The Biggest Obstacle to Texan Independence

Suppose you were a patriotic Texan, planning on how to make your state independent. As Tinkzorg likes to put it, in politics (not just in war), the professionals think mostly about logistics. This comprises two parts. First, the grassroots aspect of how do you build up enough internal support to make independence a concrete aim of a sufficient number of Texans. On this aspect, the people you want are (in Henry Sumner Maine’s phrase) “the wire-pullers”, the successful manipulators of public opinion, and the people capable of building organizations to expand out such messages and grow power. I have no skill nor inclination in that regard.

But there is a second aspect that’s more interesting to me. How do you plan in advance for likely hostile responses from USG? If such responses don’t happen once your Texan mob/democratic expression of sovereignty arises, happy days! In that case, the first step of building support is the only one that matters. But since you probably won’t have too many cracks at this, one needs to plan for how to overcome Yankee resistance.

I suspect that said resistance initially won’t be military. It may not be military at all. The reason this whole thing is interesting is that the level of committed energy seems so low on both sides. This is true across most of the western world. The number of people in Texas willing to die to ensure their state’s freedom is likely very low. But so is the number of New Yorkers or Californians willing to die to keep Texans in the union. So inertia rules the day at the moment. It’s like a market that’s very illiquid in both buyers and sellers. Small changes in demand or supply can result in large price swings in either direction, which is what makes it a live issue. Sure, the Californians hate the Texans. But this version of “Fuck you, Dad!” could just as easily manifest as “Fuck you, I won’t [let you] do what you tell me”, or “Fuck you, you’re not invited to family thanksgiving anymore”.

The default Yankee instinct, however, is probably power and control. It is impossible to have a federal, live-and-let-live model of each state making up their own mind on gay rights, or abortion, or most politically charged issues (including, once upon a time, slavery). And while not every issue resolves itself at the level of the Supreme Court, progressive soft power is directed at solving the monstrous corollary to MLK. That is, if injustice anywhere is a threat to justice everywhere, then only total global domination of the levers of power is sufficient to ensure my security in the Upper East Side, or Georgetown, or Malibu. It’s for my own safety, and the cause of justice, you see, that I must rule you.

If you add this up, the likely USG response is probably to apply unpleasant non-military pressure, and try to make life maximally unpleasant for Texans in a way likely to cause them to either relent, or just blame matters on the independence supporters.

So what are those ways, and how might you circumvent them?

One guide is to look at what they do to foreign states they don’t like, and want to apply pressure to. Of the toolkit they like the most, it’s sanctions, and especially financial sanctions. In the recent case of Russia, USG threatened to cut off their banks from the SWIFT system. This would leave them isolated from US financial institutions, and force other countries’ banks to effectively decide (presumably on threat of the punishment being extended to them too) whether they’d rather do business with US banks or Russian ones. Whatever you think about the long-term consequences of the Fed’s print-a-palooza, right now, that’s not a difficult decision for a Swiss Bank.

(As an aside, if I were the Chinese, I would think about making an explicit threat that if the US cut off Russia, Chinese banks would only do business with Russian banks and not US ones. Let the US find out if it’s actually cutting off Russia from America, or cutting off America from the rest of the world).

But assuming the Chinese gambit doesn’t happen, for Russian banks, being cut off from SWIFT would be seriously inconvenient, but probably wouldn’t precipitate a domestic banking collapse. Inside Russia, their customers can still withdraw their rubles just fine. In the Republic of Texas, cutting off all Texas banks would potentially precipitate a bank run / panic, if people worry that their US dollars are about to be replaced with some new currency that’s worth less. Though if withdrawals are simply frozen or drastically limited (as Greece did briefly in 2012 in the run-up to their vote on whether to leave the Euro), things would probably be okay in the short run.

Weirdly, things would get funky based on the fact that the concept of “Russian banks” is much more coherent than “Texan banks”. Mostly what you have is Texan branches of national or regional banks. The big question is who controls the computer systems. If you’re, say, Bank of America in North Carolina, and the federal men with guns (or just a furious Fed banking regulator) call up and demand that you turn off all the computers of all branches in Texas, you’ll probably comply (unless the systems don’t make that straightforward to do, which is quite possible). Of course, Texas has USAA and Comerica and the rest of the banks headquartered there, which also operate regionally or nationally. Presumably men with guns will be doing the same thing there, dictating what those banks have to do.

The standard way to solve this problem of bank runs in the past was to print up a new currency quickly, and order the banks to start paying deposits only in the new currency, which we’ll call Texars. There is some difficulty in printing sufficient volume of not-easily-forgeable currency in a raging hurry, but presumably you can make do in a pinch. Effectively you confiscate local dollar deposits and forcibly convert them to Texars. People will be pissed, but eventually they’ll adjust.

But I think that it’s a mistake to focus on bank runs and bank stability as the main obstacles in the modern era. These are problems, but they’re manageable problems. Rather, what’s harder to actually solve is payment rails. Most money is already electronic, primarily through credit and debit cards. And for anything online, this is the only game in town. A currency is both a store of value and a medium of exchange, but between the two aspects, the latter is a much more acute problem if it starts to fail. Hurt the banks, the banking industry suffers, and people worry about their savings. But if you cut off payment mechanisms, pretty much all business grinds to a halt. People don’t need to access all their savings immediately, but they do need to be able to fill up their car at the gas station. If they can’t do that, this probably guarantees either capitulation, or military escalation. If you’re Free Texas, you don’t want either. You want to be able to maintain business as usual, and dare USG to go kinetic first, hoping that they don’t have the stones. And every day they wait, you can solidify your local control.

The single biggest obstacle to Free Texas right now is the hegemony of Visa and Mastercard. The extent of the power that these firms have over everyday commerce is colossal and not widely appreciated. They run your credit cards and debit cards, which have moved from being ways to extend credit to ways to pay for anything, anywhere. Not only that, but the US has past form on successfully pressuring these companies to cut off foreign businesses they don’t like (Pokerstars, Tradesports, etc.). They would absolutely do this with Free Texas, probably as their opening salvo.

The challenge is that any electronic payment system needs both a digital currency in question, a mechanism for transferring that currency between buyer and seller, and the technology in each store and consumer’s wallet to make such transfers. When you spell it out this way, you can see why this is incredibly difficult to conjure up in a hurry. Much, much harder than printing up new banknotes and forcing everyone to take them. This also poses a problem even to people who want to use things like Bitcoin. Even if you did everything on the lighting network so there were very low fees and short confirmation times, how long is it going to take for every gas station or website in Texas to be set up to accept this kind of payment? How long is it going to take to get every boomer or retirement home resident to get a wallet capable of spending it at said gas station? How long is it going to take them to get the actual bitcoin to spend? What happens if you're the last grandma in line to convert their dollars over to bitcoin, and the price of bitcoin has gone up 50% from the massive influx of demand?

In some sense, you need the incredibly hard ask of a payment system that can be turned on at the drop of a hat once you declare independence. The crude version is just reverting to cash under newly printed Texars. This will probably work for an initial period of emergency, but you need some way of rolling things out, and it’s not clear that the task gets obviously easier after a few weeks. Not only that, ideally the system can be developed with plausible deniability for its true purpose.

I have only vague ideas about how to do this, and I don’t know which one is best. But I am strongly convinced that this honestly may be the single most important problem to figure out a solution to.  A significant part of the challenge is that many of the initial steps look like a huge needless expansion in wasteful reporting and intrusive data collection.

One such component is that you probably need to set up daily reporting requirements for all bank branches in Texas to a parallel system. You could maybe do this through some local institution you had control over (the Dallas Fed, maybe? Probably too converged), or some new regulatory agency. Every day, banks must report their closing balances for all customers to the State of Texas. This ensures that when you declare independence, you at least have a snapshot of what amount to credit everyone’s account with in Texars. You would probably want to also measure people’s equity holdings too – it’s doubtful you can stop USG expropriating these, but at least if you have records, you can figure out some kind of compensation scheme. Most likely, I would reassign expropriated Yankee-owned shares in every publicly traded Texan firm to Texas residents that had lost equity holdings from the Yankee confiscation. People might not be thrilled that their shares in Microsoft have been converted to shares in Texas Instruments or whatever, but it’s sure better than nothing.

From there, you’ll need to decide what the payment system is. This is where I’m less sure. There are various options, with their own levels of difficulty.

