05.22.08
Posted in Policy at 11:07 pm by steve
Faulty Reasoning in Gardening and Banking
“I seem to fail with most of my dahlias.” I complained to a gardening friend.
“Not me,” replied Jason smugly.
“You probably read the instructions before planting them.”
“Yup.”
“You probably follow the instructions, too”
“Yup.”
“You can probably tell me to the last ounce how much horse manure to put on each different dahlia.”
“Yup.”
“Suppose I am planting border dahlias and I live in a place with rich, moist soil, how much horse manure do I use?”
“None.”
“Poor soil?”
“None.”
“Okay, so when do I use horse manure to fertilize dahlias?”
“I would say about a year before you plant them.”
I was asking the wrong question. Horse manure and dahlias have little to do with each other. I was in the wrong universe of discourse. And no matter how long I pondered the problem or how deeply I considered it, I was just wasting time. As I reflect on the conversation, I realize I was reasoning like this
1) Plants grow better with horse manure
2) Dahlias are plants
3) Therefore, dahlias grow better with horse manure.
So where did I go wrong? Certainly Dahlias are plants, so the problem must lie in the first proposition. What is actually true is that some plants grow better with horse manure. Some actually don’t. Stingy plants don’t - the kind that thrive on the punishing open plains and high desert. And a lot of young plants are burned by the excess nitrogen in horse manure.
There was something about this logic that reminded me of a completely different discussion. It was a discussion in which someone was arguing something like this
1) The Federal Reserve manages money supply.
2) The current banking crisis is due to burgeoning money supply.
3) Therefore the Federal Reserve is to blame for the current banking crisis.
Each premise is true; but, it seems to me that the conclusion is false. There is no question in my own mind that the second premise is correct. The problem may or may not be the fact of of glut of credit - it might be more related to the means employed to create that great tidal wave of easy money - but it is integrally linked to it. If the second premise is true we must look for the problem in the first.
Back in the days when banks could only lend money on the basis of deposits and when all credit was extended by chartered banks with very strict reserve requirements, essentially all money originated with banks, and shortfalls were borrowed from the Federal Reserve. At that time in history, the Federal Reserve played a powerful role in regulating money supply. And premise 1) was essentially true.
But when banking deregulation occurred, other sorts of institutions were empowered to lend money. And the requirements that restricted the transactions were materially relaxed. Companies like Bear Stearns that used mortgaged backed securities as collateral to lend more money were, in effect, printing money. And the amount they lent had no connection whatsoever with the Federal Reserve or with the interest rates charged by the Fed. Or, more correctly the connection it had was obscure, contorted, indirect, difficult to understand. And the result was that even if the Fed had increased interest rates, it is not clear that the move would have stemmed the flow of new money. One might argue that it would have simply driven more people to borrow from the institutions that were, in effect printing money rather than from banks. And that might have caused things to become unstable sooner.
It’s not clear that very many people understand intuitively how the deregulated system differed from the regulated system. But it clearly caused a burgeoning of one kind of money supply. And that drove up securities on Wall Street during the dotcom bubble. Then it drove up real estate. And now it drives up the price of oil, other commodities, and agricultural products. And all the while the supply of the kind of money that the Fed manages grew in a healthy relationship with the part of the economy it represented.
So it’s not that the Fed did the wrong thing. It’s that the instruments that caused the problem have nothing to do with the Federal Reserve system. Rather, they have to do with the investment world. Banking deregulation caused the problem. Any solution that does not strip financial institutions of the of the power to, in effect, print money, will assure that the same problem recurs, perhaps via some mechanism that appears at first to be different. The players will be different, the instruments will be different, but many of the effects will be the same.
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05.04.08
Posted in Policy, Politics at 2:10 pm by steve
Global warming, free trade, biofuels, water resource management, energy availability, and over-population. What do these factors have in common? They all affect the cost of grain around the world. Grain has been going up in price, more than doubling in price in one year.
The cause is a kind of perfect storm; a combination of many factors hitting the market at once. Unusually warm temperatures have caused significant drops in grain production in northern China, perhaps in other regions. Free trade has driven local farmers out of the market in many poor nations. It has also made two of the world’s most populous nations richer; and as a result the peoples of those nations wish to eat better. This generally involves eating foods that take more resources to produce. Biofuels efforts have drawn a huge amount of grain off the global market. Water resources - aquifers such as the Ogallala in the plains states - are being depleted. And oil prices are escalating. This raises the cost of mechanized production and it raises the cost of fertilizer made from petroleum ( i.e. most of the nitrogenous fertilizer used in agriculture. )
The Grain Shortage
The problem is so severe, so widespread that WaPo has run a whole series of articles on the issue.
The food price shock now roiling world markets is destabilizing governments, igniting street riots and threatening to send a new wave of hunger rippling through the world’s poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78 percent. By comparison, from the beginning of 2005 to early 2008, prices leapt 80 percent, according to the United Nations’ Food and Agriculture Organization. Much of the increase is being absorbed by middle men — distributors, processors, even governments — but consumers worldwide are still feeling the pinch.
The Economist dedicated a large portion of a recent issue to the crisis. Food crises are an almost perpetual souce of news. At any given point in time one can find a few parts of the world where food is scarce. The reasons usually have something to do with bad weather, war, or bad government policy. They almost always have something to do with poverty and overpopulation as well.
