Belmont Club

The Open Future

“To live will be an awfully big adventure.”

To paraphrase Charles Dickens, every age is in its own peculiar way ‘the best of times, the worst of times’.  His famous literary curtain opens upon a scene “so far like the present period” that the same paradoxical adjectives applied to every time and place.  We are always living through some equivalent of the French Revolution; the difference merely being that they may never make a Broadway musical about our life and times.

That we live in the best of times is proved, according to the Cato Institute, by that almost everything — except “the highly distorted healthcare, education and housing markets” — is cheaper than ever before.  “Consider two common kitchen appliances: the microwave and the refrigerator.”  In 1979 a microwave oven cost 61 hours of average American wages to buy.  Today it can be had for six.   A 13 cubic foot refrigerator took 75 wage-hours to obtain in 1979.  Now one can go and buy it for 36.

We live in an age of miracles. Reusable rocket boosters, genetic engineering, additive manufacturing, artificial intelligence and true robotics.  In 2005 it was reported that “for the first time in recorded history, poverty rates began to fall in every region of the world, including Africa”.  The World Bank notes that only 10% of the global population are below the absolute poverty limit and, if present trends continue it will reach zero by 2030.

But this magnificent historical vehicle is rolling along unbalanced, on one set of wheels.  The refrigerators, microwave ovens, cell phones and cars now so cheap were made by private enterprise whose falling prices are responsible for nearly all of this growing global prosperity.  The side of the car which runs on the square wheels of politics is not nearly so progressive and is the main source our ‘worst of times’.

The best places are full of ordinary people.  The worst are the land of giants. In Castro’s Cuba the City of the Future is stuck in 1959.  ISIS, more ambitious than Castro, hope they will soon reach the 8th century. Turkey’s Erdogan, who is less ambitious, will settle for 1945. “Turkish President Recep Tayyip Erdogan, who is pushing for constitutional changes that would turn Turkey’s political system into a presidential system expanding the powers of his office, has cited Hitler’s Germany as an example.”

For some, even in the West, the future is the New Deal.  In 2015 the US government’s 2015 share of GDP was larger than even its WW2 peak.  While nearly 70% of this vast sum was spent on social security, Medicare, veteran’s benefits, education and housing, it had little effect on income equality.  After government has spent trillions of dollars on transfer payments the Brookings Institute warns that American society was dividing in two.

The American upper middle class is separating, slowly but surely, from the rest of society. This separation is most obvious in terms of income—where the top fifth have been prospering while the majority lags behind. But the separation is not just economic. Gaps are growing on a whole range of dimensions, including family structure, education, lifestyle, and geography. Indeed, these dimensions of advantage appear to be clustering more tightly together, each thereby amplifying the effect of the other.

Government appears to have outsmarted itself. Noam Schreiber and Patricia Cohen of the New York Times  argue the tax system — the preferred liberal instrument for promoting income equality — was in fact the biggest cause of disparity.  They wrote that “the very richest are able to quietly shape tax policy that will allow them to shield billions in income.”

From Mr. Obama’s inauguration through the end of 2012, federal income tax rates on individuals did not change (excluding payroll taxes). But the highest-earning one-thousandth of Americans went from paying an average of 20.9 percent to 17.6 percent. By contrast, the top 1 percent, excluding the very wealthy, went from paying just under 24 percent on average to just over that level.

This outcome should come as no surprise. For years it has been known that the more powerful government is, the greater is the potential of the rich to corrupt it.  The notion is so old it even has a name. Regulatory capture “is a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating.”

A recently disclosed email exchange involving George Soros and Hillary Clinton paints an atmosphere so pervasive that political pros hardly notice it at all, any more than fish are aware of water or land animals are conscious of air.

In an email to Clinton, Neera Tanden, head of the Center for American Progress, recounted a conversation she had while seated next to Soros at a dinner sponsored by the liberal major donor club called Democracy Alliance.

After Tanden informed Soros that she had worked for Clinton during her bitter 2008 campaign for the Democratic nomination against Obama, Tanden wrote that Soros “said he’s been impressed that he can always call/meet with you on an issue of policy and said he hasn’t met with the President ever (though I thought he had). He then said he regretted his decision in the primary – he likes to admit mistakes when he makes them and that was one of them. He then extolled his work with you from your time as First Lady on.”

The duality of our age — as befits the worst of times and the best of times — is captured by the circumstance that Forbes’ candidate  for the most profitable industry for 2016 is health technology which reflects the fact there is often more money in getting people out of a hole than filling it in the first place.  The big need to help people escape from the “benefits” of the Affordable Care Act underlines the ambiguous nature of progress in the age of Obama, and indeed in every age.

Trouble and opportunity seem to come in pairs, in the same way that Omar Khayyam and Hassan-i Sabbah, the father of the Assassins apparently attended the same school. It is interesting to speculate in which direction the arrow of causality runs between two sides of the same coin: the list of the 10 emerging technologies for 2015 and its negative counterpart,  the 10 biggest risks facing the world for the same year.

While on the surface all the 10 biggest opportunities appear to spring from the private sector and all the 10 biggest risks seem to originate in governance its hard to resist the observation that both aspects of the future are twinned.  It is as if civilization were in a race between creativity and destruction and we had no choice but receive equal doses of each, both hunted and inspired by ourselves.

For individuals the deadlock of the present is broken by choice.  The phrase “Happy New Year” recognizes an opportunity to make a decisive turn and be one thing or the other not somewhere in between, or worse, in both places at once as one usually is.  In Dickens’s world Sidney Carton could gamble between the best of times and the worst of them.

Miss Manette … I wish you to know that you have been the last dream of my soul. In my degradation I have not been so degraded but that the sight of you … has stirred old shadows that I thought had died out of me. Since I knew you, I have been troubled by a remorse that I thought would never reproach me again, and have heard whispers from old voices impelling me upward, that I thought were silent for ever. I have had unformed ideas of striving afresh, beginning anew, shaking off sloth and sensuality, and fighting out the abandoned fight.

The reason why the miracles of today’s world are paradoxically built on aggregate individual risk instead of on the controlling efforts by the political few to defend the status quo and preserve faltering economic systems is because the world makes sense even if we don’t completely understand why.  We just have to trust it and the politicians could never do that. As Naseem Taleb once put it, “trial and error is freedom.”

But in the collective part of the world, the future is generally regarded as an opportunity to justify the past; and each new year offers the chance to prove how right you were. When the president said in 2011 speech that “the future rewards those who press on. I don’t have time to feel sorry for myself. I don’t have time to complain. I’m going to press on,” he might just as well have said, “I’ve chained the wheel to the course.”

Whether that is brilliant or foolish the future will show.  Among the truly lost there is never a “last dream of the soul” but there was always another glimpse of yourself in the mirror.

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The War of the Words for $3.99, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres
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