You could try to repurpose the existing Visa and Mastercard networks. The advantage here is that the tech is already out there, both in terms of cards and payment machines. Existing bank relationships with national banks (both cardholder and merchant) could be set up with existing Texas banks. The problem is the Visa and Mastercard networks, which is how the banks communicate with each other. You could create your own one of these and somehow repurpose the machines to transmit through it. Maybe I’m wrong here, but I suspect that reverse engineering this stuff as the State of Texas may be harder than reinventing things from square one.

My guess is that the easier setup (though still extremely hard!) is to actually just set up a central bank digital currency from scratch. In other words, the Texas Central Bank keeps a central database of all dollar amounts that people have in bank deposits (which, remember, it has records of already). A “central bank digital currency” in its most minimal form is just a computer at the Texas Central Bank (TCB hereafter) that anyone can open up an account with. If the Fed let you and I open up the same kinds of Fed accounts with it that Citibank has, America would already have a central bank digital currency.

In other words, we currently have an extraordinarily cumbersome payments processing system because we launder the entire thing between thousands of banks that all need to communicate with each other, verify balances, etc. But if you were redesigning the system from scratch, and especially if you need a system that you can get up and running quickly, you don’t want to duplicate all this stuff. Just let the TCB store all the accounts. Then payment processing is just transferring trivially from one register in a database to another register in the same database.

In this framework, the process is at least simplified – instead of trying to run things through the combination of every bank’s existing legacy IT infrastructure, you just need a way for each consumer and merchant to communicate with the TCB. The simplest way to do this is with an app. Download it, and use the camera to take photos of your Texas drivers license, plus your face next to your ID, plus whatever sequence of random requirements are selected (e.g. take a photo with your ID where you close your left eye, put your right index finger on your nose etc.). Then you’ve got access to your existing bank balance.

Want to pay for a purchase? The vendor generates a QR code that contains the amount of the purchase, and the account to have it credited to. You use your phone on the app to take a photo of the QR code. An alert comes up – do you wish to send $12.95 to “McDonalds Plano, TX”? Click yes, take a photo of your face to confirm your identity, and the purchase is complete.

In this version, the role of banks is significantly scaled back. You go to a bank if you actually want to deposit your money into a savings product with a higher rate of interest, with the money being lent out to borrowers. If you want an actual credit card, you have some arrangement with the bank where they pay for your stuff at the TCB using their own funds, and you pay them back on whatever arrangement you negotiate with the bank. I suspect the demand for this service specifically is actually quite low, and a lot of current credit card demand is really just demand for easy electronic payments. Sure, there are airline miles and other reward programs, but this is just a roundabout way to maintain the duopoly of Visa and Mastercard by effectively fleecing cash-paying customers by a small amount. If all this nonsense disappeared, the system would probably be better off. 

In the medium term, you're going to have the problem that taking all this money out of the banking system will likely increase interest rates, by reducing the amount of funds banks hold at any time that they can loan out. That's a problem (unless you're an Austrian economist, in which case it's a feature), but it's not an immediate problem, and can be mitigated down the line with TCB monetary policy or direct lending to banks. There’s nothing to stop consumers keeping more money in an actual bank earning interest by making risky loans. But if you just want to make and receive payments, you can now do it without a bank. There’s also a longer run risk of centralisation of all money in the hands of the new Texas government. I suspect this already exists with current banks, but people just don't think about it much (ask Conrad Black, when they froze all his assets before his trial which made it difficult to mount an expensive legal defense).

At first, there will be a challenge figuring out the various anti-fraud measures, dispute resolution stuff that banks have worked out for ages. Even getting the whole thing into the hands of consumers is hard, and making sure it scales But it’s at least feasible. The challenges are basically:

-Design an app

-Design a database that stores all the balances.

-Design an API for stores to generate transactions  

-Get customers and businesses to download the app

Then every transaction just requires two people holding smartphones, which they already have. Figuring this out from the business end might be a little complicated, but the consumer end at least doesn’t require sending plastic cards to every person in Texas, or new payment machines to every business. The minimum viable product is that each restaurant has one guy holding a smartphone that implements all their transactions until they can redesign their IT systems to make it smoother.

I mean, this is a several year project! I don’t mean to minimize how hard it is. It's also a long way from the core competency of any government, let alone a future government. It seems likely that you'd need to develop it in secret with some rich, sympathetic Texan fintech CEO or something similar. But the hard work is all doable beforehand. Once it’s go time, you just need everybody to download the app (though you should assume that they’ll also prevent you pushing it to App Store or Google Play, and have plans in place for that).

This isn’t the only variant on the plan. I’m sure crypto boosters can imagine some kind of crypto version where you fork Bitcoin and airdrop tokens to all the existing bank account holders. I suspect the challenges of getting this up and running are quite a bit harder than my version, but who knows.

I am actually less wedded to the specific solution that I propose than I am sure that the problem is probably the most important problem to be solved. As far as I can tell, there hasn’t been a new breakaway country that set up in the age of digital finance against the wishes of USG. If you want to be the first, you would do well to ponder the paraphrased version of Jonathan Swift:

“They have his soul,
Who have his payment rails.”

Last Thoughts on Voter Fraud

Winston Churchill once observed that a good definition of a fanatic was someone who can’t change his mind, and won’t change the subject.

On the subject of voter fraud, I like to think that I meet neither arm of the test.

On the first part, I feel like I’m definitely open to having my mind changed, but not many people engage with the better evidence on the subject, so I don’t often hear good arguments to the contrary. Then again, every fanatic on every topic feels the same way, so perhaps this doesn’t distinguish me very much.

But I can at least make sure I don’t fall foul of the second arm. Few things in this life, even if true, are worth driving away those near and dear to you, having friends of long standing view you as some crank and lost cause obsessive. My twitter feed the past month has been that of a single issue kook, which has gained me a lot of new followers, but I never really wrote to build a large audience, and definitely wrote for the sheer joy of being able to say whatever was on my mind, not for advancing a single cause.

To know if you’ve started to become viewed as a crank, you have to listen to the silences – the friends that don’t respond to your whatsapp messages when you send them something on the subject, the people on twitter who used to engage that you haven’t heard from for a while. You don’t have to change your beliefs about the election because others don’t agree with you, but you do need to value your audience, especially when they are friends and loved ones.

In finance, most trades are essentially neutral – if you buy a stock, and nothing happens, you stay flat. However, a famous trade in foreign exchange is the carry trade – borrow in low interest rate currencies, and invest in high interest rate currencies. There, if nothing happens to the exchange rate, you win (on the difference in interest rates). This term, “carry”, gets used broadly to describe any such trade with this property, where you win by things staying the same. An anti-carry trade is thus the opposite. If nothing happens, you lose.

Since the Wednesday morning after the election, it has been quite clear that Biden had a strong carry trade, and Trump had an anti-carry trade. Something fairly large had to happen to change the answer. The Supreme Court case with Texas was my last bet on what that something large might be. Related to my post earlier this year on how Republicans can’t get their appointed judges to stay conservative, the answer was depressing, if not surprising. The number of ways the outcome can change at this point is small, most of them would be highly alarming if they occurred, and not many of them seem to hinge upon a great new empirical analysis of voter fraud being written by me.

So having written much on the subject, this is my coda to the past month’s thinking, at least for the time being. Like the Dylan poem to which the title is an homage, it’s not that the issue is suddenly dead, it’s just a way of collecting one’s thoughts and drawing a line under a chapter that seems to be coming to a close. I will probably have more to say on the subject, like every addict, but the time for being a single issue author is passed. Please bear with me even if you feel heartily sick of the subject. I have spent an extraordinary amount of time thinking about these issues over the past month, and I feel confident I may yet be able to tell you something new, the things that at least I didn’t know before I started out. Without further ado, they are as follows.

The average American believes three things about voter fraud in his country.

First, he believes that there is very little of it, perhaps almost zero, and certainly not enough to swing an election.

Second, he believes that if there were a reasonable amount of it in general, he would have heard about it, from experts on the subject.

Third, he feels that if any single election had been fraudulent, said experts would be able to identify such fraud and bring it to light before it was able to decide the election outcome.

I am not going to have much to say about the first point, at least not directly. I suspect that by this juncture, the number of people who haven’t made up their mind about this is very small. My firm belief is that one’s priors on this should be quite wide, but that’s another subject.

Rather, I want to convince you that the second point, and especially the third point, are wrong.