But this time it is different. It is a fundamental problem of there not being enough grain. We need to take it seriously. Changing distribution patterns will not solve the problem. In a kind of strict sense the free-marketeer is right. The free market left to its own devices will solve the problem. And if we simply do not care how many billions of people starve to death, and how much strife, death, and destruction this causes, then we may grant them this point. If, however, we care just a little, then we need to think about what can be done to alleviate the immediate problem and what can be done to move toward a durable solution.
To most Americans this is pretty much an abstraction because the cost of grain is such a small portion of our annual income that what grain costs, per se, doesn’t seem to have much impact on our standard of living. But the same is not true in almost any non-European nation.
Late last year, just as corn prices began to escalate there were protests in Mexico. The price of tortillas, a staple food in Mexico City had recently doubled. Since the tortilla is the cheapest source of calories in the Mexican diet, such a change hit hard. The government intervened to help stabilize prices, but many reasonable people worried that the action would, in fact, precipitate a more severe shortage.
Since then, much has happened. In Haiti, recently, the government collapsed under political pressure for its bad handling of food and agricultural policy. That hunger should hit Haiti early when food prices would rise is never a surprise because the nation is so densely populated that it perpetually lives at the very edge of disaster. (Jared Diamond in Collapse) But this fact does not make the human misery of starvation any less real.
The problems have hit many large nations. India and Egypt have banned the exportation of rice. South Korea, China, and Japan are bidding up food prices at an unprecedented pace. Violence has hit many nations (WaPo)
At least 14 countries have been racked by food-related violence. In Malaysia, Prime Minister Abdullah Ahmad Badawi is struggling for political survival after a March rebuke from voters furious over food prices. In Bangladesh, more than 20,000 factory workers protesting food prices rampaged through the streets two weeks ago, injuring at least 50 people.
and
The food price shock now roiling world markets is destabilizing governments, igniting street riots and threatening to send a new wave of hunger rippling through the world’s poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78 percent. By comparison, from the beginning of 2005 to early 2008, prices leapt 80 percent, according to the United Nations’ Food and Agriculture Organization. Much of the increase is being absorbed by middle men — distributors, processors, even governments — but consumers worldwide are still feeling the pinch.
This food crisis has a number of related causess. What is special about this crisis is that
- it is global.
- it is not a problem reasonably related to distribution.
- its causes are not special but general. Not temporary but enduring.
- the forces that caused the shortage are all going to get more severe, in the absence of serious intervention.
Global Warming
Global warming is arguably the smallest component of this particular instance of global food shortage. There have been some large areas in northern China where unseasonably warm weather has led to crop failures, but it would be hard to argue that a pattern of unusual climatological conditions caused crop failures on a kind of global scale. That said, gobal warming is likely to play an increasing role in agricultural problems. In a number of highly populated nations such as Vietnam, a very large portion of the arable land is within a foot or two of sea level. And if sea level rises by a foot in the next century - as it is likely to do - these fertile areas will be inundated. Huge swathes of fertile land that exist where major rivers such as the Mekong in Vietnam, the Mississippi in the USA, and the Yellow River in China will be inundated and rendered useless for the crops now grown there. Global warming did not cause this famine; but it might play a very big role in the future.
Biofuels
Recent changes in energy legislation have led to a significant amount of corn being used to create ethanol. Separate analyses by Patzek and Pimental suggest that it actually takes more petroleum to create a gallon equivalent of ethanol ( in terms of energy ) than is available in that ethanol. Other workers have suggested that there might be a slight gain; but whereas a viable primary source of energy at some point in the future mightl have a gain of ten to one or three to one, there is virtually no hope that ethanol from corn, under any scenario will reach two to one. Something like half is used up just separating the water from the ethanol. Something like a third is used up as nitrogenous fertilizer for to grow the corn. And we can quibble about the remaining sixth. But by any measure, it’s a bad idea to view ethanol production from corn as a primary source of fuel. It is not.
Dispite this argument, the US government has granted huge subsidies to businesses who would ferment corn starch and distill the resulting fluid into ethanol. According to the GAO more than a fifth of corn production is now used to make ethanol. It’s a number that has been growing sharply over the last three to five years. And it almost certainly accounts for a large part of the price increases in corn that have rocked the world economy.
Peak Oil
There is hardly a major developed field on record today that is not well past peak production. Russia was thought to be awash in oil just a few years ago but there seems to be evidence that production there is falling. It is off sharply in the North Sea. And the productive Caribbean wells of Pemex are down in production. Wells in the continental US peaked in the early seventies. And there is some question about whether the Saudi fields have as much oil as claimed; their claimed reserves fail to be reduced by the production of oil.
New fields are being found and developed, but it has been some time since the discovery of new oil reserves matched the rate at which oil is depleted from existing ones. This is not a sustainable game. And we are on the downward sloping edge of the curve. Presidents at oil majors have argued “it’s not that there isn’t enough oil; it’ s that there isn’t enough oil where we can safely develop fields.” So there is a question whether this would change if the geopolitics of central Asia and Africa were materially different. But it is more of an academic question than it is a practical one. Oil that one cannot extract doesn’t count; not until you can extract it.
