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Guest Post: The Master Narrative Nobody Dares Admit: Centralization Has Failed

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

The Master Narrative Nobody Dares Admit: Centralization Has Failed

All centralized systems, open and shadow alike, act as heavy taxes on the society and economy. This is why they cannot compete with the forces of networked decentralization.

The primary "news" narrative may be the failure of the euro, but the master narrative is much, much bigger: centralization has failed. The failure of Europe's "ultimate centralization project" is but a symptom of a global failure of centralization.

Though many look at China's command-economy as proof that the model of Elite-controlled centralization is a roaring success, let's check in on China's stability and distribution of prosperity in 2021 before declaring centralization an enduring success. The pressure cooker is already hissing and the flame is being turned up every day.

What's the key driver of this master narrative? Technology, specifically, the Internet. Gatekeepers and centralized authority are no match for decentralized knowledge and decision-making. Once a people don't need to rely on a centralized authority to tell them what to do, the centralized authority becomes a costly impediment, a tax on the entire society and economy.

In a cost-benefit analysis, centralization once paid significant dividends. Now it is a drag that only inhibits growth and progress. The Eurozone is the ultimate attempt to impose an intrinsically inefficient and unproductive centralized authority on disparate economies, and we are witnessing its spectacular implosion.

Centralization acts as a positive feedback, i.e. a self-reinforcing loop that leads to a runaway death spiral. Centralize the entire banking sector into five corporations and guess what happens? They buy access to the highly centralized power centers of the Federal government. Like the HIV virus, centralized concentrations of capital like the five "too big to fail" banks disrupt the regulatory "immune response" that was supposed to control them.

This feedback between centralized capital and centralized government cannot be controlled by more rules and regulations--the two partners in domination will subvert or bypass any such feeble attempts with shadow systems of governance and control of the very sort we now see dominating economies and governments around the globe.

Centralization itself is the disease, and devolving power to decentralized nodes based on the transparent power of the Web is the cure. The authorities and Elites attempting to maintain their centralized fiefdoms of power are desperately trying to control the technology of the Web, but disruptive technology that offers stupendous improvements in efficiency and productivity cannot be put back in the genie's bottle. The authorities can try, but they will fail.

The analog to the printing press is but one example. The centralized authorities of the Holy Roman Empire tried to limit the citizens' access to the Bible and other books, and as their failure became evident they ramped up their oppression to extremes: printing the Bible was a "crime" punishable by death.

Despite their almost total dominance of society and the economy, the centralized authorities failed to limit the technology of printing and distributing books.

Centralized authorities face an impossible double-bind: if they limit access to the Web, their economic growth is doomed, and thus eventually so is their power as the impoverished and oppressed populace rises up to overthrow their failed Elites. But if they enable widespread access to the Web, then the populace eventually realizes the centralized authorities and Elites are burdensome hindrances to liberty and prosperity.

The highly centralized Elites controlling China are engaged in a desperate campaign to constrain the Web in China to what they deem supportive of their regime. The "Great Firewall of China" reportedly has tens of thousands of employees monitoring and censoring content. Hyper-nationalistic rants are "enabled" to spread virally, while inquiries into official over-reach and misconduct are quickly suppressed.

You can't fool Mother Nature for long, and the Chinese are trying to tame forces akin to Nature.

We already saw this dynamic play out with the Soviet Union. In the former U.S.S.R., networked computers were understood to be a serious threat to political control by centralized authorities, so access was strictly limited. Scientists and mathematicians in the U.S.S.R. were relegated to working with paper and pencils because this was "politically acceptable."

Denied access to transformative technologies, the economy and society of the U.S.S.R. withered and eventually expired.

China has played a very quick game of catch-up based on a unique set of factors:

1. An abundance of low-hanging fruit to be picked, both domestically and globally. If you watch documentaries filmed in China in the early 1980s, villagers were harvesting bamboo by hand and the village "theater" was one black-and-white television. By the time I first visited China in 2000, there was already a glut of cheap TVs and massive overcapacity in TV manufacturing.

2. An abundance of mobile global capital to fund the initial industrialization.

3. The ease of stealing/copying existing technology. It's always easy to steal/copy existing technologies: strip down the motorbike to its parts, machine-tool a factory to make the parts and voila, you are soon producing "Yamaka" motorbikes in quantity (and drinking "Starbuck" coffee).

But once the low-hanging fruit has been picked, you have to develop new technologies on your own to keep growing. The U.S.S.R. was able to keep up by stealing technology for decades, but once the pace of innovation slipped from centralized labs (where spies could be highly effective) to decentralized networks of innovation, the game was over: stealing technology became inefficient and/or impossible on the necessary scale and timeline to keep up.

The Web also feeds social innovations. Centralized authorities move with glacial trepitude because any change, no matter how modest, steps on the exquisitely sensitive toes of some vested interest, protected fiefdom or favored Elite. So while the centralized Elites and their apparatchiks in government are detailing more regulations of the buggy-whip industry, the entire industry is bypassed by social and technological forces beyond the control of the Elites and their flunkies and factotums.

The forces of centralized authority will not relinquish their power easily. In Egypt and many other quasi-feudalistic nation-states, the Empire of centralized Elite authority is striking back, often via the "shadow" systems of governance and control they established behind the thin veneer of legitimacy created by their organs of propaganda.