While I don’t want to inflate my credentials here, I am one of those fortunate people (or unfortunate, depending on perspective) whose skills and training puts them in a good position to actually be able to empirically study the question of voter fraud. There are few academic papers on the subject that I would not back myself to be able to read and understand.

I have spent almost the entire past month digging into various ways of trying to find voter fraud. Much of that work has been out of the public eye, and not all of it was ever released officially to anyone. This is how data digging works – you do a lot of analysis for everything you actually write, in the “measure twice, cut once” manner.

And I can tell you, as someone who’s hunted very hard for it – voter fraud is extremely difficult to prove using only public data, whether it actually happens or not.

To which you might immediately think – that’s because there isn’t much voter fraud!

On the contrary. It is not at all difficult to find extremely alarming and weird anomalies in election data.

A good working definition of fraud is “wrong data entered for malicious reasons”. The big challenge is that a good working definition of data errors is “wrong data entered for innocent reasons”.

The extremely hard part is thus not finding anomalous and suspicious patterns in the data, but proving with certainty that these arise due to malicious intent. Moreover, one has to rule out every possible innocent reason these errors could arise, where the functional form of errors is allowed to be incredibly vague. Further still, the counties and election officials are given almost every single benefit of the doubt. Moldbug is right on this point. The sovereign is he who determines the null hypothesis.

One can very easily find loads of extremely suspicious things in the data.

One can find 169 updates in the New York Times county-level election update data where the vote count in one category (in-person or absentee) actually decreased in an update. Here is one of the most suspicious, in Montgomery County, PA which still hasn’t been well-explained. You have not even heard of the remaining 168. Here’s the count by state:


    state |      Freq.     Percent        Cum.
------------+-----------------------------------
         AL |          1        0.59        0.59
         AR |         12        7.10        7.69
         AZ |          5        2.96       10.65
         FL |          3        1.78       12.43
         GA |         24       14.20       26.63
         IA |         20       11.83       38.46
         ID |          1        0.59       39.05
         IN |          1        0.59       39.64
         KS |          2        1.18       40.83
         MA |          1        0.59       41.42
         MI |         21       12.43       53.85
         MS |          1        0.59       54.44
         NH |          1        0.59       55.03
         NJ |          4        2.37       57.40
         NM |          1        0.59       57.99
         NY |          3        1.78       59.76
         PA |          9        5.33       65.09
         SC |         30       17.75       82.84
         TX |         11        6.51       89.35
         UT |          1        0.59       89.94
         VA |         15        8.88       98.82
         WI |          1        0.59       99.41
         WV |          1        0.59      100.00
------------+-----------------------------------

Several of the disputed and contentious states are heavily represented – Georgia, Michigan, Pennsylvania. But so are places you haven’t heard of. Arkansas. Virginia. Iowa. South Carolina.

(By the by, through my various digging, Virginia is my bet for “state with the most election fraud in 2020 that you never read about”, and not just because of the metric above)

Look at how much work went into the analysis of Montgomery PA, which covered one of these data points, trying to rule out every possible innocent explanation, and showing additional evidence that points to fraud. Do you think anyone is digging that much into the remaining 168? The NYT data can be downloaded in a bunch of places, and it's not hard to find these updates. I've looked at them, about half of them are quite small, less than 100 votes. Some of the rest look like a single set of ballots being reclassified from one category to another. But even after taking out all of these, there's a large number of these where frankly I have no idea what's going on, and I doubt you would either.

One can find vote updates that look like colossal outliers in terms of the fairly intuitive rule that updates can be either large, or unrepresentative, but not generally both. Here’s a long analysis of this. The most suspicious, in Wisconsin, Michigan and Georgia (surely a coincidence with the states identified on the metric above!), also came in the middle of the night, and were large enough to swing the election. The defenders argue that this is all just normal absentee votes. At least for Milwaukee, one can also find corroborating evidence in suspicious patterns in down-ballot races too, that at least don’t fit simple stories about mail ballots.

But suppose you don’t believe the New York Times data. That could all just be errors! Indeed. Couldn’t it all.

One can find 58 Pennsylvania registered voters born in the year 1800, 11 born between 1801 and 1899, and 25 born in 1900. Admittedly, these particular cases are more likely just errors - if this is voter fraud, it’s the stupidest form ever, since it’s going to stick out like a sore thumb. But it proves beyond any doubt that errors in this data do not get checked or corrected anywhere. And indeed, these implausible years of birth are in fact the mere tip of the iceberg of suspicious patterns in birthdays, which follow much more notable patterns indicating fraud involving round numbered days of the month and months of the year, plus month distributions that are too smooth. These patterns consistent with fraud are related to counties voting for Biden, including at record levels.

Or suppose you don’t believe statistics at all. You insist on hard evidence! In Wayne County, MI, you can find totally normal scenes from election night, like them boarding up the windows in the vote counting center to stop observers even seeing in. In Fulton County, GA, you had the insane spectacle that on election night, election officials sent all the observers home, telling them that counting was over for the night. In the press, dubious accounts were circulated implying that a burst pipe was the cause, although it turns out that may have been from that morning, or may not have happened at all. In any case, an hour later, they started counting again, with no observers in the room, using ballots in suitcases under a desk that had been delivered at 8:30am that day. Oh, and all this was caught on video. As part of this, you can also watch the officials scan the same set of ballots multiple times.  As has been noted before – if this were happening in a third world country, the State Department would declare it presumptively fraudulent. This isn't an exhaustive list. This is the ones I managed to remember and write down, while working furiously on other things over the whole period, and where the main allegations were actually caught on video. If you go through everything alleged in affidavits in lawsuit, many are much more shocking, though also harder to verify.

My point is not that you should believe this absolutely nails down fraud, let along how widespread you should infer the fraud to be based on these incidents. My point is to emphasise how difficult the task is, even if there were actually fraud. Fraud would look exactly like this. People switching votes back and forth to swing a total, or deleting inconvenient votes from the count. Bringing fake and colossally unrepresentative ballot dumps in during the middle of the night. Registering tons of fake voters to flood in mail ballots. Counting happening in secret after observers are sent home under false pretenses. Reports coming in from whistleblowers in affidavits.

But how sure are you that these aren’t just data errors in very noisy data? That someone incorrectly entered a vote total in a database, and later corrected it? That patterns in absentee ballots, while highly weird, represent odd preferences of mail-in voters? That the ballots in Georgia were all scanned regularly, and that the machine will never count ballots twice if they’re scanned twice, and that there’s not some innocent mixup as to why everyone was sent home? That the witnesses in the lawsuits were confused about what they saw?

If every benefit of the doubt is given to the other side, what's the chances you can ever overcome them all?

Suppose, like a number of readers, you are in the category of someone who still isn’t convinced. There’s some weird stuff going on, sure, but it doesn’t rise to the level of “fraud may have decided the election result”.

Three good questions to ask are the following.

1.      What kind of voter fraud do you have in mind?

2.    What evidence would actually convince you that there might have been this kind of voter fraud?

3.     What data is actually available, and based on this, how likely is it that this evidence might ever conceivably be discovered?

The first question, as it turns out, is actually the most important. Because fraud comes in many different types, and the likelihood of catching them varies enormously.

The most egregious type is to make up election returns out of whole cloth. In this version, the vote totals are plucked from someone’s head, and don’t correspond to any actual ballots or button presses in the real world.

This type is actually the most likely to get caught. Totally fake numbers leave lots of traces that can be studied by things like digit analysis via Benford’s Law. Only the most basket case third world countries do this. I think one can say with high certainty that, at the conservative end, this does not occur very often in US elections, and I would wager strongly in America does not occur at all.

The next category of obvious fraud is when some dictator reports winning 99% of the vote. Like Theodore Dalrymple observed about propaganda in communist countries, this kind of election is not actually meant to convince anyone, but rather to humiliate them, to insist on obvious lies and dare them to say differently.

But even here, most of the argument about fraud is already at the level of a smell test. Suppose you had to prove statistically that it was impossible that these election results in Cuba or Syria were genuine. How exactly would you do it? I suspect you’ll find it’s a lot harder than you might think. Bear in mind, in 2020 the “Norristown 2-2” precinct in Montgomery County had reported mail-in votes up to November 10^th where Biden had won 98.7% of the two-party vote, across 150 votes. Please tell me how you plan to show that this number is genuine, yet Assad’s 88.7% of the vote is not. Not by digging up the raw ballots (though even here, if Assad can produce his fake ballots, you may still be out of luck). From your computer, which is what nearly all of us have had to do.

