Wednesday, April 23, 2008

Globalism

GLOBALISM IS merely the policy of ensuring that the prices of goods and services, worldwide, are determined by actual costs, with economic entities determining for themselves how much something is worth to produce or consume.  This system assumes that the only objective value of anything is its cost, although of course everyone can subjectively value something over another.  There are no externally imposed value judgements other than money, which is the only measurement of value.

This system has consequences.  If something is too expensive to buy, they consumers go without, and unfortunately one of those commodities is now food in many places in the world, including even wealthy Japan, where rationing is now being imposed.  Under globalization, food has no more intrinsic value than does windshield wiper blades.
People are also considered commodities, and under globalization, they are to be able to move freely where labor is needed, even it it destroys the culture of the source or destination country.  And if labor is not required of individuals, due to local cost structures, then they will go without work.

Seeking lower costs, many nations are now purchasing their military weapons overseas, even though in wartime, spare parts, or strategic supplies of all kinds may not be available.

Removing all barriers to trade and movement of peoples may become a disaster, but we must not give into the temptation to erect total barriers to these movements, which proved to be an economic and social disaster in the 1930s.

Globalism has some goals that we ought to consider seriously.  Lower costs and greater access to goods are usually considered good things, while trade and travel can help build global solidarity.  Some regions may have certain expertise, or access to raw materials, making trade highly desirable.  These goals of globalism are admirable.  Show me a country that has no trade and migration, and that country will most likely be a harsh dictatorship, whose subjects are starving to death.

Access to good and services at reasonable prices, and prudent use of global resources are what can be termed the 'first-order' consequences to globalism.  'Higher-order' consequences, due to changes in prices, or changes in the rate of change of prices or availability are often ruthlessly exploited; indeed, some investors claim that taking advantage of these higher-order economic effects is the best way to reliably make lots of money.  Clearly, those who play second-order economics provide liquidity to primary markets, but a little goes a long way; certainly there is far too much attention, time, and talent paid to these kinds of financial markets.  Whereas primary trade is ideally a win-win situation for those involved, financial markets tend to be closer to a zero-sum game.  The stock market ought to be primarily the domain of well-to-do retirees, and not a general obsession!  When you move away from real goods crossing borders to secondary markets, you descend into the cave of darkness:  where changing opinion, unreliable perception, and shadowy appearances rule, rather than facts. Rather than supplies, expertise, raw materials, transportation costs, and so forth controlling the system, instead we have public relations and disinformation having the greatest effect, which is quite an irrational system.

Such a system tends toward chaotic behavior, with prices fluctuating wildly, for no apparent reason, and goes against the stated purpose of globalization.  Perhaps those who are intelligent and know how to game the system will be successful; but should ruthless competition, where the winner takes all, ought to be the goal of globalization?  I think not.

Others use globalism as an excuse for moral license.  Recall that by definition, globalism considers money to be the only objective value; not truth, not goodness, and not beauty. Whereas individual producers and consumers have their own values, these only indirectly affect the system.  This is the great flaw in libertarian thinking:  some people are willing to produce defective goods for short-term profit, even though the long-term consequences may be severe. Just consider the tainted animal feed from China.  A libertarian may think that the 'invisible hand' will correct the system of such abuses, but that system is mostly reactive, and the damage has already been done.  The doctrine of Original Sin tells us that such abuses are to be expected, even if they are not the general rule. 


In engineering, the control of dynamically changing systems has been intensely studied, with many lessons learned.  Predicting how the components of a system interact with each other, and how they collectively react to external disturbances, is in general an extremely difficult problem unless the system has been carefully designed.  Systems are classified as either linear or non-linear, with the linear systems being tractable, while the non-linear ones are not. Linear systems respond to external influences in a predictable way, and we can say that all of the components of the system respond harmoniously, even more so if they are properly tuned. Non-linear systems are chaotic and unpredictable; minor changes in one part of the system cause devastating consequences elsewhere.

That we use the musical terms 'harmony' and 'tuning' here is no coincidence.  Linear systems theory is classical music theory.  Only when a string on a harp, for example, responds in a linear way when plucked, will it sound musical.  Multiple singers or instruments will only sound together in harmony if certain rules of linearity are followed, otherwise they will be dissonant and unmusical. Human voices must be trained, and musical instruments must be very carefully constructed and operated before musicians are free to make music, otherwise noise results. This is not a limitation of the freedom of musicians, for a great variety can result, and well-trained musicians in a group can improvise at will, while the whole group remains harmonious.

Generally, music abhors second-order processes — nonlinearities — and goes to great lengths to eliminate or tame them.

It should come as no surprise that musical training was a great priority in classical education in both the West and Far East.  The theory is that harmony in music gives children an appreciation for harmony in society.  A harmonious society is not static and changeless, but rather reacts to changes in a predictable, smooth way, with each part reinforcing the other. Even though each component of a harmonious society is independent, the linkages between the components acts to reinforce the whole; like each independent string in a well-designed violin produces a pleasing sound through the agency of the whole instrument.

A well-tuned and harmonious system of globalization will eliminate as much as possible anharmonic or higher-order effects which are found with excessive speculation and 'gaming the system'.  The two most common methods of doing this in linear systems theory are damping and inertia; damping is friction, and can be identified with regulation and taxation, while inertia can be identified with long-term contracts and established institutions.  Both are absolutely necessary for a harmonic system, but must be used prudently; I would prefer inertia (or tradition or conservatism) as being more in keeping with the good society, while damping can easily lead to a totalitarian state.  It ought to be noted that globalists want to eliminate both; however, the lack of inertia in general can lead to chaos, possibly leading to the destruction of the system, while the lack of damping can prolong the effects of disturbances indefinitely.

Another factor absolutely required for a harmonious musical instrument or a harmonious society is a solid norm, and forces which restore the system back to normality.  In a violin or piano, this norm is the bridge, and the force is the tension on the string;  with too little tension, musical notes cannot be produced, while too much tension will break the string.  In society, the norm is fixed on various standards and morality, and social disapproval and pressure ought to be proportional to deviation from the norm in either direction.  Obviously conditions can and even must fluctuate, but are there forces in place that will tend to bring them back in line?  This ought to be contrasted with our current system that encourages unlimited freedom within bounds, with harsh criminal penalties when those bounds are crossed, which is a highly non-linear, and therefore chaotic system.  The proper tension in a musical instrument or an economy is a matter of prudent tuning.

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