But all centralized systems, open and shadow alike, act as heavy taxes on the society and economy. Their attempts to retain control will fail because of the conundrum outlined above: if they succeed in stifling the Web and the powers of decentralization, their economy will wither and their impoverished people will eventually tire enough of poverty to rise up and crush their oppressive Elites.

If they allow access to the Web and the innovation-driven power of decentralized networks of knowledge, collaboration and information, then their political and financial control will be eroded. Either way, disruptive technologies will dismantle their power base and wealth.

Here in the U.S., our Central State and Financial Elites are also desperately trying to maintain their control, even as their control strangles the economy and social innovation. Being controlled by five "too big to fail" banks and six media corporations is like being dominated by the buggy-whip industry and the horse-manure-collection industry.

The way forward is to dismantle the five banks and six media companies and allow 500 banks to compete in a transparent market but be unable to buy other banks or other companies. If there are 500 banks that are forced to compete in a transparent marketplace, it will be very difficult for those corporations to purchase the political power the TBTF banks own.

The Federal Reserve is the ultimate centralized horse-manure-collection industry. Like the Catholic Church trying to control Gutenberg's printing press, the Fed is terrified of transparency, liberty, competition and the technological forces of networked decentralization. Though those in power cannot dare contemplate it, their highly centralized institution and the chokehold of its authority are already doomed.

Centralized control leads to stagnation and poverty, which leads to the overthrow of oppressive political Elites. If the centralized Elites attempt to corral the Web to serve their own narrow self-interests, it will overflow their narrow channels and erode their power. Either way, their attempts to control disruptive technology will fail. Their only choice is which path to destruction they wish to tread.


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Thu, 06/21/2012 - 12:15 | 2547550 reader2010
reader2010's picture

The Soviets failed, do did the Amerikkans.  It looks like only the Chinese go whoring around.

Thu, 06/21/2012 - 12:20 | 2547575 NotApplicable
NotApplicable's picture

Dear CHS,

It only "fails" if you're clueless enough to believe the narrative.

Meanwhile, it is so insanely successful, you cannot even discern "its" true existence.

Thu, 06/21/2012 - 12:46 | 2547663 narnia
narnia's picture

Its true existence is nothing but force initiated & perpetuated by hubris filled psychopaths.  

Thu, 06/21/2012 - 12:51 | 2547687 dlmaniac
dlmaniac's picture

China is at the early stage of collapse. US is entering the main cycle now. Greece is at the final climax.

Be patient. In due time all central planning morons will get to the (bitter) end. 

Thu, 06/21/2012 - 14:37 | 2548148 FreedomGuy
FreedomGuy's picture

Ahhhh. A kindred soul. Men desire power (over other men) more than sex or food. They create vast alliances to get it and then keep it. Historically they always succeed because liberty takes reason and makes no grandiose utopian promises.

The one advantage is that central planning always fails. It cannot work and never ever produces the promised results for more than a moment. Events teach fools and we will have to see for the 237th time the abject failure of central planning.

Thu, 06/21/2012 - 15:52 | 2548471 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

" liberty takes reason and makes no grandiose utopian promises."

fantastic, I need to share this with other sleeople

Thu, 06/21/2012 - 12:53 | 2547707 slewie the pi-rat
slewie the pi-rat's picture

risk0n has failed

time for risk0ff?

centralization has not failed, charles; it has simply priced itself outa thePeople's ability to pay for it

you can go w/ the drama tho chs;  why stop now?

Thu, 06/21/2012 - 13:20 | 2547794 narnia
narnia's picture

I suppose Enron didn't fail either, right, it just priced itself out of its ability to meet its fraudulent obligations?  

Thu, 06/21/2012 - 14:15 | 2548068 Bicycle Repairman
Bicycle Repairman's picture

Forget about ideology.  Just oppose centralization regards of the justification.

Thu, 06/21/2012 - 19:42 | 2549052 slewie the pi-rat
slewie the pi-rat's picture

hey, narnia!

centralization is not a corporation

it hasn't failed any more than decentalization or stability/no big change along this "axis" has won

if a centralized plantation (business) fails,  decentralized share-cropping (businesspersons) might come to the land;  then a centralized corporate farmer may come; if they shell that out, some families might buy pieces and give it a try with their credit which would decentralize this same land, again

besides, if enron had stayed centalized and not gone "off-balance" [sheet] decentralized at the same time perhaps the actual owners of that BALANCE SHEET might have been better protected from their hotshot predator-bankster top-gun criminal management who, if you reacall rolled the assets to the other sides of the wink-wink 'understandably' unaudited stuff that was enron-decentral

thanks for the interest!  you are certainly right about the fraud, but the plantation owners, the share-croppers, the corporate interests and the family farmers may all be fraudsters

if people trust you, you can rip them off by fraud;  if people don't trust you, you hafta use a gun...

cenralization as a style of governance has actually priced itself out of thePeole's ability to pay in many places:  what many pieces on zH are about, imo

if a doctor charges you $700 for a $100 procedure it is not fraud if you are dumb enuf to agree to it and s/he performs the procedure

it is simply over-pricing and stupidity which allows the transaction to go to completion and to billing

and even at that we aren't even close to centralization's "existence" which you perhaps see as due to some evil or something?

i hope you and i and others here choose to lead a decentralized existence b/c that is how many wonderful individuals develop, imo;  but that is personal, not collective, by definition, isn't it, narnia?

not b/c everyone who does it is good and eveyone who doesn't is bad;  decentralization is not a religous doctrine;  to most...

if you pay close attention to zH you will find hubris-filled psychopathic decentralization-favoring types here, also;  they actually pretend they are normal and try to blend right in...

myself, i know that fascism can operate thru either and my concern is to point out the overcharging for the shit governance we get world-wide

we would still  be getting reamed even at 1/2 the price   see ya!

