Socially Constructed Belief Is Indistinguishable From Insanity

One philsophical claim is that definitions of social phenomena such as mental illness, justice and morality are socially constructed and reflective of power rather than truth. But more fundamentally, social construction has been insane as well as sane, false as well as true, and therefore it is difficult to discern whether a social construction is true or false. Since social construction has questionable validity and deliberation depends on social construction, political systems that depend on deliberation are as likely to result in false as well as true conclusions.

Every age is rife with delusion. Charles MacKay wrote Extraordinary Popular Delusions and the Madness of Crowds in the early 19th century and he details mass delusions such as the south sea bubble, tulipmania, witchcraft and superstitions. Because of the financial importance of such delusions in the stock market, the financial delusions have been studied more often and more carefully than others as in Charles Kindleberger's Panics, Manias and Crashes but mass delusions are not limited to market phenomena like tulipmania. Political scientists such as Irving Janis have been fascinated by delusions of small groups in making decisions, which Janis termed groupthink, but delusions are as characteristic of large as well as small groups. Nazi Germany, 19th century imperialism, racism and slavery were widespread delusions that had the support of entire societies.

Academics have been especially prone to systematic delusion, such as the belief that Stalin and Pol Pot were social reformers and not mass murderers, that Mao was a kind man who was successful in developing the Chinese economy (a belief stated by the leading economists of the mid-20th century in a 1972 New York Times article penned by John Kenneth Galbraith). As well, delusional academic belief such as in centralized economic planning, Keynesian economics, Freudian psychiatry, the use of econometric models to predict gross domestic product, belief in welfare as a cure for poverty, and belief in urban planning as a way to improve cities look quaint to us today, but these were beliefs actually held by twentieth century academics.

What does this say about deliberation and democracy as ways to govern society? Democracy is an information sharing device. People know best what they want. They are prone to mass delusions that they later regret, but democracy is the best way available to permit the state to reflect their intent. But given the likelihood that the public deliberates irrationally and with limited foresight, democracy ought to be limited. Not by autocratic or totalitarian rule, but by anarchy, or more accurately, markets. Markets perform better and are less prone to perceptual error than are state institutions becuase investments are easier to withdraw than laws are to change. Markets are more flexible than government. Thus, democracy ought to be limited where possible and replaced by markets.

Second, democratic decision making processes ought to be as easily reversible as possible. Since deliberative decisions are often erroneous, it must be possible to reverse them once errors are detected. State institutions must be made flexible. But in large units flexibility is absent because it is most difficult to change laws.

Third, the outcomes of deliberative processes should be voluntaristic when possible. The principle of voluntarism is consistent with basic precepts of fairness. Just because a majority prefers one way of doing things it may not be so for all. If it is not necessary to force a minority who thinks differently, then to be fair and to best incorporate information about the intention of the majority, force should not be used. To the extent force is used, democracy's ability to integrate information from all citizens is curtailed and democracy's value is limited. De Tocqueville wrote of the danger of a tyranny of the majority in America. The danger of majority tyranny can be limited if democratic decision making utilizes cafeteria criteria. Choice among democratic rules results in more information about the public's preferences than a unitary rule. Why one social security plan when there can be several or many? Why one set of federal rules when there can be a multiplicity? In the last century the ability to express diverse rules was limited by the economic need for a unitary market, but today computers can integrate diverse regulatory systems. Corporations choose to do business in 100 countries. Why should 50 states pose a problem?

There are many instances where government programs need not be forced upon all Americans. For example, the draft was mandatory until the 1970s. Its compulsory nature caused upheaval. After military service was made voluntary in the mid 1970s, the controversy subsided. Why not apply the voluntaristic principle to social security, regulated cable television service and regulation of financial disclosure?

Fourth, democratic institutions ought to be as local as possible. Representation of public insanity is best accomplished when those who represent the public understand their insane idiosyncracies. Experts are generally wrong, as per the twentieth century fields of economics, sociology and psychology, so experts are of little use to public deliberation. Moreover, public insanity is likely to vary regionally and in other ways. A Congressman who represents 37,000 citizens is better able to understand their oddities than a Congressman who represents 600,000 citizens. Although the American population has nearly doubled in my lifetime, the number of Congressmen remains at 435. The population of the City of Los Angeles today is about the same as the entire population of the United States in 1790. In 1790, there were 106 Congressmen representing all of America, today there are the equivalent of six or seven representing Los Angeles (it is difficult to tell the exact number because of gerrymandering). Bruce Bartlett has suggested increasing the number of Congressmen. How about increasing the number of states so that state governments can be more responsive to public needs? Why must upstate New York be conjoined to New York City, or Los Angeles and San Diego conjoined to San Francisco?