This peak in production comes at a precise moment in history when the level of wealth in China and India is beginning to allow a significant portion of people to buy cars. So a dwindling supply occurs precisely when there is burgeoning demand.
Because the chief variable costs associated with growing grain are energy costs, most especially the cost off nitrogenous fertilizer, and because nitrogenous fertilizer is derived from natural gas, the price of oil and gas will play a powerful role in the price of grain by strongly affecting the price of production. Furthermore, if one can cheaply convert food to motor fuel, then there is an implicit tension between eating and operating mechanical equipment - driving, flying, mowing the lawn. The lower limit on the price of grain is determined by its value as a fuel.
A shortage of oil drives up the cost of oil and gas alike. It therefore drives up the production cost of grain, the tranportation cost of grain, and the value of grain as a biofuel. In the absence of biofuel conversion, rising oil prices simply drive up the cost of grain production. But with efficient biofuel conversion, the price of oil also sets a lower limit on the value of grain as a feedstock for ethanol.
With subsidized and inefficient biofuel conversion, the picture is even bleaker. You burn more oil in making ethanol than you gain in energy from the ethanol. The process means that you simultaneously have less energy and less food. They are both more expensive. You spend more money for food and fuel.
If one were a cynic and if one believed that the Bush or Cheney family or any of their political backers had any interests in oil or oil service companies and that these interests were driven up in value by a the spiralling price of oil, then one might imagine that the reason the US is rushing headlong into the grain-to-ethanol business is to create a shortage of oil and to drive up prices.
(It seems bizarre to me to argue this because had I not run the I’d be an avid supporter of biofuels. I’d like to believe that biofuels might one day be a significant sustainable source of energy. And I know that you have to start with a solution that is less than optimal. So I would normally expect myself to be supporting ethanol production from biomass. But the current policy situation is difficult to explain in any rational manner, )
Water Shortages
A material amount of the world’s grain is grown with some irrigation. And a significant portion of that depends on water in non-renewable aquifers or in aquifers that are being drawn down much faster than they are being replenished. Today, while there is water we are suffering from grain shortages. In a matter of a few short years or decades, major aquifers in the US, India, and China will be empty. And the amount of grain we now produce will no longer be possible. The amount of energy and expense required to move water from where it exists to where it is needed will be overwhelming. This bodes ill for future grain supplies. If we have hopes of doing this, we need some really cheap and ever-enduring source of energy. But we don’t
A recent article in The Futurist suggested that only 15 percent of the grain grown in the US depends on irrigation water from the rapidly depleting Ogallala aquifer. But it suggests that India and China may be in a less favorable position.
It sounds quite rosy for the US. The US will have a excess capacity in food production so long as it has an ample and secure energy supply. Efficient manufacturing nations such as China will need to import a large amount of food from the US. And they will be able to trade many goods for food. It sounds pretty promising, but a lot depends on whether the US can maintain its manufacturing base, support its currency, create a reliable and sustainable primary energy supply. If so, then the amount of grain the US would likely send abroad would likely not cause hunger pangs stateside. But if China succeeds in cornering the world’s supply of raw materials and if most manufacturing is done in the Orient, then the US will risk becoming a kind of peaon state.
Whatever happens at a national level, at an international level, the poor will be starving. That’s happening today. But if one cut world grain production by fifteen percent and if eating habits of the more economically successful nations did not materially change, it would mean many tens of millions might not be able to afford to eat. It will no longer be a question of distribution. it will be a question of production. There will be no easy solutions.
Free Trade
Free trade, in the long term, is supposed to guarantee that no economic good ever experiences shortages; the theory is that the price will go up, more will be produced, and viola, we’re back where we started. Except it doesn’t work for goods that actually have a finite supply; fertile land, fresh water, oil, stuff like that. Therefore it does not work for grain whose production capacity is limited by the availability of each of these limited resources.
The Economist recently ran a series of articles on the global food shortage. The editors of that newspaper pretended that nothing but market forces are required to stay a food shortage; but it is hard to buy that idea. It assumes that the reason there have been few food shortages in Western Europe and the US over the last several centuries is because of the marketplace alone. But it is not. It is because an efficient marketplaced operated in a space in which there was ample capacity to produce food. At some point in time it is almost inevitable that global population will be limited by food production. And at that point in history, a fair portion of the human population will have less to eat than they need. It will not be a question of more efficient markets. The physical stuff required to produce grain - fertile land, fresh water, energy and fertilizer will not be in sufficient supply to grow the amount of grain necessary to feed the whole human population.
How long it will be before we get to that point is a matter of some question. It may be a decade. It may be five decades. If there is another great, massive revolution in crop genetics it might be eight decades. If humans learn, in the intervening time period to farm the oceans it might be twenty decades. But already humans consume something like twenty percent of the energy that plants turn into sugar. And a good portion of that energy is required to mainain soil fertility. So we might just be able to double the amount of food we produce on land - assuming we can find the water and energy sources to do so.