Thu, 06/21/2012 - 14:54 | 2548192 Alea Iactaest
Alea Iactaest's picture

N/A wrote, "It only "fails" if you're clueless enough to believe the narrative."

This is so accurate. Reminds me of Bluto (Belushi) in Animal House ranting, "Over? Did you say over? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!"

Otter: Bluto's right. Psychotic, but absolutely right. We gotta take these bastards. Now we could do it with conventional weapons that could take years and cost millions of lives. No, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part.

Bluto: We're just the guys to do it.

D-Day: Let's do it.

Bluto: LET'S DO IT!!

Bluto for Fed Chmn, bitchez! Let the Ponzi continue...

Thu, 06/21/2012 - 12:49 | 2547613 TruthInSunshine
TruthInSunshine's picture



Do you remember a guy that's been
In such an early Red Shield song?
I've heard a rumour from Ground Control at Waterloo
Oh no, don't say it's true


They got a message
from the Modern Money Mechanics
"We're happy, hope you're happy too
We've debased
all we've needed to
Sordid details following"


The shrieking of printers is killing
Just pictures of dead presidents
in synthesis and they
Ain't got no real money and they ain't got no bread
But they're hoping to kick but the planet it's glowing




Ashes to ashes, funk to funky
We know that The Bernank's a junkie


Bernank's strung out in Krugman's Alien Invasion dream
Hitting an all-time Jeremy Siegel perpetual secular bear low


Time and again he tells himself
He'll stay clean tonight
But the The Money Masters are following him
Oh no, no


Bernank's stuck with his VIP friends of the NYFRB
"We're happy, hope you're happy too"
One more flash of Monetization
but no smoking printers (CTRL+P)

Thu, 06/21/2012 - 12:55 | 2547720 potlatch
potlatch's picture



most excellent sir.  You have inspired me to place the vinyl of same on ye olde turntable, and am now jamming to some nihilistic Bowie.

Thu, 06/21/2012 - 14:23 | 2548109 MacGruber
MacGruber's picture

Interestingly enough, looking at the headlines on Yahoo Finance (news from the sheep herd), it looks like the failed central planning narrative is finally coming to light.

"U.S. Economy, Market Now Facing a Monetary Cliff"
"Bailouts Can’t Save Europe, Failures Must Go Bankrupt: Jim Rogers"

Seems reason may be seeping in if for no other reason than the Fed needs another excuse for banker free lunches.

Thu, 06/21/2012 - 12:15 | 2547555 Abraxas
Abraxas's picture

It's too late now anyway.

Thu, 06/21/2012 - 12:16 | 2547558 Aziz
Aziz's picture

Duh. Has failed. Has always failed. Always will fail.

Thu, 06/21/2012 - 12:31 | 2547610 notbot
notbot's picture

Good article: Central planning doesn't work in complex systems/economies.

Those who don't understand this prob don't read ZH and if they did, they'd just focus on "unfair outcomes" and the need for a "benevolent hand" to redistribute, as if that could exist without huge negative unintended consequences even with the best of intentions.

You're preaching to choir.

Thu, 06/21/2012 - 16:21 | 2548618 BigJim
BigJim's picture

Queue LTER with one of her accusations of 'Randian' sociopathy.

Thu, 06/21/2012 - 12:16 | 2547560 garypaul
garypaul's picture

Sorry but the internet can be and has been heavily censored, controlled, etc. I'm finding there's not much freedom there anymore either. So your whole argument is fluff.

Thu, 06/21/2012 - 12:16 | 2547561 Atlas Shrugging
Atlas Shrugging's picture


Thu, 06/21/2012 - 12:24 | 2547564 Ghordius
Ghordius's picture

Come on Charles, the article is quite good, but the introduction with the "failure of the euro"? What exactly is that?

If you, like many, conflate the EU and the EZ, then please be reminded that the EU has a budget of roughly 1% of the 27 member's GDP. Does not sound like centralization, to me. In fact, it would be a budget's deficit rounding error, in some other places...

If you, like many, think that there is something sinister in the EUR, then please remember that a break-up would create several smaller beasts of the same species. An improvement? Only for bankers keen on new business...

Thu, 06/21/2012 - 12:46 | 2547656 Lebensphilosoph
Lebensphilosoph's picture

If you, like many, conflate the EU and the EZ, then please be reminded that the EU has a budget of roughly 1% of the 27 member's GDP. Does not sound like centralization, to me.


Non sequitur. The policies and actions of the member states are concocted in Brussels and determined by the Eurocrats. The relatively small size of 'EU budget' is irrelevant when the member states are mere puppets of this clique. Every state's budget is an EU budget.

Thu, 06/21/2012 - 13:25 | 2547800 i-dog
i-dog's picture

Exactly. Ghordius likes to build straw men to deflect from his Politburo ... which concocts treaties and regulations to be implemented by the bureaucrats (and budgets!) of the member states. LOL.

