Thoughts on Brexit

Brexit should trigger soul searching within Britain, however unlikely it is to do so. It is the culmination of a broken economy and broken society that is unable to cope with the pressures of globalisation. In that world, systems are strained and the weakest buckles.

This is partly due to the arrogance and incompetence of EU bureaucrats and UK politicians, in their failure to understand the effects of immigration on wages of the low skilled. But this begs the question of the existing structure of the economy. Years of socialism, followed by Thatcherism, hollowed out the manufacturing economy and created an underclass of low wage service workers. This was ripe for disruption by an influx of migrant workers that brought real wages in this sector down. And it will continue to be ripe for disruption by automation and other technological developments.

Brexit was also the result of a contentious political culture that could no longer generate a national consensus partly as a result of the accumulation of economic mismanagement over decades. This polarisation is supported by a toxic class culture which normalizes inequalities, not just economic but social and between communities, which would be unacceptable elsewhere in Europe. The breakdown of social trust and the political centre is evident, and is a repeat of the 1930s.

In this case, democracy has become a destabilising force which reflects the polarisation of society - south vs north, rich vs poor. Political groups have been talking past each other for decades. This is not new, and similar problems occurred in the 1930s. Yet only monetary economics has seemed to learn much from that episode, and no new policy innovations, in Britain or elsewhere, have been made in the last 20 years to deal with the distributional effects of globalisation on individuals and communities which theory clearly predicts. Hence the only solution is to limit migration. This is partly due to the failure of supranational institutions and the state of international policy coordination, which are inadequate to the tasks at hand.

At the more immediate level, Brexit was the result of an alliance of centre right and far right British nationalists, who are unable or unwilling to define a British cosmopolitanism that includes a role for European foreigners. Some believe that the gains from policy flexibility and sovereignty outweigh the loss of access to Europe, brain drains and the diminished reach of its institutions. This has a long history in a culture which defines itself against Europe. However, in the Darwinian race, culture itself is a shackle, and Britain will pay for its inflexibility in dollars and influence.

Note 58

"Because they cannot be known, they can only be described." - Lao Zu

Just as the content of music must be given in its relation to silences, so the meaning of statements must be given in relation to the unspoken meaning behind it, pertaining to both the possibilities within which it is conceived, as well as the contexts though which it is understood.

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So the content and structure of meaning is given through expressing it's relation to the totality of what it is not, as well as what is not thinkable. By thinking the unthinkable, we can understand thought.

Less pessimistically, our use of thought contains within it an understanding of the unthinkable.

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A finite conception of the totality of these possibilities is contained within culture, which expresses a view of what these might consist. Hence paradigm shifts may occur that rejig the notion of these possibilities.

From a philosophical standpoint, culture constitutes a way of contextualising epistemic possibilities in relation to our current understanding of the world.

Note 57

The essence of meaning are the relations between concepts which it picks out. It picks out both context (what is implied, both about the world and about the relation to it) and representation (the specific thing to which it refers).

By picking out specific contexts, it embodies assumptions about underlying structures governing context, within which contextualization is posssible. The way it organizes information is itself information, but which cannot be given in terms of representation. 

By picking out representations, it also embodies assumptions about the structural content of representations, and about possible relations between representation and context.

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When we say we mean something, what we mean is how the objects relate to other objects within contexts, or represented contexts relating to other contexts.

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Relationships require limits. Limits are not real. Or rather, they are only as real as they are taken as such from within the network of relationships.

Hence the absolute, or that which is not relatedness, cannot be thought.

Note 56

The greatest cultures are those which articulate and advance the frontiers of the human condition, in their unique ways. They are divorced from the ethnicity from which they originate,  and seed ideas in other cultures in ways which extend their influence beyond the survival of the civilisation itself.

Note 55

Subjectivity is composed of two parts, relativity and representativeness.

By asserting relativity, the argument from representativeness at the meta-level breaks down. This is due to the hierarchies of truth being maintained at that level. Hence there is no argued basis for relativity due to representativeness.

Hence, it either asserts non-representativeness at the meta-level, or denies representativeness as the basis for relativity.

Frame-coherantism is one such alternative. This epistemic notion may be paired with an ontological reality-pluralism which asserts that there are multiple frames of truth, none of which invalidates or overrides the other.

However, the determination of what constitutes a frame is itself a search for a founding principle, a foundational frame. Hence it transcendentally presupposes that which it categorically denies. 