Or put it differently. Suppose that Assad in Syria decided to rig the elections, but instead of generating insane levels of support, he decided to replace all the genuine ballots with fake ones that showed him getting support levels between 60% and 71%, with turnout at 70% of the electorate. He has total control of the vote counting process.

You know this is bullshit. But that’s not the question. How would you go about proving it?

Almost anything below the first two cases – making up numbers whole, or 90% vote shares – is actually extremely difficult to prove, even if it’s occurring. I mean, he kicked out the observers, which is pretty bad. But so did Fulton County, GA, and kept on counting.

Let’s take some scenarios more likely to actually occur in the US.

You are an election official who is not being closely monitored. There is a list of eligible voters in your precinct. Suppose it is a normal year, with relatively few absentee/mail ballots. You have hidden a genuine ballot box of pre-filled in ballots, with genuine ballot papers, that you know contains 1000 votes total, of which 97% are for your candidate. All registered voters in your precinct are on a list, and get crossed off as they come in. You wait until polls close, and you can see the list of everyone who hasn’t voted. You cross 1000 names off the list, and bring in your pre-filled in box of ballots, mingling it with the main ones.

How do you propose to identify that in the data? If you had periodic updates, you can maybe find batches that look really anomalous, sure. That’s what this analysis did! And this one! The scenario wasn’t exactly the same, but it was similar. Did you find it sufficient proof?

In this particular variant, every voter is a genuine, registered voter. Every voter votes exactly once. Every ballot paper is a genuine ballot. Every vote corresponds to a ballot paper that can be counted and re-counted. No ballot gives any indication it was not cast by a genuine voter.

Let us agree on this much. Unless you catch the person in the act, this will be flat out impossible to detect just by looking at final election results. I actually don’t know how you’d prove it with any other data either. Don’t believe me? Propose a test. I’m all ears. I have heard stories from campaign operatives that this actually happens, I didn’t think up this idea myself.

But I’m not here to convince you to believe those stories. Suppose one accepts, as indeed you’re told, that there is no evidence of this kind of voter fraud. It’s true. There broadly isn’t. Now, ask yourself, what’s the signal to noise ratio of this kind of lack of evidence? If there were no voter fraud of this kind, we’d expect to find no evidence. If there were voter fraud of this type, but we lacked any realistic ability to catch it, we would also expect to find no evidence. So the lack of evidence tells us almost precisely zero one way or the other.

Especially germane to the current election, there are many types of fraud involving mail ballots. It is much easier for a person to send in mail ballots for someone else, than to turn up at a polling station and claim to be five different people of different ages. This mail then gets handled by postal workers, with a crazily weak chain of custody, from the same people that lead to your Amazon packages being stolen with reasonable frequency. This leads to a number of stories you can find for the search string “ballots found in the trash”. Meanwhile, signature verification on potentially fraudulent ballots got greatly weakened in 2020 in many of the key states, just as the number of mail ballots increased massively, as described in the Texas lawsuit. A discussion I had with a campaign operative (which I haven’t been able to verify, so I’m just reporting the claim, not asserting it) said that in Arizona, once the signature was verified on the envelope, the envelope got thrown away, making it impossible for anyone to verify after the fact what it said.

Don’t think about “was there fraud”. I’m not interested in the question of haggling over the specific details here of what precisely happened in each place, and you can make up your own mind on that. Rather, I care much more about the question of “if there were fraud, would it have been caught?”

And here’s the crazy part, if you’re sure that election fraud in general would have been caught. 2020 is actually the single best year in history to catch election fraud. Because unlike in the past, we have periodic snapshots taken by internet amateurs of the update of counts scraped from the NYT website, rather than just the final tally. We can also download a ton of stuff from the internet.

For most past elections, we can get final vote counts at the precinct level if we’re lucky, or the county level more likely. Votes by candidate. That’s it. You want to go back and find out if the 2016 election was fraudulent, that’s basically the overwhelming extent of the data you’ve got to work with. Oh, and four years later, that data is still riddled with errors, because it has to get kludged together from 3300 odd counties, with vastly different reporting systems.

Tell me what kinds of fraud you are confident you can identify from those numbers. Not just you, but “the experts” who study this stuff.

I understand enough about this data to know that while there are clearly some tricks one can do if one is clever, there are large and fundamental limitations to how much fraud you can ever hope to identify from this kind of data.

And that’s it. That’s basically what you’ve got. Or you can hope that someone does something dumb and gets caught in the act. But is that the state of the art strategy? How many would slip through the net for each one that gets caught, like in Fulton County GA? Not that anything is going to happen to the people in Fulton County, which also is quite revealing. In a year, I predict fairly confidently it will be one more rumored and then forgotten local story, and the videos will eventually disappear. Along those lines, if more evidence does come to light, you certainly can't publish them on Youtube, no matter what you find from here on out, as they've said that their policy is to delete all such videos. Big tech has spoken! The matter is closed. There is no evidence of voter fraud, and also, you had a total of four weeks to come up with any of it, before the verdict is entered for all time. 

I think there is a strong case to be made that, for many types of fraud, catching them is extremely difficult.

And so almost the entire question comes down to one of priors. We have no reasonable hope of actually identifying it from the data. Most people are sure it is extremely rare. I am not. The evidence demanded to budge their priors is enormous. That evidence will never be found, whether there is fraud, or whether there is no fraud.

And so finally, we get to the last question. Even if fraud could be caught, eventually, somehow, with enough time and analysis and manpower, would it be caught in time?

Reader, prepare yourself, because the next sentence may be shocking to you. 

The Trump campaign, in many respects, was not very well organized.

But I have come to have enormous sympathy for the sheer scale and difficulty of the task in front of them, even if they were well organized.

A campaign is not a permanent organization, but a bunch of operatives coming together for a particular period and task. I suspect, and it accords with the few anecdotal discussions I’ve had with people who’ve worked on them, that most presidential campaigns are a shitshow at the best of times, but some candidate has to win, so we assume after the fact that their campaign internally must have been great, when it probably wasn’t.

So what happens after the dubious election returns start coming in in the dead of night on Wednesday after the election?

You have a small staff. Most of it is lawyers and political operatives, not statisticians and data scientists. Everyone is absolutely frazzled. You are trying to put out a thousand fires. You are trying to coordinate dozens of people and teams. Everyone is demoralised and worrying about their employment future, since most were working on an implicit promise of employment in the administration if they won, which is now looking unlikely. You are trying to keep track of ten thousand different leads and reports coming in from all over the country. Half of them will be straight up wrong, either bogus third hand accounts, or claims from someone genuinely concerned but insufficiently skeptical and not probing into alternatives. Avoiding this is actually quite hard, to be honest. When one really wants to find fraud (or indeed any empirical result) it is psychologically difficult to then switch gears to convincing oneself of all the ways the hypothesis could be false, and then trying to find evidence of that.

Of the other half of the leads, perhaps 80% will be plausible, but either inconclusive, or admitting of multiple interpretations. Of genuine ones, they may be contained in a two hour video that’s not very well explained, and you don’t have time to watch the whole thing. They may be written down in some long technical piece that you don’t have the training to follow entirely, or which doesn't explain clearly what its doing. Even if you think it seems legit and you understand what it’s doing, you have to take a gamble that it’s not a coding error or bad data cleaning or some other screwup. They may be some anonymous whistleblower that you have to spend resources to try to find out if they’re fake or well-intentioned, if they’re right or wrong, if their claims are provable or unprovable.

Now, you have to figure out, can I get this in an affidavit? Is this author willing to go public? Will this convince a judge? Can I get an expert witness to testify, assuming a judge is even interested in hearing evidence, which often they're not? As far as I can tell, the statistical analyses I liked the most were all written pseudonymously. It is not a surprise that they didn’t find their way into the major lawsuits. The Williams professor who did a god damn confidence interval for the Matt Braynard analysis got dragged in the papers by his utterly contemptible colleagues. The chances that they would do this if he’d computed a confidence interval for literally any other survey in history are zero. Are you surprised that more people aren't signing up to put their professional reputations on the line for what's almost certainly a Hail Mary, and which won't even benefit them personally?