For some short period of time the high price of grain will have a beneficial effect on small farmers who are land owners in nations like Mexico. Two years ago they were not able to produce corn at a cost competitive with the corn imported from the US. So they quit. Today that is not the case. So they can grow corn again and make a living at it. This will increase corn production a bit in the short term. Similarly, there was an interesting piece in the Economist that suggested that a recent government initiative of subsidizing fertilizer and seed corn succeeded more by accident than by virtue of being good policy. But measured in terms of whether it produced a lot of corn, it was a raving success. If Africa were to be stabilized, its food production capabilities would, no doubt, add some to the equation for a while. So long as high fertility rates persist, it will always be less than two generations of developmental stasis, or less, from catastrophic starvation.
So the free market will adjust to high grain prices by committing more land to grain production. And more labor. Economic theory says that this land will be poorer than the land now in production. It might, therefore, become exhausted earlier. In any case, once this minor adjustment is made, there is not much wiggle room. There is talk of bringing more acreage in the US under cultivation.
It may not be a bad idea. But it is true that committing land to corn production takes a toll on soil fertility. One may trade short term gains for longer term losses. To understand the issue, one would need to have a robust model of soil fertility, one that specified how much energy is required to sustain the soil flora that sustain economically important plants.
The Malthusian Crunch
Most of the food shortages since the start of the twentieth century have had distribution as a fundamental component. Current (then) agricutural practices were sufficient to produce enough food for everyone in the world. The problem was to transport the food to where it was needed. And to pay for that transportation. Under such conditions it is easy to argue that food supply is simply a matter of supply and demand. If the price of food went high enough in places where it was in short supply, the free market system would move food to that location. Problem solved.
Except, not really. Because in most places where the supply of food was short, there also existed little or no manufacturing. So the people who were starving had little to trade for food. In the case where there actually is an ample supply of a good, the free market sometimes fails to deliver that good where it is needed. That is an interesting problem. It suggests that the free market is good at allocating resources in a particular way, but sometimes the consequences of that are not desirable by certain important measures. Still, problem is fundamentally different from the problem we face right now.
The current problem is not fundamentally about distribution it is fundamentally about production. The problem we face now is that food is scarce on a global scale.
Westerners have been able to dodge the Malthusian crunch for five centuries thanks to the rapidly expanding western frontier. It was not until the late ninteenth century that the Dakotas were settled by Europeans. And it was well into the twentieth century that distribution became completely effective in drawing its bounties to urban markets effectively.
Mechanization, chemical fertilization, and irrigation all increased the productivity of these vast but otherwise marginal agricultural areas. irrigation and chemical fertilization expanded their productivite capacity in mid-century; and genetic manipulation did so later on. But the frontiers physical and intellectual that have brought us to this point in history have been pushed about as far as they can go.
If one looks at the fundamental biochemistry governing the way plants turn sunlight into sugars, one discovers that humans exploit a rather large portion of the available energy already. If I remember correctly, E. O. Wilson (in Consilience) estimates it at about twenty percent. This means that tinkering with genetics can only bring marginal improvements. To get the kind of bounteous excess that we enjoyed in the mid twentieth century, scientists would have to re-invent photosynthesis to be two or three or ten times as efficient without sacrificing anything else. Or we would have to learn how to cultivate crops in the parts of the ocean now barren of life. Marginal changes will mean that most of humanity is reduced to living on the margins - as has been the case for most of human history.
This food crunch rightly ought to warn us that it is not axiomatic that free markets alone have been responsible for the excesses in food production in the western world. It is at least in part due to a really big accident of history. This experience can warn us that all limited resources run out. And that rising prices do not always succeed in producing enough of the item in question.
Actions
So what should we do?
- Encourage wind and solar energy production in a durable, systemmatic way.
- Price water, oil, and coal at a level that more nearly reflects the value it creates for society, one that more nearly reflects its replacement price. Use the excess to encourage conservation and sustainables.
- Set up and fund free fertility control services around the world.
- If the political viability of such services is threatened by controversial issues, do what can be done first.
- Encourage every nation to create, fund, and sustain organizations that guarantee the welfare of its aged. There is almost a perfect corellation between this and low fertility rates.
- Create incentives to build desalinization plants for coastal California cities, Arizona cities, and Texas cities.
- Create business incentives and supports for businesses that turn America’s bountiful foodstuffs into high value-added food items.
- Provide minor incentives and/or supports to trading companies that trade high value added food and food derivatives overseas.
- Streamline the nuclear plant design and permitting process, creating a small family of related pre-approved designs as France has done.
- Build nuclear plants. The oil in Iraq has cost America between half a trillion and two trillion dollars. For that price we could have built enough nuclear power generation plants to generate the power extracted from oil we still do not have. And they would continue generating power long after the oil is used up.
- Reprocess the fuel
- Use waste heat from nuclear plants to distill ethanol from cellulosic biomass.
- Use cellulosic materials to make ethanol, do not use foodstocks
- Study soil fertility and understand how much food energy must be pumped back into the soil to sustain fertility. My guess is that it’s much more than we have assumed.
- Fund studies that demonstrate ways of nitrogenating soil effectively without the use of fertilizer derived from fuel
- Develop crops efficient at producing oils; vegetable oils need little refinement; and if waste heat from nuclar power is not to be used in alcohol distillation, this fact reduces the energy input of the fuel. It therefore substantially increases the gain by a huge margin. ( We note that if soybeans could be made efficient at producing both oil and soil nitrogen, they might be a very valuable crop… )
- Fund fusion research and development seriously.
