RIGHT OF THE LINE! biking from Bend to Burns on Hwy. 20

RIGHT OF THE LINE! biking from Bend to Burns on [click photo for next . . . ]
Hwy. 20 ! (XI.17.08) . . .

While biking down straight road to infinity like
this one, I often remember and recite for comfort one
of my Miniatures, like the one that goes:

"A free economy

is a strictly limited one.

Even the busiest of thoroughfares

still retains

a thin white line,

protecting the rights

of those of us who prefer to walk."

(or bike, as is here
the case...)

#art #poster A FREE ECONOMY is a strictly
limited economy
pdf http://bit.ly/Q8Jb3h

OUT OF CONTROL—the runaway economies
of systemic imbalance

I have argued elsewhere, that all truly free economies
are necessarily strictly limited ones. This goes, of course,
radically against the prevailing metaphysics that freedom
increases with the decrease of regulation. Let's see why.

The model I like to use is that of an essentially self-regulating,
self-organizing network of highways. The point I like to make
is that systems of roads function as well as they do because
they are ordered not on principles of control—that is, rules
that tell you what to do—but rather on principles of limit—that
is, rules that tell you what not to do, like no faster or slower
than x.

My contention is that a small set of clear, unambiguous
rules or limits is a hallmark of all self-organizing systems.
(A rule of thumb—with no play on words intended—is that,
if you have more limits than fingers on one hand, something
is wrong. One ought always be able to tick off the rules
quickly and rhythmically as a test of clarity.) What do I mean
by self-organizing? Well, in human terms, the key feature
of self-organization is that it requires little or no policing.
In other words, the system exhibits natural in-built safeguards
against, and correction of, all breaking of limits. I don't want
to crash into you, and you don't want to crash into me, so
we naturally both readily accept all such reasonable limits.

Another way of saying the same thing negatively is: a self-
organizing system has failed, that is, has demonstrated an
inappropriate or ill-designed set of limits, when it is in need
of continuous control by use of force. The key point I would
like to make here, is that this is a systemic problem, and not
an ethical one concerning a few individuals of questionable
moral character. For example, in my view, current US drug
laws are a textbook illustration of such failure, causing far
more suffering and disorder than they eliminate, both on the
streets of North American cities and in the developing countries
where source plants like poppies and coca are grown.
(Even conservative economist Milton Friedman thought this
to be the case.) So, excessive use of force by the State in
democratic countries is, in the view being sketched here, a
plain indication that somewhere in the background of an
arcane legal system lurks a poorly conceived, self-defeating
labyrinth of unjust laws and self-serving legislation.

So, what would a clear set of self-organizing limits for a free
economy look like? In this miniature, I'm not going to answer
this question directly. Rather, I'd like to state by way of two
examples drawn from current financial headlines what a truly
free—and therefore strictly limited—economy would not look

In 1999, the Clinton administration repealed a key depression
era piece of legislation known as the Glass-Steagall Act.
This act was designed to keep—in other words, to limit—
savings and speculative investment banks separate.
Repealing the act removed the limits, thus effectively giving
government sanction for bankers of all stripes to imprudently
throw the dice, so to speak, with the money in our savings

A second crucial misstep occurred in 2004 when under the
Bush administration, then chairperson of Goldmen Sachs and
now Secretary of the Treasury, Hank Paulson, convinced the
Securities and Exchange Commission to lift limits on required
investment capital.
* This led to the remarkable situation that,
when Bear Stearns went under, they were leveraging, to use
an ugly phrase, 33 dollars of debt on every dollar of equity, to
use another equally cumbersome expression. In other words, the
1930's depression era saying, "A dime will get you a dollar," had
become under Secretary Paulson's influence, "Three cents
will get you a dollar!"

Now, to continue with our analogy of a self-organizing and
self-regulating network of highways, the repeal of Glass-Steagall
and allowing the savings and investment branches of the
banking system to merge, is the roadway equivalent of allowing
NASCAR to run races freely on the Interstate. And to add insult
to injury, the 2004 repeal of capital limits is the equivalent of
giving the fastest and most high-powered of those race-cars a
loan of essentially free gas (3 cents on the dollar..) The result
has been, as everyone now knows, catastrophic. The collapse,
in my view, while not perhaps in all its on-going gory details,
but rather in its general outline, was completely predictable.
And what is more, it is not the mere result of the greed of 'a few
bad apples,' but I would argue of systemic poor design. That is,
the utter failure to compose a clear set of unambiguous limits.
Again, just as is already universally the case with networks
of roads around the world.

My central point, however, does not concern the details of
reform that would lead to less corruption and a more equitable
distribution of wealth and access to resources, but rather one
of basic logical necessity. Most readers are probably already
aware, that, in the recent US election cycle, Mr. McCain
received about seven million dollars in backing from Wall Street;
While Mr. Obama received about 10 million. My contention is
that, as long as it is possible to purchase influence in this way,
and on this scale, the economy must necessarily be skewed
to the expensive racecars of the already reckless hyper-rich,
resulting in a continuous cascade of unnecessary and
unpredictable pile-ups and crashes. And, if we fail to take
heed of this basic difference between, on the one hand,
intelligent limit, and on the other, rigid mechanical control or
regulation, then we had better prepare ourselves for more
self-induced world-wide economic runaways charging headlong
into degenerative chaos. As Virgil has it in his arresting image
of his Georgics: "The world is like a chariot run wild,
that rounds the course unchecked, and, gaining speed,
sweeps the helpless driver onto his doom."

Pine Lakes Camp,
Eagle Cap Wilderness,
Oregon, X.29.2008

* data drawn from an excellent Democracy Now! interview (X.17.2008)
with Paul Craig Roberts, former Assistant Secretary of the Treasury
Department in the Reagan administration and a former associatee
e ditor of the Wall Street Journal.

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(created: XI.10.2008)