actually using in conducting its business, and that's when we needed a banking industry to disburse it back out, to intermediate between accumulation and disbursement, in the form of dividend payments to those investors who initially were responsible for the concentration of capital in the first place. Like the radiance of the sun, it needed to rid itself of the waste heat from its activities.

These banking institutions, however, were not incorporated in order to perform a public service, but, like the businesses they served, to make a profit from those services without, this time, providing anything tangible from their operations. It is this aspect of its business model that apparently, from the history of such institutions, invites the least competent, and therefore, most parasitic, of the greedy into its employ, so that eventually one bank failing after another, as its funds are either embezzled or simply absconded with, causes the rabble to rise up and demand that the government either take over the industry or regulate or at least guarantee, its honest functioning, insuring that its citizens' funds, entrusted to such institutions, would be, not only returned to them, but that they should be, just like the investors that risked their dollars to build the factories receive dividends as recompense, have their trust, which always entails risk, since it can be misplaced, rewarded, only this time in the form of interest payments.

Now, all of theses ancillary industries, one of which, insurance, has only been hinted at, but which, as in the case of the FDIC, also extract from the profits being spun off from the productive enterprise of the pants factory, result in the need of charging more and more for the same pair of pants unless the industry can either cut expenses of its various inputs, (energy, raw materials, and labor), or raise the price it charges for the end product.

And just as it happened time and again that banks failed, what happens hand in hand with that is that the intermediaries, those in the ancillary industries of what has lately been referred to as FIRE -Finance, Insurance, and Real Estate, and the employees thereof, elevate their importance in their own minds, such that, like the miners in Upton Sinclair's, "King Coal", or Emil Zola's, "Germinal", workers become of secondary importance, their contribution, although at the very heart of the entire structure and the foundation upon which all the rest is leveraged, are conspired against. Consequently it is their wages, as well as their numbers, that are considered to be one of the more onerous costs of the enterprise, and hence are targeted as being in need of reduction and eventual eradication.

Thus does enterprise take upon itself the work that landowners once had, as illustrated by one of Scotland's history's saddest chapters known as The Clearances, wherein tens of thousands of Highland residents were evicted from their ancestral lands by the landowners in order to facilitate the more profitable enterprise of the grazing of sheep. In this episode that we still hear the echos of today in the voice of Alvin Toffler, as he used the sobriquet of the "electronic cottage" to assuage industry's conscience at the eviction of tens of thousands from their jobs, their tasks replaced with computerized apps, Duncan Forbes expressed a similar sentiment during The Clearances with the wish that the tenants' now-idled hands would be free to work the land for himself. It enabled just the opposite, however, and instead freed the hands of the chieftains to treat people as temporary tenants who could remain on the land if they could afford it, but otherwise would have to go.

With the same dynamic at work today, with the FIRE blazing across the landscape, first selling people the electronic cottages, but then, instead of the electronic part of these cottages enabling the revenue stream Toffler envisioned, contrarily creating a revenue drain as devise after devise becomes, not a luxury, but like most luxuries, which come as a guest but take a slave, result in the inability to maintain residency in said domicile for more than a fraction of the time necessary to pay the 30 year mortgage, and instead being subjected to the 21'st Century version of The Clearances as millions now, instead of the tens of thousand then (1807 -1821 or so), are thrown into the street. The difference being that, this time, there is no relief valve of America to flee to, only penury, despair, and early death.

To this end, an entire industry, ready-made under the auspices of government investment, the computer industry, was called into play, to increase the productivity of said workers such that fewer of them would be needed to produce the same, and indeed, increasing, amount of output. But now, how to pay for the increasing energy costs as those were the new expenses taking the place of the workers, and thus management, now with no one left to manage, had to go.

Yet with all this decimation of the workforce, one layer, the intermediary known as banking, together with its stepchild, the computer industry, far from shrinking with it, not only kept on growing, but was now growing exponentially, since much of the R&D that went into creating it was never borne by the industries that benefited the most from it, but was instead, since it was being done by the military for their own nefarious purposes, and then handed over to what is cynically referred to as the "private sector" which wrangled all these marvels out of the hands of the military that got its monies from taxing the very people that were being thrown out of their jobs, and their homes, that is, the very public on whose backs these so-called entrepreneurs used the government to wrest the funds for the research, and who took on the risk, albeit unknown to them, as military spending on technical R&D is largely kept secret under the auspices of "National Security", needing a conduit through which to funnel those funds, and then one to offload the risk of selling houses to people whose jobs were being systematically eliminated, fostered an entire shadow banking industry to hide those risks from investors and have it also be borne, once again unknowingly, by a hoodwinked public that was entirely convinced that their prosperity was assured and their fortunes rising as inexorably as the star in the East.