- Fix healthcare so that it works better and uses less money. The current system is killing the US economy.
- Teach civics. People who are can think critically about the ethics of greed are less likely to be caught by its traps and to starve in them
If we do all of these things promptly, and if we do all of these things well, then there is some hope that we might stay ahead of the Malthusian limit for a few decades.
Permalink
05.03.08
Posted in Philosophy &c, Science & Religion at 6:28 pm by steve
In the day it was written the King James Bible stood as a symbol of the Reformation, a realization of Renaissance and Enlightenment principles. Today it stands as a symbol of the past, a day where witches were burned at the stake and religious practice was prescribe by the state. Are we turning today in that direction? It’s a much bigger question than we have time to answer; but we hope that this little piece succeeds in framing the question.
What is Medieval?
Renaissance artists gave the middle ages a bad reputation. Mostly, the middle ages deserved it. It was a superstiious age. An age governed by a greedy and corrupt church and peopled by men who were almost all illiterate and provincial. The medieval ideas of self-sufficiency, superstition, continuity, cyclicality, religious bias, and stasis that governed medieval thought were overthrown by the opening up of the New World and the establishment of reliable trading routes to the far east. The enlightenment was a response to new possibilities, new frontiers, new ideas, new ways of doing things.
Since the end of the Apollo program, however, the world in general and Americans in particular have been turning inward and looking backward. The impulses that ruled medieval life are gaining momentum. Not all of these are necessarily bad. Self-sufficiency is a useful goal for any society when it comes to issues of food and energy, for example. When these are in ample supply, most other things might possibly follow. When not, the others don’t matter very much. But most of the medieval principles run in opposition to a happy, prosperous, egalitarian existence rich in art and culture.
The great objections to the medieval lie in its mental attitudes. Medieval thought is bound by superstition. It denies or ignores science. It preys on ignorance. It closes peoples’ minds. It exploits and magnifies minor power differences creating a highly stratified society. It magnifies and exploits cultural differences, creating Balkanized areas. All of these things combine to make it hostile to arts and sciences.
The same hostility is one that blossomed during the Reagan revolution in America. That same revolution brought an appeal to “deregulation” and “free trade” that is in opposition to medieval principles. But it created a “trickle down economics” and a class divide of hyper-rich set in opposition to lower classes. And it began reserving for that class special priviledges that would allow it to propagate its power advantages over the middle and lower classes. If this class divide proves durable it will be the start of a kind of feudal power system that resembles those that preceded the French revolution. And this divide will pose more difficulties to the lives of Americans than the modest gains of free trade ever could. The Reagan revolution promises to return Americans to a life of servitude of the sort their acestors left Europe to escape.
Changes in culture such as the enlightenment, the French revolution, and the rise of democracy do not happen all at once. They happen by accretion. More than four hundred years elapsed between Marco Polo’s trip to China and the writings of enlightenment authors such as Rousseau, Montesquiieu, Voltaire, Hume, and Jefferson. Similarly the retrograde motion from a happy, liberal democracy to a world of feudal lords and serfs cannot happen in a generation. One would expect that the trend would take some time to develop.
Looking back we will see the elimination of the study of civics from the high school cirriculum to be one such event. We will see Reaganomics and the culture of greed to be another. We might compare the thinking of Rawls and Nozyck and decide that at the point in time when society chose the assertion of rights in the first person over an attempt to deal with property in a way that recognized a kind of joint stake humans share by virtue of being social creatures, we turned our backs on liberal ideas and doomed democracy to failure. Judge Stevens suggested we were doing just this in his dissent in the landmark decision of Nordlinger v. Hahn. And Kevin Phillips comes at the worry from another angle in American Dynasty.
It’s hard to know where this arc of descent will take u;s but when we get there we might look back and see many markers of the descent. One is a kind of nostalgia for the past, an impulse to connect with it in a way that turns its back on things easily judged to be better. One example is an impulse all humans have to be attracted to things they held most dearly in their youth. It’s a natural impulse. It’s one that accounts for such things as the durability of pair-bonding and the fact that music we listened to in our youth casts a spell on us from which we cannot easily escape. No matter what I might think of these songs today, “Colour My World” and “Stairway to Heaven” will always have an effect on me.
But sometimes our yearning for the past seems to be unrelated to actual experience. We imagine simpler times to be stripped of the stresses of modern times. But they were not. The stresses were simply different. Today they are more abstract; then they were more related to the physical environment, perhaps. It may be that we are better equipped to deal with the stresses of simpler times than the ones of today. And if that is true, then we have arguably created a way of living that is out of balance with our nature. But it’s not clear that medieval times offered the kinds of primitive satisfactions that our romantic imaginations attach to them. Social structures were rigid and material shortages prevailed. In a sense, it was the worst of all possible conditions.
Attention, Shoppers
It seems odd at first, but this argument was provoked by reflection on the following, a passage quoted from the writer’s almanac and sent to me by a friend:
It was on this day in 1611 that the first edition of the King James Bible was published in England.
