Systemic Risk Solutions under Hohfeld

1. Do you ever get the feeling that the problems of government are just too big to ponder? And that no solutions are forthcoming because the problems themselves are so hard to define? Really? Imagine belonging to a group where you either have to follow or lead. The fact there is a follower or leader does not mean anything at all because of the necessity of the situation. Power is given by one and used by the other with the object that both can survive. This scenario is a semblance of the Prisoner's Dilemma. But should the leader be any richer or wealthier; or that there be any presumption that the power he or she commands makes him or her any better than the other then we have the beginning of fascism. The Prisonner's Dilemma turns into a closed system of self-justifying privileges and immunities for the few, and concomitantly, increased disabilities and negative liabilities for the many. Simple as that. In legal theory, we call this Hohfeldian.

2. Now what is the problem with the US government? It is run mainly by de facto fascists who have translated the power given temporarily by the people into permanent features of privileges and entitlements, de facto immunity from prosecution, and increasing the disability of the people.

3. The only open legal relation, that is, the only legal relation left open for determination is who will be liable for this mess? Liability strikes both ways. It means who will be liable for any munificence if there is any left, and similarly, who will pay for the debt when it comes due. Liability is the way the law talks about the determination of risk. In legal terms where complete order is determined asa form of translational symmetry through time by judicial decisions and the processes thereof or rites, rituals, signs and symbols thereof, corruption is held at bay because the law's structure itself as a whole is invariant. Theoretically, what is invariant allows us to measure, compare, predict with precision and realise with accuracy that which is within the ambit of our consciousness.

4. And what can we see across the governmental landscape of the US? First and foremost, nearly 14.5 trillion in national debt. And a giant military engaged in three wars. And a Medicaid system where the future expected costs are three times more than future expected income of the people. So these are the "problems" which the government must fix to get its house ("oikos") in order ("nomia"--law and order).

5. to fix these problems by legislation, we might listen to:
by Madhouse
on Sun, 06/26/2011 - 16:20
#1403524

6 year one time terms with random confidence votes for the Pres, Sen, Congress. Constitutional ammendment to balance budget and turn the 16 trillion into a 30 year note with a 1/30th sink each year. Cut the defense budget to 2002 levels, taxes back to 2002 levels, get govt completely out of healthcare (i.e. phase out medicare over 10 years) and stop the [expletive deletion] mongering...

All of these goal changes would be very much against the interests of major corporations in the US. So, they would not be readily feasible.

6. Another strategy, long ago conceived by Plato, is to educate the people. Funny that after 2,400 years, the nation state that is currently living well beyond its means is Greece and is the focal point for systemic collapse. As Michala Marcusen (quoted from Zerohedge) od Societe Generale writes:

"Can Greece ultimately avoid default? The sustainability of Greek public finances depends critically on the snowball effect, i.e. the difference between nominal GDP growth and the funding rate and the level of the primary surplus. Greece’s public debt today stands at almost 160% of GDP, with a primary balance forecast at -2.8% in 2011 and nominal GDP forecast at -3.1%. Even with the attractive funding rates provided by the EU and IMF (just under 4% at present), the situation is clearly not sustainable. 

Making a back of the envelope calculation, we find that if Greece can sustain a primary budget balance and enjoy nominal GDP growth that exceeds the implicit interest rate on its debt by 1pp, it would take Greece 100 years to reach a debt-to-GDP ratio of 100%. If Greece in addition could sustain a primary budget surplus of 1% of GDP every year, it would take 50 years.

Theoretically, Greece can avoid default, but it depends critically on the ability to achieve growth, run a primary surplus and achieve a cheap rate of funding. If the rest of Europe wants to avoid Greek default, it seems it may be funding the country for many years to come."

7. So what should we do?

We should teach that Freedom is Responsibility and that Knowledge is earned through constant Discipline (unlike the Foucaultians' views of discipline which for them is really about pernicious stimulus-response conditioning, discipline comes from the concept of one who is capable of learning).

The first implementation of these principles should be in grade school so that balanced budgets become features of the good society. Just so we understand ourselves completely, no one should learn how to do financial derivatives unless they are first tested and cleared of any and all socio-pathologies. Rigorous methods of mass financial creation become weapons of mass social destruction in the hands of determined fraudsters who dress their justifications for such with idiotic solipsistic arguments of regulatory arbitrage.