His argument is akin to saying that the decisions agreed at Bilderberg are irrelevant because its budget is only 0.00000001% of western GDP.

Thu, 06/21/2012 - 13:45 | 2547887 falak pema
falak pema's picture

I'll defend Ghordius. The polit buro is the governments of the big EZ countries, not the commission; aka Merkozy of past. THe brief of the Euro commission is only valid in areas where responsibility has been delegated by the nation states who control it. There are checks and controls along the lines. But...the Euro parliament is not used enuff as the governments do not want to delegate national controls to a supra-national parliament. We are in a botched up union which is a half way house. Its a tower of babel which can only improve if we have a political will to create a european political space. Like the USA. Who knows what the future generations will want but the young generations are very pro Euro Union, except for the extremists. 

Nothing shows us that this pseudo political union will not one day be more controlled by parliament. But this means that the national parliaments lose their power. COmplex game. We are not there. I think that the events in the pipeline will push us there. A thousand year history is not easy to efface. 

As for our philosopher from Brit land who is proud to say he is ENglish like John Bull, he has no place in this debate and should eat his scones in Windsor and go ra ra during the Henley boat race for English goats and uber-sheeple. 

This statement of his is not true in areas outside the brief given to the union :

The policies and actions of the member states are concocted in Brussels and determined by the Eurocrats... 

Not true. ONLY so when the governments agree to share these prerogatives. 

Thu, 06/21/2012 - 14:59 | 2548222 Alea Iactaest
Alea Iactaest's picture

Death of the Euro? Like Mark Twain said, "Rumors of my death have been greatly exaggerated." Likewise the Euro.

Exclusive: Secret EU summit document shows first step to banking union

A classified draft of next week’s EU summit conclusions is the first step on an emerging “roadmap” to a banking union, pooling debt via eurobonds and political union via EU treaty change over the next 10 years


Fri, 06/22/2012 - 06:14 | 2550142 Lebensphilosoph
Lebensphilosoph's picture

This statement of his is not true in areas outside the brief given to the union :

The policies and actions of the member states are concocted in Brussels and determined by the Eurocrats... 

Not true. ONLY so when the governments agree to share these prerogatives.


Yes, it is true. And national goverments are all run by local Eurocrats.

Fri, 06/22/2012 - 06:44 | 2550160 Ghordius
Ghordius's picture

your statement does not make sense to me. either the directives come from Brussels (not true) or from the national governments (true). if the national governments are run by "local Eurocrats" - by which I think you mean pro-european, then this generally means that the electorate voted for pro-european parties (true) insofar that those are the parties that form a majority in parliament. Or the national governments are not pro-european, but not anti-european enogh to propose an exit from the EU.

I sense some garbling in your thoughts - perhaps it's me

Here I've posted an EU DEMOCRATIC PRINCIPLES "cheatsheet", let's see if it clears your mind

Fri, 06/22/2012 - 11:53 | 2551340 Lebensphilosoph
Lebensphilosoph's picture

your statement does not make sense to me. either the directives come from Brussels (not true) or from the national governments (true).

Get out of here. Just how naive do you think I am? European directives come from national governments as much as Manchukuo directives came from a Manchu government, or DDR directives came from the Volkskammer. European politicians have their orders, their ideology and their state, and that state is Europe. They think as Europeans, talk as Europeans, and act as Europeans. In what particular location and at what particular gathering of these servants of the European state these decisions are formalised and enacted in writ is irrelevant to the political facts.

if the national governments are run by "local Eurocrats" - by which I think you mean pro-european,

No, I mean Eurocrats.

then this generally means that the electorate voted for pro-european parties (true) insofar that those are the parties that form a majority in parliament. Or the national governments are not pro-european, but not anti-european enogh to propose an exit from the EU.

WHat has this to do with anything? As I told you before: do not mistake me for a populist and a democrat. I place no value whatsover in the votes of universal suffrage and the opinions of the mob.


Fri, 06/22/2012 - 06:36 | 2550158 Lebensphilosoph
Lebensphilosoph's picture

As for our philosopher from Brit land who is proud to say he is ENglish like John Bull, he has no place in this debate and should eat his scones in Windsor and go ra ra during the Henley boat race for English goats and uber-sheeple.

And the racial alien proclaiming European statism and appealing to the indoctrinated opinions of the mob for the support of his political fantasies is a true thinker, and an independent one at that.

Its a tower of babel which can only improve if we have a political will to create a european political space. Like the USA.

Improve indeed. Like the USA. The USA. There you have it: fat, stupid, indoctrinated, mindless, belligerent, uncultured, undifferentiated, bastardized brown ants crawling about the queen's nest, consuming, slaving and fighting at her behest. What you hate is Europe. What you want is the destruction Europe. Admit it.

Fri, 06/22/2012 - 06:54 | 2550183 GeneMarchbanks
GeneMarchbanks's picture

Your last paragraph reveals everything about what you want not falak. This is exactly how you wish to frame the discussion. In parallel a great synopsis of what Brits really think about their Yankee 'friends'. Just beautiful, really summed it all up.

Fri, 06/22/2012 - 12:01 | 2551366 Lebensphilosoph
Lebensphilosoph's picture

Falak wants Europe to follow the USA, the USA that is the very antithesis of Europe. That does lay Falak's intentions bare, whatever you have to say about it.