Alternatively, one might be left with a radical undecidability between opposing frames for the sake of meta-consistency, which cannot even be said. This Wittgensteinian anti-theory would deny the validity of the question within which it is framed. Frame just is use.

Note 54

A characteristic of modernity, and Asian modernity in particular, is the determination of social structures and institutions by economic values. 

Hence by altering economic imperatives, the changing operative modality of technologically embedded living will disrupt existing social arrangements. The means of change rests on the question of the flexibility of institutions to adapt.

In particular, the shift to large scale automation will require a lifestyle and social welfare alteration towards pursuit of creative comparative advantages. 

The success in generating potential growth, as well as preventing violent change, rests on the speed of cultural change.

Note 53

Societies function in a general equilibrium within evolutionary stable sets of mutually reciprocating factor conditions. The combination of norms, institutions and ideology, as well as the interaction of the emergent properties and the relationships themselves, constitutes that which Hegel idealizes and calls Geist.

Linkages between components of Geist evolve over time, according to the hierarchy of principles which order the collective decisions of society. Being humans, these principles are embodied in actual historical events and actions, rather than implemented from the top-down.

Use

Use is frame. Meaning is not use. Use is the way in which meaning is used.

So form does not precondition content, but is given in the relation of content to other content.

Expressed through content, it exists in a categorical relation to content.

Use is not the precondition of meaning, but arises out of the condition of meaning  through its content. The necessity of its content is called form. It's necessity is contingent on the kind of content that is evoked.

Quotes 11

"What differentiates a leader from a manager, research tells us, is the ability to figure out where to go and to enlist the people and groups necessary to get there. Recruiting stakeholders, lining up allies and sympathizers, diagnosing the political landscape, and brokering conversations among unconnected parties are all part of a leader’s job. As they step up to the leadership transition, some managers accept their growing dependence on others and seek to transform it into mutual influence. Others dismiss such work as “political” and, as a result, undermine their ability to advance their goals.

The key to a good strategic network is leverage: the ability to marshal information, support, and resources from one sector of a network to achieve results in another. Strategic networkers use indirect influence, convincing one person in the network to get someone else, who is not in the network, to take a needed action. Moreover, strategic networkers don’t just influence their relational environment; they shape it in their own image by moving and hiring subordinates, changing suppliers and sources of financing, lobbying to place allies in peer positions, and even restructuring their boards to create networks favorable to their business goals."

Ibarra and Hunter at HBR

Note 52

The relative is understood within the frame of the absolute. The absolute functions as the frame (or category) and object (to which the relative is the negation).

Absoluteness functions both as frame and possibility in the discussion on the Absoluteness of truth. The nature of the assertion is a contingent one, set within an absolute frame.

The refutation of absolute truth is a contingent refutation of a possibility. But a contingent refutation cannot refute an absolute. It can only refute the possibility of an absolute. On the other hand, if it was an absolute refutation, it would be an absolute truth. It then becomes that which it refutes. It is a meta Paradox. It remains a necessity at the level of the transcendental possibility.

So it is with god. It's existence is given through its non-existence. It is the necessary frame through which it's non-existence is made god again. At the transcendental level, it is the negation of the concept of the existence of god.

Note 51

The primary function of society is to harness the energies of the individual for collective ends. 

The philosophies through which they point back to the individual, and the way that individuals acquiesce to it, determines the social compact, and the social features that flow from it. 

Insofar as the individual identifies with the collective ends, he is imbued with a notion of purpose and progress. Ideology is primarily a means of generating identifications and hence teleological constructs that align self with society. However, the loss of identification generates alienation. 

Modern progress is thus a means of generating ideological legitimacy through inclusion. The terms by which inclusion is measured is generated within the ideology itself. 

But legitimacy referred to here is short term legitimacy, not long term legitimacy. That must be provided through philosophical incorporation, the evolution of ideology.

This applies not only to modern institutions, but also to development as such. For example, the religious tolerance of Ottomans as examples of development of a civilization.

Institutions are the embodiment of the interactions between the trinity of culture, ideology, and political ideas. The ability to judge the relative importance of different frames in the assessment of events is crucial to understanding the world.

Note 50

Meaning is contextual; context is specific to a perspective; perspective is grounded in categorical frames; categorical frames are given to a species; hence meaning is sited within a form of life.

Underlying this is the assumption of representation constituting the ground of meaning on the basis of its appearing to. But in what sense?

But what is referred to is represented meaning; which by definition requires representation. 