It was a chaotic time in England, and King James I thought that a new translation of the Bible might help hold the country together. There had been several English translations of the Bible already, and each English version of the Bible had different proponents. King James wanted a Bible that would become the definitive version, a Bible that all English people could read together.
King James appointed a committee of 54 linguists for the project. For the first few years, the scholars worked privately on the translation, and starting in 1607, the collaborative work was assembled. It went to press in 1610, and the first finished King James Bibles appeared in 1611.
Many of the turns of phrase in the King James Bible came from previous translations, but it was the King James Version that set them all in stone. Several of its phrases have become enduring English expressions, such as “the land of the living,” “sour grapes,” “like a lamb to slaughter,” “the salt of the earth,” “the apple of his eye,” “to give up the ghost, and “the valley of the shadow of death.”
And I wondered out loud what the current fascination with the KJV comes from:
I am really intrigued by the recent fascination with the story of the KJV. This is the second blip I’ve seen about it recently. One was in a major news publication. I have never seen one before, in all my life. I wonder where the interest comes from?
The KJV is a kind of iconic expression of the durability of the Reformation. There had been for centuries before an effort to commit the scriptures to the vulgate. The people who were behind this were essentially the same ones who backed Protestantism, if I am not mistaken. James, as a Catholic king ruling a land that not long before had been overrun by Cromwell and his Protestant roundheads, probably viewed the project in part as an investment in the continuity of his neck.
The KJV is quite an achievement, though. It is sometimes brilliant in the turn of phrase, but it is rarely too difficult to understand. College sophomores today may have some difficulty following substantial bits of Shakespeare read aloud; but they will rarely have so much difficulty following the KJV.
The KJV is dated, however. A significant portion of the words it uses simply have different meanings today. In contemporary usage “suffer,” \, almost never takes the sense of “allow” or “permit” as in “suffer the children.” And “day” which was then used to denote any period of time, short or long, twenty four hours or twenty four million years, today generally refers to just twenty four hours. My guess is that one could identify a thousand words, perhaps ten times that many whose usage is so materially different today that reading the KJV would give the wrong impression of the author’s original sense. (or of the sense in conveyed in the documents used by the KJV translators )
Whatever one might choose to believe about religion, one must view the KJV is a cultural icon. It was a material expression of the notion of empowering the common man, an idea that seems deeply ingrained in Germanic culture. One might even argue that it did more to standardize English usage than any single document in history. It was one book that could be found in almost any household that had readers. And it was one document from which all the faithful read for almost four centuries. It’s hard to find a document in the English language with broader and longer exposure.
The Magical Mystery Tour
Again, why should we suddenly care about the KJV translation? Since WWII there have been two or three new renderings of biblical writings into modern English. Some worked very hard to preserve the sense but sacrificed beauty; others worked very hard to preserve the artistic and mystical qualities of the writings while yielding a bit of ground on the sense. By comparison to any of these, however, the KJV fails quite compellingly to deliver sense and clarity without the reader doing more work than most readers of the KJV typically do. So why this interest in the KJV? It cannot have to do with the question of how to understand scripture better.
My own guess is that one of the attractions of religion is its mystical attraction. And part of that mystical attraction lies in the very difficulty one encounters in decoding “sacred” messages. It is a vestigal impulse borne of the infantile need to make the leap into a lingual world. We are drawn to the puzzles that occupied our minds before we mastered language. A Bible that has its own “language” that is different from our own yet somehow comprehensible satisfies this need better than a Bible that is clear and plain. A bible with a hard to decipher message moves us into a time when “the world lay at our feet.” We could get what we wanted, if only we knew how to ask for it. Or so we thought. Religious practice sometimes restores us to this happy state.
What we see happening is a re-engagement with the mystical. Since humans get much satisfaction from mystical entanglements, this, by itself, is not a big problem. Humans rightly ought to engage with the mystical in order to live meaningful lives. Science cannot provide this.
But reengagement with the mystical sometimes means denying science, and if this behavior is taken as part of a pattern of denying all other enlightenment principles, one might begin to wonder how close we may be coming to a new age of stasis and the kinds of inward-looking impulses that accompany it. Power concentrates in high places. In high places, science, for its failure to enthrall, has been overthrown. There too, ethical reasoning for its inabiltiy to deliver excess profit has been overthrown. All that is left is power and mystical impulses.
We await the rack. Or worse.
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Posted in Culture at 2:38 pm by steve
“Missouri Loves Company” Would that be any better as a marketing slogan than the much more suggestive “Show Me,” I wonder?
Good thing I’m not in advertising. I’m always peddling the wrong thing.
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05.01.08
Posted in Social, Culture at 8:04 pm by steve
We got the papers from the realtor, complete with a little passport. A passport? Yes a passport. This passport one must present if one steps into a house. Any house. I kid you not. What does the passport say? It says you are represented by a buyer’s agent. Instructions inside the passport clearly prohibit one from speaking with the owner of the house except to say that one is represented by a buyer’s agent. If homeowner were to sell his house to the bearer of this passport he would owe the buyer’s agent 3% of the price.
Does it matter whether the seller has a contract with another realtor stipulating three percent to the selling agent and two percent to the buying agent? Does it matter whether the buying agent was involved in the negotiations with the seller? Does it matter whether the buyer’s agent showed the house? Does it matter if the buyer’s agent never even knew the house in question was for sale? No. In all cases the agent gets his three percent.