As for me, do you mean the destruction of that monstrous blight upon the face of the earth that is the United States of America? I absolutely want it. But at least I don't pretend I'm an American now, do I? I absolutely want it. That is merely a matter of good taste.

Fri, 06/22/2012 - 12:06 | 2551390 Ghordius
Ghordius's picture

very sad to read this - I really hope you mean the system, which is debatable, not the people

Fri, 06/22/2012 - 03:08 | 2550038 Ghordius
Ghordius's picture

ohhhhh... straw men building? i-dog, the EU works currently the way I wish. in a confederative manner. the "Politburo" you are hinting to is nothing else than the Council. some would prefer the elected EU Parliament to have a stronger role, I prefer the ministers of the 27 nations meeting and deciding - originating decisions. If this smacks you of a soviet system, fine, this means that you are against the current decentralization of the EU decisions. I prefer the nations to keep their sovereignty and to keep key decisions in the cabinets/governments of the single countries, to be challenged by their own parliaments, who have the last word on this.

you build the usual straw man that the British press likes so much, that "the bureaucrats" concoct treaties and regulations - that's pure bullshit & propaganda.

it's the governments meeting and deciding (sometimes in a meeting of PMs, sometimes in a meeting of FinMinisters, and so on), and then the EU parliament voting on it, and then the various national parliaments getting the last word. I repeat: in the UK, this propaganda has made sure that the average UK citizen does not understand that it's his parliament that get's the last word, and the British politicians are fine with hinting that's "the EU blabla". That's a UK problem of understanding.

btw, treaties? Now you have something against treaties? Are you serious? Look at this one and tell me what exactly you don't like. The UK is not partecipating, by government decision. The Czech government also passed. The Irish had a referendum on it and it went through. Note the differences in ratifications. Where is the dictat of the burocrats here?


;-) falak - I like it the way it is...

Fri, 06/22/2012 - 06:01 | 2550133 i-dog
i-dog's picture

LOL!!!! See if you can make head or tail of this gibberish emanating from the EU bureaucracy, and then explain to me how "all 27 national parliaments discussed this and then collectively [is that unanimously or by majority?] begged the EU Council to pass it as a Lex":

"2012/C 160/01: Opinion of the European Data Protection Supervisor on the proposal for a Council decision on a Union position within the EU-US Joint Customs Cooperation Committee regarding mutual recognition of the Authorised Economic Operator Programme of the European Union and the Customs-Trade Partnership Against Terrorism Program of the United States"

Should I look in Hansard for the debate in the House of Commons on this one? -- it seems like a pretty high priority for each of the 27 states:

"Council Decision 2012/281/CFSP of 29 May 2012 in the framework of the European Security Strategy in support of the Union proposal for an international Code of Conduct on outer-space activities"

Or how about this beauty -- it reads like something in which Mao's mates would have indulged:


And are you trying to convince me that the national parliaments of 27 states all debated this classic before begging the EU for action?:

"Regulation (EU) No 386/2012 of the European Parliament and of the Council of 19 April 2012 on entrusting the Office for Harmonization in the Internal Market (Trade Marks and Designs) with tasks related to the enforcement of intellectual property rights, including the assembling of public and private-sector representatives as a European Observatory on Infringements of Intellectual Property Rights"

C'mon, Ghordie ... You can't just keep making that shit up!!

Fri, 06/22/2012 - 07:49 | 2550178 Ghordius
Ghordius's picture

the debates in the British House of Commons are regulated by the British House of Commons. Since they are not interested in debating those regulations, there is nothing you or I can do. There are several cases of stupid regulations that were picked up by a government or a parliament and smacked down. the British House of Commons voted an ACT OF PARLIAMENT that practically passes through all EU legislation without comment. It's their will to do so and nobody can force them to do otherwise, this does not mean they have to.

It has been common practice of the UK governments and parliaments to close their eyes and blame "Brussels" for many things, but it's in their power to do otherwise and they have, from time to time.

Here a cheatsheet that might bring some clarity in this discussion

perhaps what makes the workings of the EU so difficult to understand is that it works like a confederation, something uncommon nowadays.

to explain this, imagine if the US states would form majorities in their proportionally elected legislatures that would then appoint (as head of state governments) governors that would also form the US Senate, which then would appoint a US Federal government that would be subject to approval or rejection by the elected congress.

In this case, the States would also have Libertarian, Socialist, Liberal, Conservatives and a few small Loonies Parties (because they would be elected with the proportional method which allows more than two parties sharing power), the governors would be dependent from a majority in the state legislatures, they would meet from time to time in Washington as the US Senate (or send their representatives), and give their directives. Their appointed 50 members US governing body (in EU: Commission) would then draft US Federal legislation according to the directives that would have to pass the approval of the directly elected Congress. Which then would be - because I'm describing an hypothetical confederation, not a union - still subject to a possible smack down in local application, by the State Legislatures.

this would be America if the States were organized the way the EU is. I'm not judging, just stating that the principles are different, and that they are best explained in the difference between an Union of States and a Confederation of Nations.

Fri, 06/22/2012 - 07:40 | 2550233 Ghordius
Ghordius's picture

to put it in even simpler terms, the EU system is only complicated if you think it as an Union of States. If you think it as a system where the members are Nations that don't want to lose their sovereignty - only trade off some parts on a temporarily basis that can be extended and without having to form an Union, then it becomes much more clearer.

The EU is a club of nations. Those nations have governments, and those governments call the shots.

