Mencius Moldbug II

In which things become a little hairy. 

This post is now my official longest, but it’s mostly Moldbug quotes and the guy wrote up a storm, so I don’t think it properly counts.

After his discussion of the American Revolution, Moldbug quickly turns his attention to what many might consider his most caustic positions: to Moldbug, Anthropogenic Climate Change is an iron triangle ideology touted for power-seeking reasons more than truth value; mainstream economic thought is obviously broken; “human neurological uniformity” (i.e. that there is no difference in intelligence by, for example, race) is a falsehood pursued for ideological reasons. He then begins prescribing an ideal economic and government solution: “Plan Moldbug” which I found very interesting (especially in his concerns on forms of government). 

I found his climate change bit to be the least original of his work (despite his personal connections to the people involved- or maybe because of it), and also in general it’s a subject I’m not interested in noting or commenting on. I’m not advocating any of his views anyway, but to be clear, it’s not so much distaste as simple disinterest that compels me to move on from this one.

Moldbug on Economics

His own words:

Not counting Marxists, there are three significant schools of economic thought today: one founded by Lord Keynes and revitalized by Paul Samuelson (also known as “economics”), one founded by Irving Fisher and revitalized by Milton Friedman (also known as the Chicago School), and one founded by Ludwig von Mises and revitalized by
Murray Rothbard (also known as the Austrian School). As a rough guess, there are ten Keynesian professors for every Fisherite, and twenty Fisherites for every Misesian. Only Keynesians and Fisherites have an influence on public policy today.


Thus we have our hypothesis already: the “Fiat Money delusion” somehow worked its way into the mainstream, displacing the old, orthodox [Misesian] “hard money” economics. Since it is clear that, 75 years or so later, some school of economics has failed, and since hard-money economics has been long displaced from the temples of power, the simple answer seems clear. Now, let’s try to understand it.

First, both the Keynes and Fisher schools are what a Misesian would call inflationist. (Adams would probably use the same word, too.) That is: they believe that expanding or otherwise debasing the currency is on some or all occasions beneficial to the health of the State. Again, we note the accuracy of our terms: before the 20th century, in both European and Greco-Roman times, monetary debasement was considered the pathetic act of a sick, decaying polity.


We can separate the Keynes and Fisher schools based on their preferred vehicles for inflation. Keynesians think governments should inflate the money supply through deficit spending—the “stimulus” we have grown to love so dearly. Fisherites think the best way to inflate the money supply is by fixing interest rates, a policy sometimes known as “easy” or “cheap” money. I’m afraid that, with AmeriZIRP in full swing, the Keynesians have rather the best of it. Perhaps we can give Professor Madrick credit for being right about that.
So the “new economics” does, after all, live up to its name. It is a product of the 1920s and ’30s, when Britain discovered that her World War I debts would not allow her to stay on the classical gold standard that she once had established—at least, not at the now-overvalued prewar parity. There was too much paper and not enough gold. The failure cascaded, the world switched to paper money, and a new economics was needed. Under which “going off gold” was not a failure at all, but in fact a step into a brighter new world.

Moldbug is into Austrian economics, then. Is anyone surprised? In fairness, I think his appeal is in his approach/rhetoric more than in his positions themselves.


“Human Neurological Uniformity”

Here is where Moldbug plays what I consider the most second-most fun rhetorical game I’ve read from him so far (and unfortunately it didn’t come as a surprise to me because of my previous exposure to him), the “nobles and commoners” thought experiment (ctrl+f for “Human Neurological Uniformity”). I recommend reading on it for the effect of the rhetoric.

As far as I’m concerned, HNU is only a concern because the groups of humans that the government deals with are neatly delineated, whereas actual humans are not. Even accepting the given containers (arbitrarily marked) and accepting an evident genetic disposition for intelligence (which I actually accept as plausible) would not mean anything pragmatically in terms of policy unless certain values are assumed, values that I probably would find distasteful. The “so what?” is the missing bit here, but onward he marches.


Plan Moldbug

Moldbug begins to offer some direct prospective economic and government solutions. The short answer is, Moldbug is an “archist” [sometimes alleged to be a “fascist”, self-described “reactionary” but as we see here, extremely radical], who is carefully repackaging the idea in this pamphlet in order to make it palatable. And to his credit, he does a fun job.

The Economic Plan (Abridged)

Step zero: call up Larry and Sergey, and get them to lend USG a few hundred of Google’s best coders. We’ll need them to write our new financial system. (We don’t have time to do it the Beltway way.) [Note: Ugh.]

Step one: nationalize all market-priced financial assets at the present market price, exchanging them for new dollars. USG buys all publicly-traded American securities, and foreign securities held by Americans. It thus becomes the sole owner and operator of all public companies, and in doing so it also acquires all the banks (for the price of their common stock, which is not much these days). By acquiring all the banks, it acquires all their dodgy mortgages and other “bad” securities. Obviously, after this process, all debts USG owes to itself are cancelled.