But even if you can find an expert willing to go public, how long do they have to generate such a report? You need to scramble to scrape and download the data straight away from lots of sources, and start analyzing it. Find the weird anomalies, dig into them, try to figure out which ones might be errors. Think of different ways to test them. Think of different data you might get that would corroborate this. Manually do more gathering, and cleaning, and merging. Think of which things might rise above the metric of “dubious” to “very hard to explain with anything other than fraud”. Run the results. Double check the results. Triple check the results, because if you start making false claims, you’ve actively hurt the cause (and you’ll feel like a total fool and fraud). Start writing the results up. Refine the writeup to make it less jargon-y. Try to balance the tension between “easily accessible to public readers”, “understandable to smart but busy and innumerate lawyers” and “detailed enough to withstand public scrutiny by hostile experts or readers”. Also, there’s dozens of different investigative angles you can take. Each one takes a few days or a week to look into, let alone write up, let alone actually get published. You’re pulling 80 hour weeks, but even so, there’s not many weeks you have. How many such analyses can you write? Meanwhile, you're working against the clock without knowing quite what the deadline is for "too late to matter", but you know it can't be very long. 

Now, consider the media environment you are operating in, if you are the Trump team. The same media that in 2016 was willing to report uncritically every breathless allegation of Russian interference, that was willing to circulate as evidence a single anonymous dossier of allegations about Trump and treat it as a basis for campaign wiretaps and impeachment, now is loudly insisting that a) the race is over, and b) “experts assure us there is no voter fraud”. Meanwhile, on the rare occasions they do report on the matter, they only focus on the most ludicrous witness statements and the most easily debunked claims. These are sure to circulate widely, so that by the time previously open-minded readers get around to seeing actual good evidence, they’re largely exhausted and cynical, and often won't even read it.

Partly for the fun of trolling, and partly just as an experiment, I started asking the Montgomery County twitter account, and its commissioner in charge of the election, Ken Lawrence Jr, why it was that their county looked so crooked on multiple dimensions, both in terms of having the most suspicious vote update in America, and the third most suspicious set of voter birthdays among Pennsylvania counties. They never answered. I tried poking newspaper reporters from multiple papers. Most didn’t bite. Ross Douthat, to his credit, linked to the Montgomery piece, admittedly in a one-liner in his NYT article on how weird it is that these kooks believe in conspiracy theories. I asked him in multiple places – have you, or any other journalist, actually just asked these guys in Montgomery County what their explanation is for it? Even just to get a response on the record? No dice. Nobody was interested. Hell, I couldn't even get a response out of the Pennsylvania Republican Party twitter account!

I didn’t really expect anything different, so my demeanour was mostly one of trollish entertainment, rather than disappointment. But at the end, even I found myself more cynical than I expected.

If you are Republican, and alleging voter fraud by the Democrats, the media will be actively opposed to you at every single step. How could they not be? These are the same people that have been writing about how Trump was Hitler for the past four years. Does any reasonable person expect them to voluntarily start digging into stories that might make Trump actually get another four years, when they can just turn a blind eye and end it all? Besides, if they start being called a voter fraud truther, it will be disaster for their career.

There is one more piece of the puzzle worth noting.

How many people do you think there actually were working on this, total, over the past month? At least on the data side?

The average person probably assumes that there must have been thousands of highly paid professionals working on it.

I estimate that the number is perhaps 40 at the high end, and maybe as low as 20. (If the sides had been flipped, it would definitely be more, perhaps a lot more, but I don't know). I’d estimate that nearly all of them were volunteers juggling other full time jobs. I personally knew about ten of them working on analysis, and there were a number of other excellent people helping enormously with data gathering and processing. 

That's it. That's the full extent of resources around the world that have gone into investigating from a statistical point of view whether the 2020 election may have been decided by fraud. With the time and resources available, it's remarkable we found as much as we did.

At least personally, I never really expected to change the outcome. The task was basically impossible, but damn it, we worked until the end anyway.

This is all one can ever do. 

To live not by lies, as Mr Solzhenitsyn put it.

And to fill the unforgiving minute with sixty seconds worth of distance run, as Mr Kipling put it.

To the ten, and to all those I know who helped  in the effort – friends, it was a true honour and pleasure to work with you.

The thorny problem of inconstant judges

One of the periodic themes of this journal is that the reality of power is everywhere and always messy. I have described my conception that the most important high-level problem to be solved is well-defined and secure property rights in the state itself. This is a slightly more formalized way of saying "secure power".  I'm certainly not claiming originality in this idea - Moldbug's formalism is what got me started thinking about this.

In viewing matters this way, I think it's important to know what we're studying. Perfectly secure power in a governing regime seems to be somewhat akin to a perfectly efficient engine. 

In both cases, it's easy to design one on paper. The process is entirely straightforward! Fuel is mixed with air, then inducted into the cylinder, then the spark plug ignites it. What could be easier than that? There's an absolute monarch, and everyone just follows his orders.

And then when you actually implement the thing, you find all sorts of leakages due to annoying complications in details of the machine that you'd largely abstracted away from. Understanding these turns out in many ways to be more of an engineering problem than a pure science problem. 

But even though the perfectly efficient engine or perfectly secure monarch may be a platonic ideal, that doesn't mean that the forces preventing you from getting there should be viewed as mysterious. Indeed, if you do that, you'll have a very hard time improving things. Maybe you can be a menshevik, and slightly improve the design. Maybe you need bolshevism, to start with a new design that doesn't produce these specific frictions (although, of course, it will produce others, perhaps others you hadn't encountered or thought about).

More importantly, in either case you should care very much about how far away you are from the platonic ideal. Otherwise you're just committing Asimov's Relativity of Wrong. Is your government the equivalent of a nuclear power plant, or a coal power plant? And if the latter, how might you change that? Moreover, the messy world of the social sciences makes things hard. Physicists love to mock the social sciences as being unscientific, but there's no escaping the fact that we have to design this particular power plant based on the computational output of a large number of meat sacks, all designed slightly differently, all interacting with each other. 

The modern world presents us with very few serious monarchs to examine. This also liberates us from focusing on the specifics of what went wrong in any one case (what could Louis XVI have done differently? Lots of things, as it turns out). 

A lot of people on the dissident right have thought hard about the problem of delegation, which is definitely a first order problem, probably the largest one. No man rules alone, and the sovereign's decisions have to implemented by his subordinates. What are their incentives to implement it honestly, or competently, or not divert resources to themselves?

But there is another problem that I think gets relatively less focus. Which is the following: how does the monarch prevent himself from being psychologically manipulated or pressured by those around him?

Among the closest modern analogs to an absolute monarch is a US Supreme Court Justice. The analogy is not exact, because there's a very small-scale democracy going on within the nine of them. But this is voting at a level where your vote often might matter, and you know the parties, and it's a repeated game. 

In the court context, the delegation problem is how to make sure the court's decisions get implemented by lower courts, and by other governmental agencies. This is still challenging - what happens if lower courts routinely ignore your precedent, and you have to slap them down over and over (or just let your decision get undermined)? What happens if people just refuse to follow it? That used to be a big problem but is less so these days. 

But if you're on the right, the delegation question is not the central problem with the court today. The Republicans have long made a point of trying to get better, more conservative justices appointed to the court. And yet, as night follows day, maybe half of the supposedly conservative justices turn out to become liberals. Maybe if we vote for Trump, we can get some more rock-ribbed conservative justices like Sandra Day O'Connor, Anthony Kennedy, David Souter, John Roberts, or, increasingly, Neil Gorsuch. 

This problem seems to be wonderfully emblematic of the failures of the mainstream right. They keep losing. They know they keep losing. They are unhappy about the fact that they keep losing. And yet, their state of the art solution is just "push harder!". More of the same should do the trick! More voting. More rallies. More donations to National Review. More Republican Senators and Presidents, so we can get more Republican-appointed judges, just like...the same ones that put us in the unsatisfying position.  For republicans, it's basically a coin flip. Appoint the guy to the court, and maybe he turns out to be a stalwart judicial conservative, like Scalia or Thomas. Maybe he turns out to be mushy, like Roberts. Maybe he turns out to be a complete liberal, like Souter. 

If your best case scenario is a 50/50 chance at being right, congratulations, you getting to appoint every single judge results in a random walk over judicial appointments. Lose a single election, and it's downward drift.

At almost no point does it seem to occur to the mainstream right- why do half the Justices we appoint turn out to be traitors? And more importantly, what can we do to stop this happening? 

Perhaps, dear Republicans, this is a problem you ought to spend more time seriously studying, rather than just turning the same crank over and over and expecting different results

There are a few ways to think about what might be going on.