This does not prevent the formation of a burocracy, but the only way to keep a burocracy small is to starve their budget.

This does not prevent stupidity, but the only way to keep stupid out of politics is to inform the electors better.

And all this and more is just the manifestation of political will.

Fri, 06/22/2012 - 07:55 | 2550238 Ghordius
Ghordius's picture

or even simpler and in the context of the article: the EU contries are quite decentralized and democratic

this does not prevent stupidity - it never has and it will never


btw, I hate 22'000 pages pieces of legislation. and this kind of idiotic legislative feats are a sign of our times, not limited to the EU (less) or the US (more). My argument in the whole preventative methods that can be used is this: only a government or a MegaCorporation (which usually draft them) has enough manpower to check if it's idiocy or not. The EU system allows exactly this - when used. Incomplete and slightly inadequate? Yes. Is there any better method yet? No.

Thu, 06/21/2012 - 12:20 | 2547571 FL_Conservative
FL_Conservative's picture

A lot of people acknowledge that every day....unfortunately that includes NO ONE within the central planner ranks.  Have you ever seen anyone vote themself off of American Idol?

Thu, 06/21/2012 - 12:24 | 2547582 carbonmutant
carbonmutant's picture

Who shot Twitter?

The whole network is down...

Thu, 06/21/2012 - 12:30 | 2547599 NotApplicable
NotApplicable's picture

OH NOES!!!!11!!

Thu, 06/21/2012 - 12:34 | 2547621 i-dog
i-dog's picture

What's Twitter?

Thu, 06/21/2012 - 12:42 | 2547647 carbonmutant
carbonmutant's picture

There are a lot analysts flying blind right now with out those tweets...

Thu, 06/21/2012 - 13:15 | 2547779 pods
pods's picture

Sorry, I was trying to upload an HD picture of Kim Kardashian's ass. 

Must be the file was too big?


Thu, 06/21/2012 - 12:25 | 2547588 LawsofPhysics
LawsofPhysics's picture

So all eCONomies and politics are local after all.  Now who would have thunk it?  What is this, obvious day on ZH?

Thu, 06/21/2012 - 12:30 | 2547603 NotApplicable
NotApplicable's picture

Sky blue. Water wet.

Film at Eleven.

Thu, 06/21/2012 - 12:31 | 2547607 cthulhu
Thu, 06/21/2012 - 12:52 | 2547633 potlatch
potlatch's picture

I hate to be an egghead, but Marx predicted, and Veblen parodied, and Baudrillard swooned over, and McLuhan poared over, these things decades and decades ago. The virtual, the symbolic, the hyper-real, the non-real, the "sumptuary," etc -- it is as old as the ceremonial bonfire:

Waste, 'expenditure without reason"

This is just basic.  If someone starts talking about "narratives," "perception," "politics, and then also technology as being key together.  Yes.  Marx called it "ideology."  Veblen called it "emulation."  Baudrillard called it some French bit of obtuseness.  McLuhan said: the medium is the message.  So ya know, I stopped reading when I realized this author has just discovered these connections.  People need to study the history of ideas more, imho.


But anyway.

Historically, a real economy falters and dissolves, to the degree to which a society goes too far, relative to its technology, in the direction of trafficking in imaginary things.  dickish and boomerish paranoid quasi-attempts to live forever financial instruments, the internet, celebrity cults, religious manias, Stalinism, etc.  (lol!)

This is the essence of Gibbons' history of the Roman Empire, I think., and pretty much how it works.  Even Mel Gibson got it right in Apocalypto : just cutting out people's hearts all day is no way to actually grow an economy.

Even the Egyptians knew, you had better at least leave pyramids, something real, solid, and notable.




moonbase or bust

Thu, 06/21/2012 - 16:31 | 2548646 BigJim
BigJim's picture

Pyramids! What a good Keynesian suggestion:

Maybe if the Egyptians had spent less time building pyramids and burying their wealth with their idiotic rulers, they wouldn't have been conquered by the Kushites, the Greeks, and the Romans.

Thu, 06/21/2012 - 12:44 | 2547651 tony bonn
tony bonn's picture

"..The U.S.S.R. was able to keep up by stealing technology for decades,..."

absolute horseshit.....wall street, and ford motor co was a leader, fed western technology to the communist bloc which they ruled and dismantled in favor of 9/11 and a middle eastern strategy...

Thu, 06/21/2012 - 12:44 | 2547652 boooyaaaah
boooyaaaah's picture

Make the Rules or Your Rivals Will Sold by Amazon

Great book

Just in the introdiction

The rule makers make rules for an edge, money,
The rule makers are legislatures, lawyers, b'crats.

The example of rule makers vs Henry Ford

Thu, 06/21/2012 - 12:53 | 2547709 potlatch
potlatch's picture

sounds like a less than zero sum game to me

Thu, 06/21/2012 - 12:48 | 2547679 durablefaith
durablefaith's picture


CHS - I always enjoy your thought provoking posts, but this one strikes me as a bit naive. It is akin to saying that the native americans now have rifles so the americans heading west are doomed.

Yes, we have the internet now. But the elites know this and are busy working on a global scale to get pandora back in its box. To what lengths will they go to retain their power? Its hard to even begin to answer that honestly because they are maniacal power hungry vampires without consciences.