Hedge funds, private equity, and other exotic assets held by individuals may require some appraisal. […] Also requiring appraisal are homes; if you are a homeowner, USG calculates your home equity (perhaps using an automated appraisal, such as Zillow’s), and buys it from you. You are now a renter; USG is your landlord. Your new rent is calculated as a percentage of your home appraisal.

The result of step one is that USG owns all financial assets, major corporations, and real estate. In return, each USG citizen has one number: how many dollars they have. Perhaps the most straightforward way to implement this is to give every American a direct account at the Federal Reserve (a privilege now held only by banks). Thus, all your portfolios are automatically sold at the current market price, and your statement is mailed from the Eccles Building. The little number at the bottom, however, is the number you care about. This number has not changed. If your portfolio was worth $250,000, you now have $250,000.

Step two: triple each of these dollars. […] (I told you the plan would be popular.)

Step three: calculate the expected shortfall in future entitlements (Medicare and Social Security), and print new dollars to fill the gap. (About 50 trillion of them, to be exact.) For extra credit, print unripe dollars (bonds) and issue them directly to the actual entitlement recipients, as per the actuarial value of their policies. Otherwise, just hold the dollars until they are needed.

But before we break [the printing press], we have to use it—or we may well end up with $2T dollars, and $2T in financial assets. If you haven’t been skimming, you know what effect that would have on GDP.

Step four: auction all the financial assets previously nationalized—corporations, real estate, etc. There is certainly plenty of cash around to buy them with. Destroy the dollars received in the auction.

Why are we selling the assets we just bought? We bought them to close out a broken financial system, in which the relationship between asset prices and dollars was unstable and unhealthy. We are selling them to establish their free-market price in a stable, healthy financial system. We do not know what the right relationship between the number of dollars in the world and the net price of its financial assets should be. So we ask the market, and the market tells us.

If you were a homeowner before step one, you sold your house to the government and now rent. We don’t want to evict anyone unnecessarily, so we’ll offer you the opportunity to buy back your house for 10% less than the winning bidder—presumably some faceless conglomerate. If you reject this opportunity, your rent to the conglomerate is a function of the price it paid.

Step five: renumber the currency. Every dollar in the world (perhaps about 200T) has a new serial number—from 0 to 200T. This limit will never change. Write it into the Constitution. As long as we can hold the line on this number, our new financial system is built on a fiat currency that will be harder than gold (since new gold can be mined).

Or, for extra credit, redenominate the currency (including debts and contracts, this time) so that rather than a random decimal number of dollars, there is a round binary number—such as 264. This has two advantages: (1) micropayments, and (2) a round binary limit will rapidly get baked into all sorts of financial software, and become almost impossible to change.
And that’s Plan Moldbug. If this isn’t a full reboot of the financial system, what is? If the financial system doesn’t need a full reboot, what does?


Forms of Government

The most interesting piece in his entire “gentle introduction”, as he finally gives some shape to the ideal he’s promoting instead of simply dismantling ideas he doesn’t fancy. Later in the book he builds on these ideas in his historical analyses, and by the introduction’s end he makes claims on how to properly bring about a reactionary revolution. I’ll stop with these quotes, though, from the midpoint of the pamphlet..

The problem with Plan Moldbug is that it can only be executed by a strong government. The election of Barack Obama has considerably strengthened USG, by removing the fraudulent Outer Party and returning Washington to its natural “apolitical” condition as a one-party state. Nonetheless, not all one party states are created equal, and ours is weak and getting weaker. You may think this is a good thing. Please allow me to disabuse you of this notion.

What do we want in a government, anyway? What makes government good or bad?
First, there are two models of preference in government. You can prefer government X to government Y because either (a) X provides better government to its subjects, or (b) you, personally, have more power in the administration of X. Better, as Milton put it, to reign in Hell. We can call (a) the [Alexander] Popean model, (b) the Luciferian model. Whether or not to worship the Devil is always a matter of taste. For me it is Taste 101, however, and I will go with Pope:

“For Forms of Government let fools contest;
Whate’er is best administer’d is best.”

Of all Luciferian motivations, democracy is the lowest. It is one thing to rule in Hell. It is quite another to have one hundred-millionth of a say in the selection of an official whose role in Hell is primarily ceremonial. Most fans of democracy do not, I think, support it for Luciferian reasons. They support it for Popean reasons.They think that deposing Lucifer and holding elections in Hell stands at least some chance of turning Hell into Heaven. While this is definitely not an opinion that anyone was ever reasoned into, it beats pathetic grasping at homeopathic fractions of power. Note, however, that many believe others support democracy for Luciferian reasons.