But the ground of represented meaning, by inaccessibility, cannot be represented. Hence it cannot be constituted by representation. And represented meaning cannot be groundless.

Note 49

Naturalism is the reductionism of moral categories to natural categories. This is absurd, categories are not reducible to another, for if it were, it is not a category. Categories are the terms which define the frames in which they are understood, which cannot be re-framed into another, because they cannot be said.

Gardner argues that the analytic philosophy is naturalistic, and that it denies the reality of moral and spiritual categories, hence is fundamentally irreconcilable with Hegel. This is incorrect. There is no reality of categories. This conflates reality with meaningfulness. Verificationists deny the meaningfulness of these categories because they cannot be parsed in terms of empirically verifiable statements. But that is not to say that they are not real. In fact the naturalistic philosophy would have to deny abstract reality, as it is meaningless in that sense.

Note 48

Dharma as general equilibrium over states of the world. Dharma can punish, and it can bring abundance. But it is essentially pragmatic, not ideal in character. There is no absolute dharma.

Does form imply essence?

The objects of a frame are given within a frame, but are not implied within it. Frame is form, so the constellation of frames, or a particular arrangement of the relationships between frames, defines the context. The object itself, and the verbs, adjectives etc. are then use: the particularities to cohere and orientate the relations within a context.

A universal description of anything is by definition self-referential and paradoxical. Hence it is not representation, or cannot be said.

Notes from Minsky 1

Wage market equilibrium w/p=MPL
Investment savings equilibrium r=mec
Money markets equilibrium M/p=L(I,O)

Supply side determined by equilibrium in supply side markets which determine output.

Output feeds into IS-LM, giving interest rates. But the economy can also attain higher investment rates and an hence higher output through lower interest rates and higher price, and hence higher output, lower productivity supply side equilibriums.

Bifurcation of short and long run. Cyclical accelerators work when y in quantity of money equation is unfixed. In the long run they affect prices only.

"In the IS-LM model with a Keynesian labour market, income and the interest rate are determined by the dominant simultaneous satisfaction of the equilibrium conditions in the commodity and money markets, the income so determined yields the amount of labour employed [via the employment function], and given the productivity of labour and the wage rate, yields the price level."

Money has an unemployment rate. The employment rate of money serves to equilibrate the marginal efficiency of capital with the implicit returns to holding money - which is also the discount rate on future consumption. The lower the MEC, the higher the uncertainty, or the higher the deflation rate, the higher the unemployment rate of money.

Return= yield - carrying cost + liquidity premium

Velocity of money determines changes in liquidity premiums, which determine the relative price of liquid and non liquid assets.

In booms, liquidity premiums are low, so less liquid assets eg, property price increase. In contracting credit, liquidity premiums rise, so cash (deflation) and gold increase in price, while stocks and property face sudden reversals.

Of course, credit fueled investment changes the real yield on assets over the longer term, and the yields reflected in prices are expected yields. Hence the beneficiaries of a boom are mostly the investors during the subsequent bust, with the liquidity premium reversals, or 'reverse yield arbitrages'.

3 slips and spreads between lip (printing money) and cup (higher investment): 1) liquidity and interest rates due to liquidity traps 2) Debt interest rates and the marginal efficiency of capital due to fluctuating capitalization factor, or equity risk premiums 3) the marginal efficiency of capital, or required earnings yield, and the prospective yield on capital assets.

In booms, net demand for liquidity increases, while net return in capital falls, which creates an inherently unstable dynamic. Interaction effects with the real economy, and monetary policy to manage liquidity conditions, may sustain the boom.

In busts, negative feedback between tightening credit and liquidity conditions, asset prices, demand for investment, consumption and employment. Recursive debt-income deflationary process could be triggered, including unemployment, depression and deflation.

Note 47

"Experience" is the framework through which the subjective experience of objectivity is reclassified and understood as the objective description of subjectivity. Hence "experience" is not a thing to be experienced - it is a manner of speaking.

Through "experience", experience itself is made into an object. The coincidence of thought and experience?

It is informative as it's use implies knowledge about what this relationship between the 2 categories consists. But it is information that only relates to the way in which it is used. Is it possible to understand why it is used in this way? What would that question consist in?

In being used this way, the object which is material is not the object being referred to in experience. It becomes the experienced object.

The application of that categorization to reality presupposes that it fits that description.

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The oxymoron of relation being subjective - without anything to relate to.

And of objectivity being the relation of fact to itself, and the negation of a relation.