But like the dot-com boom before it this chimera came crashing down, pulled to the ground by the absurdity of its own pretensions, but, unlike the dot-com boom which used Ponzi-dynamics to turn the housing market into a pyramid scheme, there was no ready-made new collusion waiting in the wings to put into place. There is only what we are seeing the last fumes of now, a pretense that we can just get the whole gas bag back up in the sky by filling it with what by now everyone already knows is just hot air, desperately pumped by desperados feuding a public's newly acknowledged desperation.

But the equation doesn't work for another reason. The scenario of the factory outlined at the start of this essay, even if it were humming along in full productivity, couldn't afford the overhead of the current banking system, not in the new modern monstrous TBTF proportions it has taken, yet that now performs few of the services for which it was first devised. The energy in the equation is no longer viable. Like the rainforests, that have been, via the machinations of man, turned from being carbon sinks, which provided so much oxygen to the atmosphere they were referred to by scientists as the "lungs of the planet", been transformed into carbon generators, the banks have similarly reversed their roles, and far from being facilitators of commerce, are instead, like all the components of FIRE, parasites on the body of commerce, sucking in more and more of the money, ie energy, needed by industry, to fuel the conflagration that is turning entire industries that took mankind centuries to construct, into a pile of ash. The very machine they used to help wipe out those millions of jobs had done to them what Amazon has done to bookstores, or MacDonald's to local restaurants, or Home Depot to your local hardware store, or War-Mart to entire downtowns: made their existence untenable. Because, just as those industries suck the life out of Downtowns, by the very nature of Monopolization whose operations and consequently, jobs, have, thanks to the computer, become more and more centralized, thus concentrating their currency flows into a reservoir from which there is no flow back to the communities, dammed up, the turbines of commerce without the great torrents turning their blades, but by design been and trumpeted as having been, to a strangely complaisant public, reduced to a trickle, can naturally create none of the energy, in the form of flow of funds, necessary to provide any enterprising populace with anything but a trickle of current: thus instead of dollars, all we get is the promised loose "Change".

 And now, The Bush and The Clinton, harking from the two families most responsible for the complete perversion of our economy into a Ponzi scheme that channels its output into the hands of an insatiable Plutocracy of Vampires, blithely comes back for more. Yet there is no outrage; there is no one throwing shoes at their heads, there is nothing but a constrained silence and a muted acceptance of the fate we all see  awaiting us. And you think ISIS are the crazy ones? You think the Muslims are the nuts? That's perhaps because what the Banksters have done to you is nothing compared to what they've done to the rest of the world, and you still reside in the heart of the beast. But that heart, if we include all the OECD nations it encompasses, is only inclusive of barely a billion of the 7 billions of humans on the planet. And despite the miracle of the emerging economies, those billions' lot is to have the rest of their countries' resources siphoned off, confiscated to serve our needs, their labor used to maintain the crumbling edifice of the West, and that is what I suspect gives ISIS and groups like it their strength. But by including Russia in the list of countries we believe we can despoil, I believe that Washington has made a grave error in judgement.

Because, now, no matter whether it's Clinton or Bush, we will be giving the stamp of approval to the government, something ,strangely enough, the peoples of the world have expressed, they don't believe we had, up to now, done. Although there is no explanation I can find that rationally explains this phenomenon, the people of the US, which is the one country on the planet one could refer to as the Avatar of Democracy, if asked to do so in a poll, are always forgiven for the actions of our government. In country after country, I see its citizens quoted as saying as much. Yet, in one Dictatorship after another, many of whom, such as Mubarak and Saddam, received overt support from the US government, their citizens, as evidenced by the repeated use of sanctions aimed directly at them, not their leader, are blamed for the actions of THEIR government. Thus could Madeleine Albright state, while Secretary of State in the Clinton Administration, that she thinks the deaths of half a million Iraqi children due to sanctions were "worth the price"; somehow I think those kids would disagree ... if they could ...only they're dead. Now in Russia, we are squeezing their citizens to revolt against the policies of a ruler we describe as a dictator, meaning he will simply jail, or even kill, those who oppose him, yet we expect them to risk their lives and do so. Whereas here, we do nothing, despite full scale assaults, drone attacks, and illegal sanctions, while they continue to think it's only our government, not we poor well-intentioned citizens, that's forcing the sanctions against them.

I think this next election, given the likely outcome, will take that free pass away. They will finally realize that, if failing to overthrow a Dictator who will gas you in the night leaves you responsible for his continued rule, then it follows that Democracy inaction must also equal complicity. Unless, that is, there is an escalation of the militarism of the police and the world gets to sees what we all dread, even at this far remove from the shootings at Kent State, is true, but have not quite put to the test, as we prefer to quail in silence, hiding the secret knowledge that should mass protests in fact be undertaken, the government response, a preview of which we were privy to in Ferguson last year and dark hints of which are evidenced by the armamentaria being amassed by police forces around the country, may look much more like one you would expect from a dictatorship than what you might think could happen in a Democracy. And should that occur, the true nature of our own government will be revealed, and we may not like what we see.















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