The first possibility is treachery. Everyone has to hew to a narrow set of Overton Window beliefs to get appointed. Prospective Supreme Court Justices are all skilled at concealing their true feelings, if such feelings should be undiplomatic. They're experts at saying the right thing to get ahead. Republican party chiefs will just never know what a person will do until he's finally unconstrained. Power tends to corrupt, and absolute power corrupts absolutely, as Lord Acton put it. These guys don't get absolute power, but they get enough of it that when you can't force them to do what you want, they do as they please.

The main problem with this hypothesis is that it stumbles on the fact that Democrats never seem to have this problem. When the chips are down, and the issue before the court is politically charged, rather than just some arcane matter of trusts law, Democrat appointees always seem to toe the party line.

So if this is our explanation, we've largely just kicked the can down the road a little. Why is there treachery among Republican appointees, but not Democrat ones? Even if the field is littered with sociopath traitors, is there nobody talented enough to get appointed by a Democrat, then drop the mask and reveal their inner Scalia?

Let us instead consider an alternative. All these justices started out intending to be conservative, but instead buckle under the social pressure brought to bear upon them. 

From the comfortable distance of one's armchair, this seems like a small thing. So what if some law school students don't like you? 

Reader, do you know what it's like to be hated? I mean, viciously hated, smeared in the New York Times, denounced as a stoolie or a rapist or sexual harasser or an Uncle Tom, day in, day out? Publicly stabbed in the back by people you helped and trusted, over and over? Like the pressure brought to bear on people by hostile journalists and the police, this is something that it's easy to sneer at until it happens to you. 

The reality is that most people just aren't good at dealing with being hated in a vicious and public manner. Despite their best intentions, it sways their choices. 

It's tempting to explain this in terms of concrete quid pro quo arrangements. If you switch to writing liberal judgments, you get invited to better parties and events, or have more fun friends or whatnot. This is definitely part of it. But I suspect there's a pure psychology aspect too. 

To pile metaphor on metaphor, look at the home team advantage in sports. Mosokowitz and Wertheim looked at this. The main driver of the home field advantage is not that it makes the players perform better. I was always skeptical of this myself,even before this study. These are professional athletes, with huge amounts of money at stake. Do they just not try their hardest without cheering? As it turns out, no, the effect seems to mostly be on the referees. And this is nothing but pure psychological pressure, on people literally selected and professionally rewarded for impartiality. The referee is anonymous. He's not getting invited to any swank parties. Even if he makes a lousy call, it's very unlikely that he's going to be harassed by name. The cost is just fifty thousand angry people yelling at you if you grant the penalty kick, and the same fifty thousand cheering if you just let it slide. 

And I suspect this is a large part of what's going on with Republican appointed justices too. Most of these people are law school strivers. They've been groomed for success for a long time, told they were the smartest in their class, voted most likely to succeed in high school, all that stuff. Then, they get made into some lower court judge, where they get less power, but almost total deference. Yes, your honor! No, your honor. And if you do something controversial, what happens?  You are mostly just "a federal court judge in Hawaii". You are the epitome of the machine - a cog, implementing something, replaceable with another cog. No sense hating the cog! But once you're on the Supreme Court, you are now Chief Justice Roberts, and your choices reflect on you, not the machine. 

Look at smiling John Roberts in his confirmation hearing:

Do you think that, before he took on the job, this guy had any experience of being hated? To ask is to laugh. The words on everyone's lips were "looks like nice guy". Good luck with that. He's a nice guy alright.

This is part of what soft power is. It's not always just a euphemism for hard power in disguise, the polite note before the US air force crushes your town. The reality is that psychological constraints are real constraints. We can't see them, but that doesn't mean they're not there. Most people simply aren't good at dealing with this pressure, or at a minimum, will be worse at dealing with this pressure than they think they will be if they haven't yet been subjected to it. It's reminiscent of the Randall Collins point about violence. Most people also don't like inflicting random violence on people, except in a limited range of circumstances. 

Most people also don't like being yelled at with curses and hatred, even if that hatred is very unlikely to result in actual violence to them. Monkey brain knows what's going on. Monkey brain knows that an angry crowd yelling at you is highly correlated with you being dismembered. Monkey brain responds, for the same reason that you get queasy when walking on a glass floored skyscraper walkway. 

To solve the problem of the social pressure being brought to bear on Supreme Court Justices is probably a coup-complete or regime-complete problem - something you can't solve without first changing the government. A good giveaway for such things is if at any point they involve the step "next, we reform or replace the New York Times".

But if you were of the menshevik mindset, there is probably still progress that can be made. The petrol engine can be improved, even if we can't yet turn it into a fusion engine. 

In particular, one useful rule of thumb when judging appointees - what experience do they have with being smeared and hated? And do they have a personality likely to be more resistant to this, inasmuch as it's possible to forecast this. Are they naturally combative and devil-may-care, like Scalia? Do they thrive on having haters? Do they have a history of being outspoken? Unfortunately, this tends to make it hard to get confirmed in the first place these days, so that may not be possible.

In an ideal world, they might have some concrete experience with similar jobs. One obvious case - running a medium sized business, and having to fire people. Yeah, you'd better believe that will toughen you up. Can you inflict pain upon people, and deal with their anger and contempt, while keeping your eye on the larger purpose? Have you had to command troops in battle, and know that making the wrong call on whether to breach that door will likely result in either your guys getting shot, or civilians being shot?

Ironically, the main pre-job exposure people have to being hated is from Democratic and media efforts during the confirmation hearings. While you have very small number of observations here, I suspect that Clarence Thomas being viciously smeared before he started probably had a searing effect on his choices. It likely made him permanently bitter, as there was basically no worse smears that could be thrown at him than what he faced before he started the job. But he knew what his enemies were like,  and exactly what their good opinions were worth, and wasn't going to cave to them after that. 

An interesting question will be to see what happens to Kavanaugh. I think it's easy to overextrapolate the Thomas outcome, and ignore the possibility that some people overreact in the other direction - they cave harder sooner in order to make the smearing stop, or they rationalise it. I'll show I'm the bigger man by not being the right wing monster they accused me of being, and instead implement this unprincipled exception for liberalism. 

You may think this doesn't really apply to monarchs. They can just fire the hostile press, or implement lese majeste laws to execute people who insult them. 

But remember, the pain point is psychology. What if you get a monarch who just really wants to be loved, and can't deal with being despised, or even just with causing necessary pain on citizens? 

I don't hold myself out as any kind of expert, but that's certainly the description I've read of Louis XVI. He wore civilian attire, rather than military. A man of the people! That worked out well for him.

Maybe you think this is all old hat. Very well. Here's a simple test. Take the sentence 

"Previously conservative judges are susceptible to public pressure, and probably will end up changing their views to conform to it."

Ask yourself - would this apply to...me? Would I be susceptible to public pressure, and change my views to conform to it?

Ha, no, of course not. Biases for thee, cold-iron robotic logic for me. 

If you are certain that the answer is "no", and yet you've never had any firm experience of resisting exactly such pressure, I suggest that there is a large chance that you may be greatly underestimating the forces at work here. 

To paraphrase one half of my nom-de-plume:

Hath not a judge eyes? hath not a judge hands, organs, dimensions, senses, affections, passions? If you scream in his face, does he not flinch? If you mock him, does he not feel stung? If you slander him, does he not bristle? If you selectively apply pain, does he not learn the lesson?

What, Exactly, Do You Want?

(The inspiration for this post comes from here, and from a coffee conversation with The Grinch, who asked me the subject line bluntly during a political discussion.)

It seems prudent to break the subject into three discrete questions, all of which might on their own be considered variations on the subject line, but which are, on reflection, very different.

1. What are the problems of modernity?

If you take people on the right, either outer right or mainstream right, and ask them what are the specific problems with modernity, you will get a surprisingly uniform and well-agreed-upon list of problems. The most ardent reactionary and the most mainstream Republican will probably not actually disagree very much on what are the particularly wretched aspects of life in contemporary America. Open borders. Welfare moochers. Criminals not being punished. Endless propaganda against straight white Christian males. You get the idea.

This is worth pondering. The things which trouble us are a substantial cause of agreement.

2. What would be your ideal solution to fix those problems?

If you took the same range of people, and asked them what kind of governing arrangements they would prefer, they might give you quite different answers. Normie conservatives want a return to the constitution as understood in 1950, or 1920, or 1850, or what have you. Further right republicans might want the authoritarian capitalism of Lee Kuan Yew, or the colonial administration of British Hong Kong. Reactionaries might want an absolute monarch, or Moldbug's sovereign corporations. 