The centralization and automation which has already been achieved along with the advances in science (social engineering, weather weaponization, bio and chemical weapons, genetically modified food weapons, ad nauseum) will enable them to wreck the global economy, bait enough of the masses through bread and circuses to retain control while they engineer a mass die off to rid the earth of free thinking dissidents and people of conscience.

How can we know all this? Because the script was written long ago...

Mt 24: 9 “Then you will be handed over to be persecuted and put to death, and you will be hated by all nations because of me.” 

Thu, 06/21/2012 - 12:49 | 2547683 Whoa Dammit
Whoa Dammit's picture

Globalization, centralization's Big Sis, is an even worse experiment.

Thu, 06/21/2012 - 12:52 | 2547698 Bastiat009
Bastiat009's picture

Wrong tense: Centralization fails (always)

Thu, 06/21/2012 - 12:57 | 2547723 adr
adr's picture

The internet is not a business, it is a tool. Just because something is accessed on the internet, doesn't make it worth 100x its real world representation.

You can give a $1 hammer to a person that knows how to use it, and a $100 hammer to a person that doesn't. The expensive hammer won't be able to help the useless build something of value. After using it for a while the carpenter will probably prefer the $1 hammer becuasehe is used to it. The different balance of the $100 hammer may cause him to become less productive.

Where am I going with this? Well, the fact that the internet has caused some of the greatest misallocation of capital in history. Facebook isn't really worth a dime, it allows others to sell something through it (not very well actually), but is essentialy a free service that never makes a dime from the majority of the people accessing it. Facebook, if it went to $150 a share which many analysts projected, would be worth more than the entire retail sector of America without ever producing a single product.

People don't see an issue there?

Thu, 06/21/2012 - 16:15 | 2548559 akak
akak's picture


People don't see an issue there?

Well, I see a potential problem there, but an issue is merely a subject of discussion, or a topic of conversation, and is NOT in ANY way synonomous with the word "problem".

For the love of God people, please stop misusing this word!


PS: As for the rest of your post, your logic is unassailable, and I agree with you completely.

Thu, 06/21/2012 - 12:57 | 2547726 Pairadimes
Pairadimes's picture

The fundamental flaw in centralization is rooted in the principle of the 'tragedy of the commons'. Centralization creates a 'commons', by making otherwise private property public. Individuals will seek to maximize their share of the public store of value before consuming their private one, and the public property will, given enough time, inevitably be destroyed in this process. Doesn't matter if we are talking about a field for grazing as in the original example, or public healthcare, SNAP programs, government largesse, or a fiat currency.

It does not require more complex analysis than that.

Thu, 06/21/2012 - 14:17 | 2548078 Umh
Umh's picture

That's a big part of why centralization fails. Perhaps less consistent but a catastrophic reason for centralizations many failures is the lack of redundancy caused by the planners drive to be correct.

Thu, 06/21/2012 - 13:06 | 2547739 Dr. Acula
Dr. Acula's picture

Centralization per se is not bad.

For example, all the big decisions at my workplace are made by centralized management. Effectively, the CEO is a dictator. But what's important is that the relationships involved are all voluntary. That means I can quit if I don't like the job. Customers can spend money somewhere else if they choose to. If too many bad decisions are made, the result will be financial losses and liquidation.

But governments are not constrained to a proper size and they can avoid liquidation perpetually. Governments are not subjected to market disciplines because they commit all kinds of crimes.


Thu, 06/21/2012 - 13:03 | 2547740 CustomersMan
CustomersMan's picture



The FED has reduced the value of $1.00 in (drumroll please)  3.8 cents.


Their # 1 reason for being is to maintain the value of the dollar.


Based on that performance what should be done with them?

Thu, 06/21/2012 - 13:31 | 2547847 ToNYC
ToNYC's picture

How many of them 1913 dollars would it have taken to buy a transistor radio back then?

Thu, 06/21/2012 - 14:45 | 2548093 Umh
Umh's picture

From my point of view the question is how many loaves of bread would the single dollar have bought.


And unless it could have bought a time machine a million dollars couldn't have bought a transistor in 1913.

Thu, 06/21/2012 - 14:28 | 2548123's picture

But the Fed had absolutely nothing to do with the invention of transistor radios. So what was your point?

Thu, 06/21/2012 - 14:31 | 2548130 Pairadimes
Pairadimes's picture

Bernanke? You post on ZH?

Thu, 06/21/2012 - 16:01 | 2548518 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

Values Used:

Total Face Value: $1 Coin Type: 1946-2012 Jefferson Nickel Copper Price:   $3.3075 / pound Nickel Price:   $7.4583 / pound


Total melt value is $0.96.

(Exact value is $0.9579526208424. $0.41106842216865 worth of nickel, $0.54688419867375 of copper.)


I like nickels and as a case for metal/commodity based money it seems to hold its value quite well, indeed.

Thu, 06/21/2012 - 13:04 | 2547747 DUNTHAT
DUNTHAT's picture

Just for the record, who are the six media companies??

Thu, 06/21/2012 - 13:11 | 2547771 printmoremoney
printmoremoney's picture

The nightmare of human history is the same story over and over. And now we have the capacity to toast the whole planet, not just the latest idiots Palace who think they rule the world. Stakes are at the ultimate level. It is an evolutionary moment. Stupid human tricks now are Eco and Geno-cidal. It boils down to the question: Are humans "good". And if so, what are they "good for"? Everyone has to answer that one for themselves. The sum is manifested all around you. Your direct experience is the Truth. Playing mental games with the powers-that-be and accepting their authority is simply defining your Cage based on the rules of the Rulers. It is still a Cage. Funny how humans are willing to live in a Cage and define their existence via suffering. That is one wacked out paradigm from my POV. But, everyone has one.

