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Guest Post: The Problem With Centralization
Submitted by John Aziz of Azizonomics
The Problem With Centralisation
Nassim Taleb slams the European project. Perfect timing to counteract the Nobel Peace Prize nonsense.
The European Union is a horrible, stupid project. The idea that unification would create an economy that could compete with China and be more like the United States is pure garbage. What ruined China, throughout history, is the top-down state. What made Europe great was the diversity: political and economic. Having the same currency, the euro, was a terrible idea. It encouraged everyone to borrow to the hilt.
The most stable country in the history of mankind, and probably the most boring, by the way, is Switzerland. It’s not even a city-state environment; it’s a municipal state. Most decisions are made at the local level, which allows for distributed errors that don’t adversely affect the wider system. Meanwhile, people want a united Europe, more alignment, and look at the problems. The solution is right in the middle of Europe — Switzerland. It’s not united! It doesn’t have a Brussels! It doesn’t need one.
The future is unpredictable. In economics some decisions will be lead to desired results and others will not. Real-world outcomes are ultimately impossible to predict, because the real world is chaotic and no simulation can ever model the real world in precise detail; the map is not the territory.
Centralisation concentrates decision-making. Centralisation acts as a transmission mechanism to transmit and amplify the effects of centralised decisions throughout a system. This means that when bad decisions are bad — as inevitably happens in economics — the entire system will be damaged. Under a decentralised system, there is no such problem. Under a decentralised heterogeneous system, mistakes are not so easily transmitted or amplified. Centralisation is fragile.
And central planning is mistake-prone. Central planners are uniquely ineffective as resource allocators. Free markets transmit information; the true underlying state of supply and demand. Without an open market to transmit price information, central planners cannot allocate resources according to the true state of supply and demand. Capital, time, and labour are allocated based on the central planner’s preferences, rather than the preferences of the wider society.
These two factors taken together mean that centralised systems tend to be both fragile and mistake-prone. That is a dangerous — and unsustainable — combination.
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If you want to go back 200 years, to 1776 when the American colonists were throwing off the yoke of the Holy English Emperor and were looking for a new model for their American experiment, perhaps you should look to what they actually based their experiment on- the Ancien Régime of the Old Swiss Confederacy when the 13 Cantons threw off the yoke of the Holy Roman Emperor with the Peace of Westphalia in 1648.
The propaganda which serves as the mythological foundation of American Exceptionalism (to both its proponents and detractors in the US) is such a bastardization of well documented history that even the indoctrinated elementary school euro-sheeple can expose it as more holy than a well-aged Emmentaler.
The Problem with centralization is IMF, aka, I made fools.
Sorry to correct you but IMF actualy stands for "Incompetent Mother Fuckers".
Chair woman La grade (?) would be pleased, indeed! As she officially proclaimed and pronounced that IMF is actually I Must Fail!
Now you know....
the people near that center don't see a problem
wrong thread, delete
Europe has rejected free market capitalism. The Lisbon Treat defines Europe's economic system as "social market economy", another name for soft fascism, a branch of socialism.
The economist Ludwig von Mises showed in 1920 [1,2] that since a socialist economy destroys price information via government intrusion, the myriad of participants in the economy are unable to make a fully rational calculation about true profit and loss. Any economic activity that operates at a loss cannot be “sustainable”, a concept the left loves to scold us about, yet cannot really grasp.
Taking another approach, the Nobel economist F.A. Hayek showed that a national economy had such an immense myriad of dynamic economic relationships that no single committee or bureaurcracy, no matter how smart or how well staffed, could possibly know enough to direct prices or production levels. His Nobel Lecture [3] was entitled The Pretence of Knowledge. Hayek had previously used this idea as the basis for a very thorough article [4] on the subject, “The Use of Knowledge in Society.”
When these two different withering critiques of socialism are combined, it is easy to see that not only is it dangrously foolish to think that economic decisions can successfully be made by government, but that competing bureaucracies will invariably react to the consequences of intrusions in the marketplace by each other. It would be like trying to control the height of waves on a lake by measuring them from the back of a boat circling in its own wake. Socialism is also morally bankrupt, for it demands we accept the premise that we can each live at the expense of others, despite how this violates the Commandments that forbid coveting and theft. [1] Economic Calculation in the Socialist Commonwealth by Ludwig von Mises http://mises.org/pdf/econcalc.pdf [2] Why a Socialist Economy is "Impossible" by Joseph T. Salerno http://mises.org/econcalc/POST.asp [3] The Pretense of Knowledge http://mises.org/daily/3229 [4] “The Use of Knowledge in Society,” American Economic Review, XXXV, No. 4; September, 1945, pp. 519–30. http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Fti...I'd actually argue it's rapidly becoming clear this is a HARD form of fascism, with clear advantages for supra-national corporations. The "socialism" isn't really there anymore, except for france where everyone's fixated at the pension age (big fucking deal), and there it's going to be short-lived once responsibillity is finally transferred. EVERYONE is paying for the black hole finance solution of funding bankrupt banks.