That’s bad enough. But the language of the contract also seems to oblige the person signing the contract to actually buy a house. One provision states that the signatory will “negotiate in good faith,” but this is not contingent on whether he makes an offer. So the most literal interpretation of the contract obliges one not just to make an offer, but to keep raising it until a transaction takes place. Any other behavior might be judged not to be “negotiating in good faith.”
It is completely reasonable to have contracts that oblige signatories to perform in a certain way. It is completely reasonable to have a buyer’s agent get paid for any work they do on behalf of a client. And, of course, it is easier to enforce a contract that simply stipulates that any house that a buyer purchases requires that an agent be paid. But the implications of this design choice mean that we cross the boundary from being reasonable to being unreasonable.
For example, the contract stipulates that the buyer’s agent be paid 3%, and it obliges the buyer to pay any part of this 3% not paid by the seller. Now, suppose that I, a buyer, am driving through a community I like and I see a “for sale by owner” sign. Suppose further, that I contact the owner, I tour the house, and I buy the house. Suppose that my buyer’s agent plays no role in the transaction. The contract obliges me to pay the buyer’s agent, regardless of the reason he did not show me the house.
What might be some of the reasons? Maybe this house was too cheap: he hoped to steer me to a more expensive one to pad his fee. Maybe he did not know about this house. Maybe he lived in this community and didn’t want me to be part of it, and so was steering me in another direction. There are an infinite number of ways in which the fact that the listing agent did not show me the house might result from his failure to perform in my interest. And any one of them would mean that he has failed to meet the intention of the contract from my point of view. Regardless of the reason for the agent’s failure to perform - ignorance, malice, or mischance - the buyer owes his agent the three percent.
It’s not that the buyer’s agent, the firm he represents, and his lawyer have not thought of this class of contingencies. That is precisely why they send the passport with the papers to sign. The passport is an instrument whose sole purpose is to make sure that the buyer informs the seller that he works with an agent and secures payment rights for that agent before seeing any house. The passport is a document that exclusively serves the interest of the buyer’s agent; and its use is enforced by requiring a prospective buyer to pay any part of the three percent that the seller does not pay.
It is evidently the case that too many buyers were somehow cutting their realtors out of the deal and saving three percent on the cost of a new house. I understand that a realtor would wish to be protected from such abuses. And they should be. but if that behavior is as broad as the language is unreasonable, then my own guess is that neighbors I am going to have if I move into this area are more predatory than I can comfortably live with. Maybe I don’t want to live there. Maybe I want to live somewhere else.
In my own experience with this agent I have already found a number of prospective homes in the area by doing searches on the internet. It may be that some of the homes that I found were also found by the realtor, but he judged them to be unsuitable for some valid reason. Or it may just be that I have been spending more time at this than he has. It may be that this realtor is representing my interests; but the language of the contract creates an expectation that he might behave differently. Still, I expect that if I buy a house in the neigborhood I will do it through the realtor and he will get his three percent. Even if I found the house by myself.
What’s the solution? A reasonable solution would be to bill for time. Suppose a buyer’s agent billed at $70 per hour payable by the buyer, regardless of the outcome. It’s a fee for service arrangement. But that can never happen. The two parties who would have to agree on such a scheme never will. The prospective buyers don’t want to pay up front to look. And realtors will never agree to get less for their services. So we are stuck with a bad way of doing business. The contracts simply protect agents from customers who want to end-run the system and shave three percent off the price of a home. But they also make the contracts and the people they represent seem ridiculous.
Our purpose here is less to discuss the case in point than it is to point to a more general problem. It is a problem with the way contracts are written. And it is aproblem with the frame of mind that causes them to be written this way. Too often they make completely outrageous claims. Sometimes that’s because of some other ridiculous outcome earlier in history. Sometimes it’s just because the notions of law and fairness have drifted ever farther apart.
I once read the fine print on a contract from a fence company. It was full of strange provisions. One provision was that if I failed to pay any part of the contract price, the fence company could reposess the whole fence. Imagine that. I wonder if they have some special tool for pulling the posts out of the ground or if they simply cut them off with a chainsaw. I marked up the contract, adding clauses that would impose on the fence company obligations that were materially as bizarre as the ones it would imposed on me. Then I sent the marked up contract with a check for the 30% deposit. Three weeks later I received the check back uncashed; no note, no explanation.
The reason for writing contracts like this one is to give the people who write them a kind of punative leverage over people who fail to pay. And it is generally true that if everything goes exactly as planned, then the contract is fulfilled and everyone is happy. The unreasonable parts of the contract are never invoked. But the whole reason for the contract language is because sometimes this does not happen. Contract language governs what happens. Again, it is sometimes true that the parties who write unreasonable contracts do not necessarily exercise the unreasonable clauses even when the language might allow them to do so. Or that they do it in a way that is not completely unreasonable.
The result, if judged only on a transaction - by - transaction basis may be satisfactory; but the consequences are more far reaching. Contracts that over-reach degrade the trust people place in legal agreements. If the purpose of a contract is to describe what each party must do and if it is to describe the remedies of non-performance, then the best contracts do not prescribe unreasonable remedies. The consequences of prescribing unreasonable remedies are many and they are unfavorable to the people who are nominally supposed to benefit from them.
