Note 73

No social systems are perfect. Therefore it is incumbent on good leadership to identify and understand the blind spots of any system and to provide discretionary measures to moderate its excesses. Here, ideological blinders are dangerous. Ideology is the business of the intellectual and institutional design, and good sense the business of the agent. By placing ideology over judgement through partisan politics, democracy trades off good judgement and representativeness of values. The severity of this tradeoff is path-dependent, and relies heavily on generations of responsible stewardship to preserve.

Note on power

The core drivers of power in the race for global dominance:

1. Economic power - consumers, skills, organizational know-how, innovation
2. Political power - military strength/reach/capacity, security cooperation frameworks, Authority/Legitimacy
3. Ideas/cultural/soft power - universality of ideals/values, Use, manipulation of institutions/images/communications, connectivity
4. Financial power - capital, networks, reputation/trust

Note on Trump

Trump is the symptom of 2 trends: The decay of public morality (which is the dialectic frame within which for and against are set); and the disruption of the nation state as a political and cultural layer of unity within a world where economic and information flows polarise different community of values.

The breakdown of public morality is due to the monoculture of neoliberalism as the dominant essential principle governing social and political relations, and the overextension of market morality to social domains. In particular, the loss of concepts of political virtue and stewardship, the breakdown of collective social institutions highlighted by Putnam, skewed incentive structures to capitalise on market structures, and individualism without individual wisdom or responsibility, has led to a failing public life.

On the disruption of the nation state, what is required in the long term is a structural review of the functions of the nation state and the terms which define its boundaries. What is needed in the short term is an institutional mechanism of pooling sovereignty over issue areas where global management is required without infringing on the areas where sovereignty is to be retained. This is a delicate task as communities are bound by total value systems as issue area bears consequences on another which may require sovereign control to preserve them. However the key mistake was that policymakers were unable to foresee the dislocations caused by globalised flows and to create global coordination tools to manage them. This was due in part to lack of convergence which makes common goals difficult, however tools of compromise was not created as they might have been. The goal for the medium term is to facilitate convergence in social conditions that enable global norms over a wider set of issue areas.

Note 72

The paradox of identity: to be and not to be.

Notes from Minsky 2

The high and pro-cyclical elasticity of money supply means that the financial markets for investment are non-equilibrating. Interest rates do not adjust to enable market equilibriums between capitalized expected profit and supply costs of investment. Hence financial markets are dominated by positive, disequilibrating feedbacks between asset prices and balance sheets, and money supply and demand.

This elasticity arises from 3 factors: the intangible nature of credit, the money multiplier, and the expectational climate of bankers and businessmen, which is procyclical, contains biases and moral hazards, and is short term.