Another corporation-big government orgy. Long Live the EUSSR. Long Live the New World Order, where people are commodities, and economies are playground of psychopaths that live far, far away, up a mountian.
great.
Good idea in theory, poorly executed in practice in its current iteration. EU got way too large and went way beyond the boundaries of what it should have attempted to do including a common currency without true fiscal union. That was a huge complaint even at the time the euro was being considered in the early 90s.
The best thing about the EU is that it has worked to prevent widespread conflict and yet another large-scale war between France and Germany. Been about the only metric it which it has succeeded. Europe averaged a major war about every ~30 years so from the start of the early 19th century until today.
Lack of war in Europe is down to NATO and 'occupation' forces of British and US in Germany. (Not actually occupation, but defence forces against USSR 'possible agressions'.)
Nothing at all to do with EEC or EU.
The next war will be caused by EU/eurozone differences.
Kumbaya!
Switzerland has had its share of issues too not the least of which is its larger neighbors (now that they are facing increasing economic difficulty) are no longer so keen on allowing their citizens and corporations to park income & assets there tax-free.
This article was a lazy post where the author (who i normally like) cherry-picks a few quotes, mentions Switerzland as an alternative, and then posts.
Switzerland, like Monaco and Luxemburg and a large part of the UK
is a Tax-dodgers haven, for the rich and powerful multinationals -
that's all.
It has nothing to do with government or politics.
Switzerland has always been a Tax-dodgers haven
and has therefore enjoyed the Status of "neutrality"
just like Monaco and Luxemburg, some parts of the UK
Dubai, Qatar and the List goes on.
London is supposed to be the financial centre of "Europe".
but the bankrupt UK is not even part of the Euro - zone.
That's the real problem !
the whole corrupt anglophile monetary system of the US and UK
(Libor) corruption, manipulation, manipulation and tax-dodger Havens like Switzerland,
and their whole corrupt manipulated ponzi financial markets.
so let's get your facts right before posting crap about Switzerland
or the EU ! (obviously most of you have not got a clue !)
wr;)
Yes, let's get your facts right before posting crap about Switzerland.
While London has been busy trading debt and derivatives, Geneva & Zug have been busy trading actual commodities (unfortunately while the Gnomes were delving too deeply into Slav mortgages). Switzerland is hardly a tax or regulatory haven for the multi-nationals, who much much prefer their EU based Dutch Sandwiches and Double Irishes, and park their cash in Bermuda, Bahamas, the Channel Islands, or any of the other low maintenance/low cost of entry jurisdictions.
There are a couple of tax advantageous structures employed in Switzerland- particularly the marriage of a Lichtenstein Trust (since Lichtenstein has the most sophisticated body of Trust Law in the world), with a Swiss corporation, but these are expensive, exotic, and way too sophisticated for someone whose knowledge of Multinational Tax Structures is apparently derived entirely from euro-MSM propaganda.
Luxembourg, on the other hand and after a good smoke, is a tiny centuries-inbred clan (which puts West Virgina to shame) of career civil servants, bankers, lawyers, and accounts (thieves all) whose entire raison d'etre is to serve their TPTB masters in an unholy Franco-German alliance.
LOL you are making my day...+1
Though one detail: why "unholy"?
The atheist (or an least agnostic) reincarnation/resurrection of a Holy Carolingean oligarchical alliance...
LOL - so the French having their own power structures is ok, same with the Germans, but any alliance or understanding is "not good"?
I care more about the practice, than the theory of alliance. I live in the domain of the evil Coop-Migros oligopoly, so while I can still thankfully buy a chicken for dinner on the roadside, I have to remain vigilant against their encroachment, not merely against the smaller competition in food production & distribution, but against the oligopoly's horizontal expansions- into banking, housewares, diesel, et al.
Is even easier:
Centralization reduces competition. That's why the already rich like it.