The social construction of reality is frequently wrong and therefore ought not to be cast in stone. But the principle of twentieth century deliberation resulted in outcomes of deliberative processes being cast in stone and then aggressively defended by "progressives" and "radicals" from being changed. A 21st century paradigm would require greater flexibility, greater localism, greater suscepitibility to change.

Open Letter to Herbert M. Allison, Jr., Chairman of TIAA-CREF, Re Threat of Future Stagflation to Account Holders' Funds

PO Box 130
West Shokan, NY 12494
May 19, 2008

Herbert M. Allison, Jr.
TIAA-CREF
730 Third Avenue
New York, NY 10017-3206

Dear Mr. Allison:

I hold a TIAA-CREF account through my employment at the City University of New York and have done so since 1991

TIAA-CREF should implement a commodity index fund and a foreign-currency denominated interest bearing fund. Doing so would fulfill your responsibility to be prudent to your account holders. I say this despite current short-term overheating in the commodities markets.

The 1970s were a period of significant challenge to TIAA-CREF because the stock market declined while inflation accelerated. This caused pensioners to receive reduced payments at the very time that inflation posed high costs. TIAA-CREF has a fiduciary duty to take action to anticipate the realistic risk that Federal Reserve Bank policy will again cause stagflation. Conversely, it is imprudent to pretend that stock and interest bearing investments provide all of the diversification that investors need when the Federal Reserve Bank has expanded the money supply by eight percent annually for the past two and one half decades.

To be prudent, you ought to diligently consider the risk of stagflation and take action. Both the stock market and interest bearing dollar denominated accounts are ultra-risky in a stagflationary period, yet those are the only alternatives TIAA-CREF currently has on offer. By failing to diversify into alternative currencies you are shooting craps with shareholders’ accounts. Inflation-indexed bonds are a crap shoot as well because interest rates may skyrocket at the very time that inflation goes up.

Sincerely,


Mitchell Langbert, Ph.D.

Cc: Chronicle of Higher Education

Correction in Gold and Oil Prices?

Is there going to be a correction in gold, oil and other commodity prices in the coming weeks? It seems like a distinct possibility.

Conservatism, Surgical Radicalism and the Four Party System

The current popular political debate occurs between two kinds of conservatives. The first, called liberals or progressives, argues that the current framework of American democracy, created during the Progressive era and New Deal and now roughly 100 years old, ought to remain in place. In their view introduction of additional institutions, plans and programs like national health insurance along the lines of earlier ones is needed, but today's framework is a good one.

The second kind of conservatives, popularly so called, are not comfortable with the New Deal project---Social Security, government regulation of industry, and large-scale federal social welfare programs, but do not want to repeal these programs either. They follow Edmund Burke, who argued against radical in favor of gradual change. Burke felt that gradual transformation of institutions while protecting liberty was a better path than the French revolution's authoritarianism, political correctness and executions. Rather, he preferred the American revolution's restraint.

Today's conservatives retain Burke's dislike for radical change. But the institutions that exist in America today were radically imposed during the first half of the twentieth century. They did not evolve logically from the market economy of the nineteenth and they did not reflect economic exigencies of the the early 20th century. Rather, they reflected the imposition of a political vision of specific rent-seeking special interest groups and agenda-drive political radicals.

Burke wrote in Britain in the late eighteenth century when barbaric institutions had gradually evolved into more democratic and liberal forms in Britain and to a lesser degree in Europe. Burke did not write about what to do to unravel the harm that the French revolution had caused. Rather, he wrote about how Britain and other liberal nations might best cope with change. This is not the problem that faces America today. An excessive application of Burke is inappropriate. America has had some radical change imposed while partially retaining liberal institutions. Conservatives who wish to create a new liberalism need to be surgical radicals. They need to undo New Deal radicalism's derangement of older versions of liberalism. The derangement has taken a number of shapes, to include social security, urban renewal, welfare, the Federal Reserve Bank, excessive application of eminent domain, and excessive regulation of business. Such radically instituted habits ought to be undone conservatively but radically.

Progressivism and the New Deal were radical upheavals. They rewrote American institutions that were not very old. A radical conservatism is one that is pragmatic, and asks that if radically imposed institutions fail that they be undone. This is a surgical radicalism that devises new liberal institutions where Progressivism and New Deal social democracy have failed.

Conservatives who wish to retain Progressive institutions, who are loyal to the old Federal Reserve Bank and its old-fashioned economic planning, high levels of government spending and support for business are Progressives. Conservatives who wish to retain New Deal institutions like Social Security and the National Labor Relations Act are social democratic liberals.

Perhaps Americans should think in terms of a four-party rather than a two-party system. Perhaps there should be a surgically radical conservative party; a Progressive-conservative Rockefeller-Republican Party; a New Deal Party; and a social democratic radical party. Of these, the surgically conservative radical party would be the most radical, liberal and progressive.