Where people actually read the contract, it creates the risk of losing business. In the case of the fence company, I would have actually done business with the company had the contract not been so outrageously one-sided. In the case of the realtor, if the contract is one of his own making, I am tempted to chose another realtor. If it is a contract standard to that region of the country, I am tempted to chose another region of the country. For I know that there are places where I do not need to sign unreasonable contracts to look at houses. And I wonder whether this is reflective of differences in local culture. Maybe if I live where contracts are reasonable, I will live among people who seem more reasonable to me in other respects. Suppose my realtor was acting in a “reasonable” way to protect himself from abuses common among people who move into that neighborhood, then I may not want to live with that set of neighbors.
Most people who actually read the contract will simply imagine that there is a distinction between what a party is claiming to be able to do in the legal language and what they will actually do in practice. Again, on a once-off basis this is not unreasonable. But when this discrepancy gets very large, it means that the contract language is unbelievable or incredible or fantastical. In all cases where a person signs a ridiculous contract, he cannot reasonably be bound by it. People believe this instinctively; and it is one of the reasons they do not read contracts.
People sign contracts because they trust in the person with whom they sign the contract; and part of the reason for the contract is to help assure that the trust is actually warranted. Contract language that is too sweeping or aggressive makes a party seem devious or greedy; and this materially degrades trust. Sometimes the claims are so broad as to be unbelievable.
There surely must be a legal principle about believability in contract law. Unless I am mistaken, there is an idea that if any reasonable person ( i.e. not a contract lawyer ) were to read and understand a contract and believe that it was so ridiculous that it could not be taken seriously, then a signing party cannot reasonably be held to its provisions. This problem of credibility is, or at least it ought to be, a serious impediment to making unreasonable contracts. But it happens all the time; the idea of reposessing the whole of an installed $15,000 fence for failure to make the last $200 payment, for instance. Or of carrying around a passport issued by a buyers agent that must be presented upon entering any house that might be for sale.
The fact that certain kinds of contracts are so ridiculous as to be unenforcable serves everyone badly. Not only does it besmirch the reputation of a entity that gives such contracts to people to sign, it reflects badly on their lawyers. To write remedies into contracts that are not only blatantly oblivious to questions of fairness but also openly hostile to them makes lawyers seem like unreasonable creatures. And it has the consequence of making people not read contract language and not believe their provisions when they do. This renders the contract effectively meaningless; for it makes claims that people who sign the contract would never agree to.
But if this happens with every contract, it means that reasonable people stop taking contracts seriously. Contracts cease to be agreements about anything material to commerce. They are agreements about how my lawyer will interact with your lawyer. Only lawyers take them seriously. Thus, they are irrelevant, except to lawyers. People signing them are oblivious to their provisions.
Everything, then, becomes subject to negotiation. The contracts, then, are no longer agreements between two reasonable people so much as they are starting points for litigation. And litigation is just one more form of negotiation.
There was, not long ago, a book that grew very famous. It argued that people do not get what they deserve; they get what they negotiate for. It went on to advocate pushing negotiation as far as it will go. And there are whole industries built upon positioning to get the most out of any negotiated anything.
The premise of the work is valid. It describes the world in a way that is materially correct. But this does not mean that it’s the best way of organizing society. When people resort onnly to power and eschew ideas of fairness, the facilities of good judgment about fairness atrophy in society, then the only thing that is brought to play in commerce becomes negotiating power. Cartels form. Power concentrates among the richest and most manipulative.
Sometime after this happens broadly in a nation, power imbalances wipe out its middle class and the nation becomes one of slaves, peons, and destitute people scratching for scraps that fall from the tables of the hyper-rich. Such a world has little need for contracts or for lawyers or for fair play. Only power matters. That is the world one gets when legal language fails to measure up to a reasonable standard of fairness and when everyone thinks in that same way.
So if one looks out far enough in time, not only is the degredation of reasonable contract language bad for the people who are actually involved in the business of reaching agreements and performing accordingly, such degredation is bad for the class of lawyers. When viewed in this light, unreasonable contracts are not instruments that can so easily be ignored. Their unreasonableness becomes an impediment to trustworthy behavior both inside the context of the contract and outside it.
Their unreasonable provisions promote within society the idea of taking what one can get rather than taking what one imagines is fair. By contrast, fair thinking promotes fair and balanced provisions in contracts. Fair contract provisions reinforce the notion of acting fairly as a central principle of behavior. A society that wishes to promote fair and reasonable behavior needs to produce fair and reasonable contracts.
In a legal context, there are compelling technical reasons for things to move in the wrong direction. The more one can claim, the better one is likely to fare in litigation. But there is a sense in which this puts the cart before the horse. To the extent that the legal provisions regarding failures of performance directly or indirectly make it more difficult for well-meaning parties interested in the transaction to trust each other and to do business, bad legal provisions actually stand in the way of commerce.
What seems good in a technical sense is bad in several larger senses. The legal contract is a device or an instrument whose whole reason for existence is to promote constructive business transactions by building trust. But too frequently it seems that contracts written to reflect this point of view are a quaint anachronism.
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