Of course, there is no doubt that centralization into central monopolies leads to worse and worse decisions that eventually destroy that system, since it can not adapt ... SO WHY DOES IT PREVAIL IN THE SHORT-TERM? The answer is that human societies are actually controlled according to the principles and methods of organized crime. The long processes of secret centralizations are behind the public centralizations. Throughout history, what mattered was militarism, being able to kill people and destroy things, as the realities which controlled later events. I repeat the truisms that are relevant to this context: those who are most able to bribe, intimidate and assassinate become those who control civilization. All the rest of the stories about centralization are various versions of the bullshit about that.
The European Union project was basically a conspiracy of the banksters and their buddies. Obviously, that is working out fantastically for them! They get to gamble with other people's lives. If the banksters win, they become more wealthy and powerful. If they lose, then other people suffer, while the banksters go on through to get to gamble again. Since the majority of people have already been almost totally brainwashed to NOT be able to think about the murder system, which is behind the money system, therefore, those people are practically incapable of understanding how real politics works, and therefore, totally ineffective against the tiny minorities that herd them around.
The basic problem is that our whole public civilization is based on totally bogus bullshit about itself, which enables those who operate behind the scenes to have a free hand. Instead of beginning with basically correct understandings that human realities are always organized lies, operating organized robbery, the public discourse begins with elaborate bullshit in the form of old religions and ideologies. The actual realities are that the history of military conflicts make War King, which then morphed to make Fraud King. The imperatives that successes in war were based on deceits, and that spies were the most important soldiers, continued to create the public states, and drove their integration.
The European Union was merely the latest phase of those who are the best at being dishonest, and backing that up with violence, driving events in ways that benefit them, in order that they can then do even more of that! Meanwhile, the vast majority of the public continues being brainwashed to think of politics in ways that are totally backwards, and which therefore backfire very badly for them.
The history of politics has applied human ecology, through political economy, which has actually and always been directed by militarism, which was based on the principles and methods of organized crime. Simply on the largest scale, the money system depended upon that, and paid for it, through the feedback loops of the combined money/murder systems. Thus, European history covertly created states controlled by the banksters, and then the banksters worked covertly to force the integration of those states into a larger unit, which would still be controlled by the banksters, for their benefit.
Meanwhile, the vast majority of Europeans went along for the ride, being brainwashed to believe in bullshit, and therefore, not being able to resist. Indeed, most of the opposition always is telling them they should be better sheep, and indeed, that is what most of them end up being. The problem is that it is practically impossible to get the basic truth about politics into the public. The facts that human beings always act as robbers in their environment, and that they always are creating stories about that which must be more or less different system of lies, are what is behind EVERY REALITY.
Thus, the centralization of power works because there is secret centralization, through the triumphs of applied organized crime, while the rest of the system is made up of people who are brainwashed to not understand that, and therefore, not able to effectively resist. "Democracy" does not work because, in order to work, it would have to be, first and foremost, the democratization of the death controls. That real addressing of the murder system by the public could then make it possible to have transformations of the money system, and the debt controls, through the public democratic processes. However, obviously, what happens instead is that the murder system is operated in secret, and therefore, the money system ends up being privatized. The people who benefit from doing that, namely the banksters and their buddies, gain more and more power and wealth, and thereby direct where European civilization goes. The majority of people continue being "led" by people who specialize in brainwashing them to believe in bullshit that only works to keep them under control. However, that process of the triumph of lies, backed by violence, which leads to a centralization of power, IS the triumph of LIES, which means that the public policies become more rigidly insane, and unable to adapt to reality, since they were never fundamentally based on reality, but always based on the biggest bullies' bullshit.
The European Union is the latest wave in the endless series of social disasters caused by human ecology and political economy controlled by runaway triumphant frauds, backed by covert, and then overt, force. Since the majority of Europeans have already been brainwashed to not understand that, and to not want to understand that, but rather want to believe in various ridiculous religions and old-fashioned ideologies, the banksters and their buddies still basically have a cake walk. The ONLY significant enemy of the banksters' systems is that they ARE BASED ON LIES, and that too much triumph of those lies then becomes its own worst enemy. However, the balancing of the real rates of social robbery fails to function, because the public are political idiots, that do not understand their reality, and have been conditioned to not want to understand.