Moldbug’s views on democracy were clear by this point, anyway, but it was lovely prose.

It so happens that, until I read Carlyle, I thought of myself as a libertarian. [How familiar!] For me, a better government was a smaller government—case closed. Carlyle
is often thought of as a prototype of fascism, a direction easy to see in even an early bit of late Carlyle such as the Pamphlets, and of course the absolute nemesis of any libertarian is the fascist. So how was I won over?

For me, quality of government comes in two dimensions: responsibility and authority. Both qualities are monotonically positive. There is no Goldilocks about them. A government cannot be too responsible or too authoritative—any more than food can be too tasty, bass too funky, or sex too hot. A serviceable Saxon synonym for the latter is strong, and responsibility is no more than common sense. So all we’re saying is that strong, sensible states govern the best.

On “responsibility” and sensibility, Moldbug discusses the joint stock republic.

This is the miracle of capitalism, so familiar and yet still so strange. The capitalist restaurant is operated for the benefit of its owners. The Communist restaurant is operated for the benefit of its customers. But which has better food?

He discusses how and why a joint stock republic is accountable to its owners/shareholders and ultimately to the benefit of the customers as well. He carefully cuts CEO and Elizabethan authority from the very different “totalitarian democracy” structures of our familiar modern despots, Hitler and Stalin.

This is easily seen in their unprecedented efforts to control public opinion, through both propaganda and violence. Elizabeth’s legitimacy was a function of her identity—it could be removed only by killing her. Her regime was certainly not the stablest government in history, and nor was it entirely free from propaganda, but she had no need to terrorize her subjects into supporting her. Not so the dictators of the democratic era, each of whom could have been removed by a combination of their subordinates, and depended absolutely on personal mass popularity to avert this fate. And killing or incarcerating opponents is a pretty obvious way to maintain one’s popularity.

This star analogy was especially appealing to me, the most interesting analogy in the pamphlet:

My favorite analogy for official authority is the stellar cycle. If the authority of government is the temperature of the star, and the size of government is the size of the star, Washington is easily identifiable as a red giant, like Betelgeuse—enormous and cool.

For former libertarians, such as myself, this inverse relationship is critical. The paradox is that weakening government makes it larger. At least, to a libertarian, this seems like a paradox. Once it seems quite natural, you may no longer be a libertarian.

Moldbug distrusts our sacred “separation of powers” as a fallacious principle. “The division of authority is simply the destruction of order.” Dividing powers, though, tends to create more overall power, and the branches of distinct powers will try (naturally) to kill each other (“and when they work together it’s as partners in crime,” Moldbug notes). Democracy portends to cut power up but instead it puts power in the hands of those who can form groups, most likely around unsophisticated ideas that can appeal to many.

We must not be too harsh on the the advocates of divided authority, however. The principle is easily recognizable as what it is: a bad, but not completely ineffective, attempt to produce accountability. Lacking anything like the shareholder structure of the joint-stock republic—which is categorically distinct from democracy, most notably because the interests of all shareholders are identical, whereas the interests of democratic voters differ and conflict— division of authority seems like a decent compromise. That it weakens the State is obvious, but the more people you have in a room the more likely they are to agree on something sane.

The great error of libertarians, as well as many liberals, progressives, etc., is to suppose that the weaker the State is, the freer its subjects are. The opposite is very nearly true. A weak government is a large government—and the smaller the State, the freer its subjects are. Every time you weaken your government, you give it another excuse to become larger.

Essentially, big government is big because it is constantly competing with itself. Restore unified authority, clean the Augean stables, and the great dungheaps which exist only for the sake of themselves are washed out with the Orontes. Ideally, the dungheaps exist only for themselves, but in order to justify their existence they often put quite a bit of energy into molesting the poor customer.

We can see this easily by looking at a level of weakness the US has not quite achieved: personal corruption.


In the US, not individuals but agencies of the State compete for power and importance. Each seeks to expand its own impact, budget, and personnel. If USG, tomorrow, were to find itself operated as a single authority, it would set quite a number of live coals under quite a number of superfluous agencies.

There are many reasons that Plan Moldbug cannot happen, but this is perhaps the most salient. Our financial system cannot be rebooted, because there is no one in Washington with anywhere near the authority required to make any such decision. Even in FDR’s day it would have been a stretch, and the Beltway hasn’t spent the last 75 years turning into Betelgeuse for nothing.

Betelgeuse, of course, will end in a supernova. The fate of the red-giant state is similar. First, a phenomenon Carlyle would no doubt see everywhere in modern America and Europe, since he saw it even in the England of 1850: anarchy. The breakdown of a single general order, the emergence of transient local centers of power—gangs, terrorists, “activists,” and the like.


And I have no solution at all to this problem.