And yet, among the more thoughtful ones, even if they disagreed on exactly what was their preferred model, they would probably also take any other right-winger's governing arrangements over the status quo, if it could actually be achieved. In other words, we might haggle over the ordering, but any of them would likely be an improvement. If agreeing to this were all it took to get it to actually happen, we'd have a reasonable shot at all being on board.

3. How do we get to there from here?

A.K.A. What should we actually do about all this? And on this question, people come to all sorts of answers. I think the reason is that nobody really knows. I tend to believe the Moldbug point that activist strategies are a disaster for the right (see, for instance, Charlottesville). But this is very different from knowing what will work, or even might work. I don't honestly have a great idea, but I'm working on it. When it comes to things like voting, we can't even agree on which direction the sign goes.  

To see how wild the divergence can be between the first point (agreeing on current problems) and the third (what to do to concretely improve things), consider the following description of leftism. See if it rings true:

Almost everyone will agree that we live in a deeply troubled society. One of the most widespread manifestations of the craziness of our world is leftism, so a discussion of the psychology of leftism can serve as an introduction to the discussion of the problems of modern society in general.

But what is leftism? During the first half of the 20th century leftism could have been practically identified with socialism. Today the movement is fragmented and it is not clear who can properly be called a leftist. When we speak of leftists in this article we have in mind mainly socialists, collectivists, “politically correct” types, feminists, gay and disability activists, animal rights activists and the like. But not everyone who is associated with one of these movements is a leftist. What we are trying to get at in discussing leftism is not so much movement or an ideology as a psychological type, or rather a collection of related types.

Leftists tend to hate anything that has an image of being strong, good and successful. They hate America, they hate Western civilization, they hate white males, they hate rationality. The reasons that leftists give for hating the West, etc. clearly do not correspond with their real motives. They SAY they hate the West because it is warlike, imperialistic, sexist, ethnocentric and so forth, but where these same faults appear in socialist countries or in primitive cultures, the leftist finds excuses for them, or at best he GRUDGINGLY admits that they exist; whereas he ENTHUSIASTICALLY points out (and often greatly exaggerates) these faults where they appear in Western civilization. Thus it is clear that these faults are not the leftist’s real motive for hating America and the West. He hates America and the West because they are strong and successful.

Sounds pretty reasonable, right?

So what do you think the guy who wrote this proposed to do to fix this problem?

As it turns out, the completely bonkers answer was to send home made bombs to try to blow up a random computer store owner, geneticist, biologist, computer scientist, and a bunch of others. The quote is from the Unabomber manifesto. He's actually one of the few exceptions to point 2 - I wouldn't actually prefer to live in his entirely pre-industrial-revolution society, even if I can agree on some of what has been lost. It's actually worth reading, if for no other reason than the whiplash disconnect between the quite incisive observations he makes about the problems of modernity, and the absolutely insane things he did that made him famous:

Step 1. Send home-made bombs to random people who do things somehow associated with modernity

Step 2. ????

Step 3. Profit!

Step 4. Worldwide revolution where technology is abolished. 

That said, I think the widespread agreement on point 2 is, in many ways, equally surprising. Because it's not obvious that we should necessarily find some kind of consensus improvement just because we dislike the status quo. And moreover, it suggests that there actually might be something common to all these alternative governing arrangements that would make them an improvement. Why exactly, do we all instinctively support a lot of each others' solutions?

I think there is a value in trying to condense down a description of what it is at a high level we want. Partly, this is because even if one dislikes voting, one can't get around having to convince people somehow. Maybe not the general public, maybe just the elites. Fine. But also as an important intellectual exercise of understanding what the actual problem with the status quo is. What is it that unites Singaporean authoritarianism, British Hong Kong, absolute monarchy, and sovereign corporations, but isn't present in modern democratic states?

The shortest answer I have, which I think can be given in a lot of different settings without offending people, is this.

Well-defined and secure property rights in the state itself.

You want to know what I want? That's what I want.

Who owns the state? And in whose interest is it to be run? Not some b.s. answer like "the people". Which people, specifically, and in which proportion? What exactly is the decision-making process? How are the cash flows going to be distributed?

That's what's so appealing about sovereign corporations. Not only is there one answer, but everybody knows that answer, and everybody pretty much has incentives to continue to respect that answer. Who owns Microsoft? Not "the people", that's for sure. And in a sense, does it matter who specifically owns Microsoft? Not really. What matters is the structure and the incentives. If the shares all changed hands tomorrow, would you expect Microsoft to act very differently? No. The shares will change hands tomorrow, and you won't even bother to think about it when you load up Windows.

But if we all agree that Lee Kuan Yew owns the state, or that the British Civil Service with their well-defined system of promotions and personnel owns the state, or that Louis XIV owns the state, that's probably fine as well. If they really truly own it, they probably will have sufficient incentives to run it decently well. They might screw it up - this is why I generally prefer sovereign corporations to absolute monarchy, because regression to the mean and bad genetic draws periodically produces fools at the top. But if they do, they'll be hurt themselves, which probably gives them incentives to hire or consult someone who understands statecraft properly.

A completely well-defined and secure set of state property rights is probably itself a Platonic ideal that can't actually be achieved. Specifying exactly why the individual soldier or policeman carries out the order in every situation, or where exactly the King/CEO's advisors come from, will always be thorny. But we can probably still rank order different arrangements in terms of approximate stability and agreement on state ownership.

Why do we want well-defined and secure property rights in the state?

Because a stationary bandit is better than roving bandits. 

When you have one bandit, you get expropriated efficiently. When you get multiple bandits, it turns out like the descriptions in one of the War Nerd podcasts of what it was like to have armies coming over your area during the Thirty Years War. Even if they were just passing through, they had to resupply. So they'd come by, steal all your grain, use your furniture as firewood, perhaps rape a daughter or two, and then camp for the night. Then a few months later, another army would do the same, except they'd be annoyed that the first guys had taken most of the good stuff.

Strikingly, in Brecher's recount, it made surprisingly little difference whether the army was notionally friendly to the country in question, or notionally hostile. Either way, you were getting everything taken. It didn't matter if they were taking next year's seed grain, or you didn't have enough to survive the winter. That's your problem.

Such accounts also show the risk of being hyperbolic. In modernity, we aren't getting randomly mobbed as a society in anything like the way peasants were in the Thirty Years War. Why not?

Well, in the modern west what we have isn't several groups of roving bandits. That indeed would be worse. When the bandits are entirely an outside force, and one that will only be here temporarily, you get absolute catastrophe, and they'll take everything. Rather, we have internal banditry by unstable coalition. None of the bandits are individually strong enough to rob you, but collectively they are. The good news is, the bandits are part of the society themselves, so they're here for a while at least. The other good news is that they (so far, and on average) view their coalition as kinda sorta stable  - enough that they can exploit semi efficiently the various groups they eating. And, so far at least, they're smart enough to figure out a way to do that. This is why modern America is grim in many respects, but you'd never confuse it with Mugabe's Zimbabwe, or a the Holy Roman Empire when the Swedish army paid a visit. In a modern context, neither stable coalitions not semi-intelligent leaders exist, for instance, in modern South Africa. Unsurprisingly, it's rapidly going down the toilet. My predictions on that have been correct for as long as I've been writing. If any of my readers are working for the South African tourism board, I suggest the slogan "See it before it's gone", or if you're more optimistic, "See it before it gets worse".

It's still approximately the same group on top over time, or at least there's a fair degree of overlap, which is why the modern west isn't a total disaster. But who exactly is on top, and who is getting more of the spoils, and who is at risk of being cast out altogether - those things are much less stable.

Hence the need for endless political propaganda, because the coalition needs to signal out-group hatred to keep itself together. Hence the ever shifting potpourri of fashionable causes competing for attention, because the relative ownership stakes in the coalition aren't well defined. Hence the endless insistence on public assent to obvious lies, because you need credible litmus tests to determine loyalty. Hence the need to keep bringing in foreign electoral ringers, because some of the important organs of power are still laundered through our four year American Idol contest, and there's the risk that some of the yokels might get uppity.

