Thursday, November 7, 2019

Sebastsian Junger: 2008 Crash Was Because US De-tribalised

Back in the day, when we were tribes, writes Sebastian Junger in Tribe: On Homecoming and Belonging, we had a natural solution to bad behavior, such as "tribe members who steal more than their fair share of meat or other resources." It was "group pressure. Not only are bad actions punished, but good actions are rewarded."

But now we have rampant cheating, from Medicare/Medicaid fraud at "around $100 billion a year" to insurance fraud at "$100 billion and $300 billion a year[.]"
All told, combined public- and privtae-sector fraud costs every household probably around $5,000 per year -- or roughly the equivalent of working four months at a minimum-wage job. A hunter-gatherer community that lost four months' would face a serious threat to its survival, and its retribution against the people who caused that hardship would be immediate and probably very violent.
And then there is the real-estate crash and banking bailout and Great Recession of 2006-08. These "illegal and unwise banking practices, cost American shareholders several trillion in stock losses and is thought to have set the American economy back by a decade and a half.

So the solution is to go back to the Stone Age and revive the pro-social face-to-face practices of the hunter-gatherers.

I don't think so, and the fact that a good little boy from elite Boston thinks this should be is, I think, one of the major items in the Bill of Indictment against our ruling class.

Because the whole basis of modern electoral politics is loot and plunder. Vote for me and I'll give you free stuff. (Hello Liz! How yer doin' gal?) If you look at our welfare state and the current financial system it is designed to be used as an instrument of power by the educated mandarin class, the people who have been to the right colleges -- Wesleyan in the case of Junger -- and got the right credentials and intoned the correct responses.

And, being as Sebastian Junger is a best-selling author he'd better toe the ruling-class line or forget his best-selling publishing deals and all the publicity that good little boys get from the fake media.

See, back in the day, Americans belonged to mutual-aid societies like the Masons and the Elks. These voluntary institutions run by their members provided a whole array of social services from employment referrals to job help when moving to a new town to "lodge doctor" medical plans to life insurance, death benefits, and looking after members' widows. They were incredibly pro-social and enacted the "group pressure" on defaulters that Junger praises in the hunter-gatherers.

But then the Progressives came along and replaced the mutual-aid system with government pensions and welfare. And I'll bet you that college-educated Sebastian Junger doesn't have a clue about the old system that florished in the 19th century and to which "everyone" belonged.

Instead what we now have is a full-scale loot and plunder operation that we call the welfare state. Scamming the system is the point, as you can see from the behavior of, e.g., the government employee unions in California.

Oh, and about the real-estate crash. That was a direct result of government policy that forced banks to loan to borrowers with small-to-none down payments and bad credit. Because redlining back in the day.

Anyone that knows anything has read Walter Bagehot's Lombard Street written after the failure of a bank on Lombard Street in London in 1866. Here is Bagehot's big idea.
  1. Loans must be adequately collateralized so that, in the event of failure to service the loan, the value of the collateral will be sufficient to liquidate the loan.
  2. Borrowers must service their loans -- make their payments -- and be seen to be doing that.
Unless these two requirements are met You Got Trouble, as the song says.

But the US government set up a system that violated both these provisions and they directed the government subsidized mortgage twins, Fannie Mae and Freddie Mac, to have a minimum percent of low-quality loans -- low down payment and low credit -- in their portfolio.

But here was the problem. Your pension plans and other regulated financial institutions were only allowed to buy top-rated bonds. How to enable them to purchase the Fannie/Freddie bonds with low-quality loans in them? The answer was derivatives, that attempted to neutralize the extra risk and thereby "create" highly rated financial instruments. Only it all fell apart in the market meltdown of 2006-08. Sorry Charlie.

Oh, and then Little Ben Bernanke choked and didn't think he had the authority to bail out Lehman Brothers.

Yeah, that's one thing that the hunter-gatherers were big on. Punishing lack of courage.

Do you see what I am saying here? I am saying that it is bootless for Sebastian Junger to complain about widespread cheating and fraud, everywhere from welfare to financial institutions.That's because the whole system has been designed by our modern ruling elite to be a scam. So that they could Divide and Conquer amd distribute the loot to their supporters.

And the worst thing is that we had institutions that replicated the pro-social world of the hunter-gatherer era. But Progressives "canceled" that world. And why? Because they wanted to be the Big Boys. They wanted to rule the new world. And they needed to be able to offer loot and plunder to the voters in order to win political power.

The point about the market economy is that it encourages pro-social behavior. It encourages people to offer products and services that other people want and at prices they are willing to pay. It encourages people to trust anyone that is trustworthy. And it requires everyone, every day, to align their behavior with the price signals of the market.

But the fact is that almost everything in the political sector is involved to some degree in allowing people to scam the system. Because marking your life to market is really hard. And, as Junger says, you need "group pressure" to keep that kind of stuff under control.

Now do you see why I call the left, all of the left, a Great Reaction? Because they have this woolly idea of how wonderful things were back in the day. But socialism is neo-slavery, the welfare state is neo-feudalism, identity politics is neo-tribalism, and so on.

What hope is there when bright young chaps like Sebastian Junger don't have a clue?

No comments:

Post a Comment