And so, around and around this goes, with the banksters' frauds prevailing, except when they finally prevail TOO MUCH ... and meanwhile, most of the public never understands, and never wants to understand, what was really going on ... Such is the basic human ecology in Neolithic civilization, a vast herd of people who act like brain dead sheep, controlled by a small herd of people that act like vicious wolves, while the public discourse is about being better sheep, while the private discourse is about being better wolves. Those two realities are kept separated, and so, over and over again, the people are led through to be fleeced and slaughtered, because those people are unable, or refuse, to do that for themselves better.
European development of Neolithic civilization's social pyramid system was particularly hyperbolic, since, after the intense history of wars in Europe, they were able to export that system of lies, backed up with violence, all over the world. After that European invasion of the rest of the world, then the spoils of that system flowed back into the European system, which is why the European banksters are still supreme.
In that context, the American revolution, and the about first hundred years of American history, were a series of temporary escapes from the growing global domination of the mostly European international banksters, until those off shore banksters were able, through the means of organized crime methods, to take back control of the American political process, and finally recreate the kind of American central bank that they wanted, and could control, namely the Federal Reserve Board.
The main trends happening throughout the world today are the attempts to consolidate the hegemony of the international banksters, who were more based in Europe originally, than anywhere else, into a global system of elites that control the whole world through triumphant frauds, backed by the force of the governments that they effectively control. The travails of the European Union are various aspects of that process, being advanced by various facets of the globalized Neolithic civilization social pyramid system, based on lies and violence, to maintain ignorance and fear, so that the sheeple can be controlled and exploited by the wolves.
Nothing new, other than the basic advancement of science and technology, driving everything to be astronomically amplified by many orders of magnitude, and incidentally, along the way, creating things like this Internet, which makes it theoretically possible to communicate publicly in ways that were never possible before. However, none of that communication seems to be making much difference, so far, since almost all of it is just astronomically amplified bullshit, still primarily serving the interests of the biggest bullies, the banksters, and their buddies. The basic truth that human reality IS and MUST BE, some system of organized lies operating organized robbery is deliberately denied and suppressed, so that those actually doing that the best, secretly, can achieve what they want to accomplish, without enough effective opposition to make much difference ... so far ...
Actually, the problem isn't centralization but centralization as a response to problems caused by decentralization, and in this case between $600 trillion to over $1.2 quadrillion in unregulated derivatives.
Actually, the solution isn't centralization or regulation, since the problem originates from centralization. Free markets will always regulate themselves. What we have now is NOT a free market.
Who made the sick banking sector possible? Look no further than the fed = centralization. People like you make the problem worse by offering the problem to solve the problem.
http://www.section9department17.com/1/post/2012/10/switzerland-see-its-future-in-cooperation-with-china-not-eu.html
Ueli Maurer & SVP are always for beefing up the armed forces to keep the foreigners out. In regards to the development of Swiss-Chinese cooperation the Glencore IPO is more telling (with the joint listing in HK) and the the focus on growing participation of Chinese interests in the global commodity trade and access to Chinese markets.
"...which allows for distributed errors that don’t adversely affect the wider system.."
this is precisely why big is not beautiful and centralization is not efficient - except to efficiently propagate error, terror, and corruption - to say nothing of totalitarianism from control freaks....
whether of systemic risk, or the folly of placing all your eggs in one basket, decentralization, limits, and smallness are the buffers from bullies and catastrophe - tbtf is a mind control meme with no basis in truth.....
thank you john for pointing out this fundamental truth of human organization.
I vote for a change to the constitution that places cities at the level of states and states at the level of the Federal Government and open source software at the top and which operates at all levels of the US human government. Cities each has a constitution as well as the States. The Federal government has no employees except for military personal that are to push the button when all the states agree to have the world end. No offensive military at all will exist. But anyhow to make this short, by making the center of power as close to the people as possible and as fair as possible the software systems that control the nation and citie governments will be by and for the people. Got to invert that pyramid if you expect to survive.
Those rolling hills in autumn, in Pennsylvania, have got to be clutterd, with the souls of freedom!
I can hear, Paul Revers' ghost calling!
Paul Revere rode thru Massachusetts. For histories sake.
Switzerland is an aberration, you canot have many of those. "I 'll hold your money while you guys fight" =
it is also a country financed by the funds from despots,, corrupt leaders,tax evaders and otherwise criminals in the planet. You cannot model anything after them!!!!!
Switzerland is a geographical vault. Nothing more or less!
end of story
True about decentralization in Switzerland I guess. I like it that they have referenda about important decisions. But they have one currency. (And also lots of money from around the world in their banks).