The best summary of the theoretical solution to all this is still Moldbug's first post on Formalism. Find out who already owns the state, and give it to them officially. That way you only have one hard problem to solve (find out who owns the state), not two (expropriate the existing owners and give it to some new set of stable owners)

The problem is that we have no idea how to define properly who owns the state, because the answer keeps changing. There's also a problem that people who think they should own the state but currently don't may not assent to formalising the current ownership arrangements. And overconfidence makes everyone think they'll get more in the next round of coalition rearranging.

But a whole lot of us instinctively seem to see the appeal in systems where that problem has been solved somehow. Anyhow. King Charles II, Emperor Bill Gates, or the dispersed shareholders in the Disney Company. It doesn't matter much to me. I'll take any of them.

So we're still somewhat back at the problem of point 3. How do we move towards a system where property rights in the state are well-defined?

I don't know, exactly.

But at least I have a more concrete idea of what I'm aiming at, and what might achieve it, rather than having to split the difference between Catholic Integralism and Sovereign Corporations.

And it's phrased at a sufficiently high level of generality that you can say it at a dinner party and not immediately get thrown out.

Maybe that's something. Maybe it's not.

Nobody said point 3 would be easy, or even solvable at all.

On the Surprisingly Apolitical Nature of the Fed

The eternal question about the civil service is its level of competence. At one end of the spectrum is the curmudgeonly woman at the DMV. At the other is the Hollywood depiction of the CIA. Reality seems to vary by department, and is usually somewhere in between. I think a lot of conservatives tend to be skeptical of government in general partly because the bits of government that they are forced to interact with are so woeful. Waiting hours in line at the DMV to fill in a form that should be able to be done online, for instance. The ridiculous and inefficient security theatre of the TSA, staffed by inept, surly, disgruntled buffoons. The post office managing to screw up deliveries at a far higher rate than FedEx or UPS. It’s only natural that this perception is extrapolated to all the bits of government that we don’t actually interact with personally.

But to a large extent, this is a function of the types of people these places hire. There’s some aspects of government that will inevitably involve distorted incentives and poor performance from a lack of competition. But even if the difference with the private sector is always there, the level doesn’t have to be appalling. In Singapore, government jobs seem to be viewed as prestigious and well-paying, and so attract relatively talented and competent people. Or, to go back further, you would give your left nut to have Evelyn Cromer administering the USA, rather than any of the leaders we’ve had since I’ve been alive. In other words, it certainly doesn’t always have to be as bad as the modern US.

When the US scrapped the civil service exams, it ended up having the biggest effect on low level jobs that you can’t sneak in other requirements like college degrees. This is how the DMV and the TSA got so awful – it turns out that IQ matters, even in low level clerical or customer service jobs. In this respect, the Fed has held out incredibly well by virtue of the fact that a lot of its jobs require a PhD in finance or economics from a top university. PhD programs have so far mercifully been largely spared the wrath of the Cultural Marxist need to bring in diversity even at the cost of competence. Moreover, even if you get in, you still need to pass, and convince the hiring committee that your thesis is actually good. In this sense, the Fed is largely drawing on a fairly talented pool of people who are pretty well versed in current economic research (for what that’s worth).

So if the Fed has avoided the obvious failure mode of being staffed by imbeciles, how does it fare on other measures? The interesting one is regulatory capture. Like any regulator, it can be captured by its employees, by politicians (which, ironically, is how the system is meant to work, but which in practice is usually treated as a design defect), or by the companies and groups that it’s meant to be regulating.

In terms of being captured by its own employees, this is hard to discern clearly, but I think that this has happened less than at most agencies. The biggest reason is that, other than the Fed Board, the regional Feds are notionally private, and so can set their own salaries and hiring/firing conditions. Even the Board seems to pay approximately market rates for the people it hires. This seems to gets rid of a decent amount of the insanity of the public service working conditions. When you can’t pay employees more, they extract concessions in the form of goofing off, unions to make it so they can’t get fired, etc etc. But they’d probably rather take the costs just in the form of more cash. This doesn’t have the deleterious effect that them simply being lazy has – it’s at least a transfer, rather than deadweight loss.

The biggest surprise about the Fed, however, is the fact that it seems to have been able to maintain relative political independence up to now. Independent central banks were a radical idea in the 19th century, where monetary policy was hot button political issue. William Jennings Bryan effectively wanted loose monetary policy (in the form of bi-metalism) to inflate away the debts of farmers. Letting a bunch of PhDs just run the show was probably not likely to be viewed as a compromise answer. But oddly, this kind of redistributive aspect of monetary policy doesn’t get thought about a ton anymore. Instead, the main effect seems to be about what monetary policy does to people’s 401K plans via the level of the stock market. This may be dumb short-termism, but at least everyone is on pretty much the same side.

In the modern ear, Donald Trump has decided, at least via twitter, to talk derogatively about the Fed’s policy, and suggest that they need lower interest rates. I don’t think the Fed takes this especially seriously. Which is fortunate, to be honest. Whatever you think about the Fed’s monetary policy since the great recession, you’d have to be incredibly optimistic to think that Congress or the Presidents would have done a better job. Instead, you can see exactly what the pressure would have been – lower interest rates before an election, consequences be damned. If it creates inflation, well too bad for the next guy. In other words, we could have the same level of far-sighted statesmanship that we currently observe with the US fiscal deficit, but with monetary policy as well. What a delight that would be.

At least on the monetary side, part of the reason the Fed seems to have stayed largely professional and apolitical is that it really has only one main button it can press – interest rates up, or interest rates down. And while people debate furiously over the relationship between that and the state of the economy, most people are agreed on at least the outcome they’re aiming it, namely high growth, low unemployment, and price stability, currently taken to mean low but positive inflation. It seems likely that the Fed has only an approximate idea of the relationship between the variables in question. But then again, it doesn’t seem like most of the public has any better idea either, and so are largely content to let them do what they think is best as long as things aren’t collapsing.

The main people with strong views on the matter seem to be people that want the Fed abolished and US dollars replaced with gold or bitcoin. I tend to think monetary policy when implemented sensibly is a useful tool, and giving it up for a fixed money supply would probably cause more harm than good. That said, my priors are pretty wide on what a fixed money supply would actually do for an economy. I found the Friedman case pretty convincing that letting the banks fail in the 1930s was one of the worst things the government did, and contributed significantly to prolonging the depression. But even if you disagree on this (and plenty of smart Austrians do) the Austrians’ view seems especially far-fetched on a political economy basis. When the world is melting down, governments are always going to do something, even if that something turns out to be significantly counterproductive. Even from an Austrian perspective, lowering interest rates is probably among the less harmful knee-jerk policies one could imagine, compared with, say, nationalizing industry or applying across-the-board price controls.

The more interesting question, and the one that’s harder to answer, is whether the Fed has been captured by the banks. In terms of the broad question of monetary policy, and whether and how to intervene during financial crises, there’s probably not a lot of disagreement between major banks and the Fed. If you think that they’re both wrong, this understandably looks like collusion and regulatory capture. But I think it’s more likely that both groups tended to come from the same business schools and economics departments, and this is largely what gets taught there. And while there is reasonable agreement between banks and the Fed on what should happen ex-post in a crisis (grumblingly bail out failed banks), the ex-ante question is not nearly so clear. In particular, most banks would probably like to see capital requirements cut significantly, and scrap the various costly stress tests that the Fed does on major banks. I’m not saying this is a major bone of contention, but it’s not exactly like banks get everything they want either. 

The stronger case, however, seems to involve some of the current implicit subsidies given to banks. I’m not even talking about deposit insurance, which is related to the “letting the banks fail” question above. Rather, the decision since the crisis to start paying interest on reserves looks a lot like a back-door bailout and subsidy. No no, they say, it’s just an important aspect of unconventional monetary policy. Great! So can I, as an individual deposit my own money at the Fed to take advantage of this same policy? Ha ha, no, of course not! Also, we’ll continually shut down any bank that tries to just operate as a pass-through entity to enable this, a proposal called narrow banking. When even John Cochrane is saying this makes you as the Fed look dumb and crooked, you should probably take heed.

But that’s the messy nature of regulation. You’re never going to get all of what you want, and sometimes dumb things happen anyway, usually for a mix of motives. In other words, the Fed isn’t the Hollywood version of the CIA, but it’s a hell of a lot better than it could be. I almost keep expecting it to get gutted and politicized at some point, and end up as some social justice economic group like the CFPB. It could be worse. It probably will be worse.

Contra Chinese folk wisdom, may you continue to live in uninteresting economic times.