Thu, 06/21/2012 - 14:35 | 2548139 F. Bastiat
F. Bastiat's picture

"Money" isn't "printed", currency is.

Thu, 06/21/2012 - 13:25 | 2547807 falak pema
falak pema's picture

the weakening of the hold of Pax Americana on the "old" order players, the rise of a multipolar regional interconnected power structure, Bric, and third world civil society, fed on Internet, will create new paradigms locally.

Yes, Internet is a huge source of people's oxygen in coming years.

What will the accumulated wealth of the Oligarchs do in this emerging paradigm change? They have everything to gain if they be wealth creators, not if they be wealth destroyers, like the TBTF bankstas and commodity trade rentiers. THese should get weaned out from the system by the forces of change. 

Thu, 06/21/2012 - 13:33 | 2547852 mrktwtch2
mrktwtch2's picture

im just glad i have central

Thu, 06/21/2012 - 13:47 | 2547934 AnAnonymous
AnAnonymous's picture

In Egypt and many other quasi-feudalistic nation-states, the Empire of centralized Elite authority is striking back,


Considering the large variety of systems that are grouped under the label "feudalism", hard to see how centralized and decentralized systems are separated one from the other.

US citizens are US citizens: dont let facts get in the way.

Thu, 06/21/2012 - 14:31 | 2548051 akak
akak's picture

Make me laugh!

Considering the large variety of captive ethnicities and conquered and oppressed nationalities that are grouped under the label "Chinese citizens", hard to see how non-Han local devils and foreign devils are separated one from the other. 

But Chinese Citizenism citizens are Chinese Citizenism citizens: dont let facts or logic get in the way of monolizing the speeching means, blobbing-up the conversation, and displaying the true mettle of trolling, roadside shitting Chinese Citizenism, whose rampant offuscating, self-denialistic and insanitationizing algebraic coconuttery nature is eternal.

Now go wok the dog.

Thu, 06/21/2012 - 15:33 | 2548361 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

US citizens are US citizens: dont let facts get in the way.

You certainly never do.

Thu, 06/21/2012 - 13:58 | 2547976 ddtuttle
ddtuttle's picture

The "Centralization Narrative" sounds like it must be a kind of Marxist Rhetoric, but it's really where all the "isms" end up.  Fascism, Communism, Corporatism, Socialism, Militarism, Imperialism all allow or even promote a centralization of power in a few hands.  Regardless of how those few hands are chosen, corruption is irresitable and inevitable.

So all these "systems" evolve into the same thing, distinguishable only by the code words in their propaganda.  Some  pretend they operate in the best interests of "the people". Others don't bother, and just publicly kill anyone who threatens their power.

The point is centralized power implies centralized control which cannot work.  The amount of information that must travel from the society to the government and be redistributed as orders is impossible to gather, let alone process.  Even if you could, the knowledge necessary to issue productive orders only exists in the society at large.  

Besides, thes guys don't even care about productivity, only preserving their power.  Inevtiably the information gathering and order distribution becomes about that.  Secret police, and gulags are the result.  Inevitiably these system become so inefficient, they simply collapse from their own weight.

The Roman empire first split then collapsed for these same reasons.  The eastern half of the empire (what we call the Byzantines), continued for another 1000 years, but eventually collapsed as well.  But there are countless versions of this same narrative in history.

Thu, 06/21/2012 - 13:57 | 2547990 Bastiat
Bastiat's picture

Bernanke prints for the banks and government.  He's an expert on the Great Depression -- this time he's going to make one even Greater.

Thu, 06/21/2012 - 14:20 | 2548099 Diogenes
Diogenes's picture

Decentralization isn't working so well either. The Euro was supposed to be a great advantage to all those who participated. As long as they refrained from chiselling. Evidently that was too much to ask, they all took advantage of the collective credit rating to borrow as much as possible, knowing they could never pay it back and never intending to pay it back.

There was no central oversight strong enough to prevent this.

Now the Euro is crumbling and their punishment will be to go back to the old system.

Thu, 06/21/2012 - 14:35 | 2548143's picture

So you're calling the inevitable misallocations and failure of centralization "decentralization?" That's just odd.

Thu, 06/21/2012 - 14:33 | 2548133 F. Bastiat
F. Bastiat's picture

With very few exceptions, perhaps only one (nation-state warfare), centralization is always inferior vis a vis decentralization.  For scientific, technological, and quality of life advancement, maximum decentralization is the proven approach.

Thu, 06/21/2012 - 14:45 | 2548169 dexter_morgan
dexter_morgan's picture


"The authorities can try, but they will fail."

Apparently we are still in the 'trying' phase, but that is a hopeful thing to think that they are doomed to fail.

Thu, 06/21/2012 - 18:40 | 2549026 toomanyfakecons...
toomanyfakeconservatives's picture

More fuel for the coming MASS ARRESTS to clean up the wreckage of an illegitimate, massively over-centralized federal government.

Obama, Brenanke, 90% of Congress, and the whole traitorous lot of them in chains before s-election time...

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