I agree with this article that the Euro has been a disaster and especially the montairy policies of the EU and ECB. But, that is all part of the plan.
I also agree that diversity of Europe is its strength. The EU want to turn Europe into a 'unification sausage'.
Too bad they cant be like Americans pretend there are no problems, put everyone in jail or pretend they win wars when they lose them :)
An updated version of "Leopold Kohr´s - The Breakdown of Nations" is due.
But:
-Can it be done? - Yes.
-Will it be done? NO!
As for 'americans', the group is all, their perception is perverted.
"Europe was great". What? There was no Europe as implied by the 'american' author. Europe was an unapplied concept that started to take dominance when the new world was discovered, with people starting to refer to people through their geographical location.
People living in the americas were americans while people living in Europe were Europeans. Not even like the crap served today by 'americans' who live to the US who refer to themselves as European-american, african-american, asian-american. Race and racism is central to 'americanism' so that is what you get here.
There was no Europe as implied by the 'american' author and kept lasting up to WW2, when for example, the russians were termed as being asians, because Russia is for its very large majority, located in Asia.
Today, Russians are considered Europeans due to the racist pressure imposed by 'american' indo -Europeans.
Not only this 'american' author placates a concept that had no ground in the times it refers but he also shamelessly follows, as the proud 'american' he is by switching to a country. China was messed up due to centralization. He cant even keep the measure of it by claiming that asia was messed up due to centralization.
As usual with 'americans', it is all about congregating around a lie, the thicker it is, the better it is as it gives better sense of belonging to members that will be sworn to defend the lie to the death.
Now lets reapply what this 'american' does but in the reverse.
China (a country) was messed up because of centralization.
Lets keep the country approach: England was messed up because they were centralized. France was messed up because they were centralized. The Netherlands was messed up because they were centralized. Germany, a late comer to centralization, stated to be messed up when they centralized. But wait, I thought Europe was great. So what? So 'americanism'...
The list can keep coming. And it tells a different story. European countries centralized, and they centralized even faster under the imperium of 'americanism'.
Let alone the story of the poster child for 'americanism', the US of A, that was a success story of centralization.
'Americans' are in so an urge to dismantle the tools they have been using in order to prevent anyone else to benefit from them, they are sputting out this kind of articles.
Stealth is bad. Humanity has to stop stealing. That 'americans' are the bigger stealers of them all explains the urge, they now possess everything and would lose promoting stealth as automatically, they are left with nothing to steal while the others are left with all to steal from 'americans'.
The State? Same story.
Centralization? Same story.
As the saying goes, the last in closes the door.
European Citizenism has been around since the earth was flat and sun revolved around the earth.
Friends, Romans, Countrymen lend me your ears was reborn in the Carolingian Court
The real estate was downsized a bit by the Holy Roman Emperors
But the message was reiterated by Urban 2nds call for Jihad
Against the same horde who made a mockery of the Qin Dynasty's Maginot Line
Constructed a millenia earlier
while Chinese Citizenism and federal centralization was being foisted on the Chu, Han, Qi, wei, Yan, and Zhao
Before the father of Yuan crushed Russia into the ground and back in time a hundred years-
Russia was a part of Europe and geography delimited the Eurasian divide at the Urals
Then the barbarians and later the Ottoman citizens redefined the Eurasian divide by the extent of their dominion
During the heyday of American Citizenism the divide was moved to Berlin
Today Schrödinger plots Russia's location on the basis of ambient temperatures and the price of gas
60 to 70% working in banking/finance. At the front of exponential printing, there are few better places to be. Out of the knee of the curve I would not be so sure. Makes sense to me they decided fix exchange to the euro.
The problem with central planning is that it is inevitable some central planner will decide that job is easier if he can only eliminate a few million people over here and over there.
When every individual is armed and trained as part of a national militia it is only prudent to let the citizens feel they are part of the decision-making process for any decision that doesn't have a national implication. Anyone on here would know how fast that arrangement could fragment into chaos if any fragment felt sufficiently disenfranchised.
Tyler,
If you had mentioned the quote in your headline came from Nassem Talib, no one would have read the story.
Centralization is inherently destructive. Think about it. Every individual has his own interests, his own likes and dislikes, and his own values. Therefore, no matter WHAT a central authority chooses, almost everyone becomes bored and demoralized, because very few can achieve what interests them or what they wish to achieve.
Centralization is not only fragile --- it is inherently destructive. Very obviously so.