Self-Quotes 1

Cash is the best antidote to ignorance.

The possibility of meaningful negation marks the representation of a category, and hence the starting point of philosophy.

Reality is like water; it cannot be sliced. Theory is like ice, malleable but static.

Thoughts on Singapore

In Singapore, the core cultural and the operational principles are pragmatic, but the form of political organization is authoritarian. Therefore free market principles are embedded within a heavily centralized form of political organization, which is socialist in some respects and liberal in others.

The political economy is market and externally driven. The constellated organization of social and political institutions are centrally controlled, bound together by developmental imperatives and social compacts grounded in culturally-sourced perspectives - pragmatism over ideals, merit over participation, and the emphasis of the individual in private over public spheres. The social system has been particularly effective in establishing merit over social class in the determination of social mobility.

The moral authority of the state remains absolute and unquestioned, as the state remains the vanguard; it determines the identity of the nation; which is constitutively pluralist, syncretic and porous to external influence - a major virtue in an open port city with a large migrant population.

Social control is exercised through a variety of state mechanisms backed by legislature and force; including the education system, national service, the mainstream media and civil rules against public disorder. This is backed by social norms which are in alignment with democracy-negating principles, which exist in a mutually conditioning relationship with the state.

The success of subtler forms of control open the space for greater freedoms within the boundary conditions established by the functioning of the state. There is freedom of movement; economic freedom; freedom of religion; freedom for political debate within non-ideological parameters; and positive freedoms of access to services and excellent public goods delivered by a clean and competent state.

What is traded off, then, is the flourishing of the individual in public life, as well as the celebration of individual initiative and inventiveness in the broader social and cultural life of the country - the concept of a society in collaboration with the advancement of human frontiers through an expanding life.

Thoughts from Rumelt & Soros

Stay with the uncertainty.

Useful Work comes from embodying fundamental insights through a refactoring of perception. Specialize in work where the ability to produce re-combinations to develop new systems and frameworks is optimal; combinations create value, and re-combinations sustain it.

Imagine doing the work everyday. What would you thrive in?

Understanding of a business is in essence an understanding of the ways in which the product adds value to the value chain of the customer. Effective FCF businesses are about competitive strategies (built around competitive advantages) to optimise the business process and the product around the buyers criterion of value. Moats are created by low cost, differentiation, or focus (segmentation).

At the Industry level, axis of segmentation, axis of competition and innovative disruptions mutually condition each other to give rise to operating environments for businesses. Businesses with durable competitive advantages build chain links, relationships, hard to replicate products and processes that confer cost or value advantages.

4 axis of business positioning: cost, quality, time, ease of access. A business can be profiled in terms of its location within these 4 axis.

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Reflexivity: a paradox

Market prices are determined by expectations.

Yet the expectations themselves are reflected in prices which creates a new set of expectations based on these prices.

This is due to two reasons:

1) uncertainty creates reliance on collective expectations as a reference point for the formation of expectations

2) price influence the fundamentals by changing real economic activity, and hence the conditions in which the expectations are played out

Hence a proper set of expectations would endogenize the effect of the change in expectations on the fundamentals and the expectations.
Through backward induction, a uniquely determined convergence point may be found.

Fundamentals > expectations > expectations > fundamentals > etc.

3) the paradox of uncertainty (random events which cannot be represented through a probability distribution): expectations depend on the future, but the future is uncertain

Note 46

Development is driven by the needs, aspirations and abilities of human capital; the producer is the vanguard of development.

We embody a society where the producer consumes as a function of the developments required to unleash the productive capacity, the development of a community of producers as consumers.

In a static society, that is, a society which consists of non producers, where the fundamental driving force is not the will to produce as a living creator, yield and interest rates would tend toward zero, as capital is accumulated and demographic and productivity growth stagnates.

The high savings rate, the manifestation of an actual example of social organisation, results in a high capital asset, low yield economy.

Macroeconomic imbalances are society's way of adjusting the conditions of supply and demand to each other, and therein a given form of social organization. The adjustment process is the macroeconomic system.

Global imbalances renders the domestic mechanism - the macroeconomy as a tool of social adjustment - impotent. It exacerbates domestic systems of social organization that creates global imbalances. These are not inherently unhealthy, but a fundamental tension is created, which is resolved one way or the other.

What is required are more opportunities for social and political change and arbitrage, a more diverse and flexible kind of domestic society and its institutions, in order to preserve the society as a unit.