Twitter: Narcissism or Age-old Communication?

It has become fashionable to castigate Twitter – the microblogging service – as an expression of rampant narcissism. Yet, narcissists are verbose and they do not take kindly to limitations imposed on them by third parties. They feel entitled to special treatment and are rebellious. They are enamored with their own voice. Thus, rather than gratify the average narcissist and provide him or her with narcissistic supply (attention, adulation, affirmation), Twitter is actually liable to cause narcissistic injury.

From the dawn of civilization, when writing was the province of the few and esoteric, people have been memorizing information and communicating it using truncated, mnemonic bursts. Sizable swathes of the Bible resemble Twitter-like prose. Poetry, especially blank verse one, is Twitterish. To this very day, newspaper headlines seek to convey information in digestible, resounding bits and bites. By comparison, the novel – an avalanche of text – is a newfangled phenomenon.

Twitter is telegraphic, but this need not impinge on the language skills of its users. On the contrary, coerced into its Procrustean dialog box, many interlocutors become inventive and creativity reigns as bloggers go atwitter.

Indeed, Twitter is the digital reincarnation of the telegraph, the telegram, the telex, the text message (SMS, as we Europeans call it), and other forms of business-like, data-rich, direct communication. Like them, it forces its recipients to use their own imagination and creativity to decipher the code and flesh it out with rich and vivid details. It is unlikely to vanish, though it may well be supplanted by even more pecuniary modes of online discourse.

Not so other pernicious phenomena brought on by the Internet’s resurgence.

Whenever I put forth on the Internet’s numerous newsgroups, discussion fora and Websites a controversial view, an iconoclastic opinion, or a much-disputed thesis, the winning argument against my propositions starts with “everyone knows that …”. For a self-styled nonconformist medium, the Internet is the reification of herd mentality.

Actually, it is founded on the rather explicit belief in the implicit wisdom of the masses. This particularly pernicious strong version of egalitarianism postulates that veracity, accuracy, and truth are emergent phenomena, the inevitable and, therefore, guaranteed outcome of multiple interactions between users.

But the population of Internet users is not comprised of representative samples of experts in every discipline. Quite the contrary. The barriers to entry are so low that the Internet attracts those less gifted intellectually. It is a filter that lets in the stupid, the mentally ill, the charlatan and scammer, the very young, the bored, and the unqualified. It is far easier to publish a blog, for instance, than to write for the New York Times. Putting up a Website with all manner of spurious claims for knowledge or experience is easy compared to the peer review process that vets and culls scientific papers.

One can ever “contribute” to an online “encyclopedia”, the Wikipedia, without the slightest acquaintance the topic one is “editing”. Consequently, the other day, I discovered, to my utter shock, that Eichmann changed his name, posthumously, to Otto. It used to be Karl Adolf, at least until he was executed in 1962.

Granted, there are on the Internet isolated islands of academic merit, intellectually challenging and invigorating discourse, and true erudition or even scholarship. But they are mere islets in the tsunami of falsities, fatuity, and inanities that constitutes the bulk of User Generated Content (UGC).

Which leads me to the second myth: that access is progress.

Oceans of information are today at the fingertips of one and sundry. This is undisputed. The Internet is a vast storehouse of texts, images, audio recordings, and databases. But what matters is whether people make good use of this serendipitous cornucopia. A savage who finds himself amidst the collections of the Library of Congress is unlikely to benefit much.

Alas, most people today are cultural savages, Internet users the more so. They are lost among the dazzling riches that surround them. Rather than admit to their inferiority and accept their need to learn and improve, they claim “equal status”. It is a form of rampant pathological narcissism, a defense mechanism that is aimed to fend off the injury of admitting to one’s inadequacies and limitations.

Internet users have developed an ethos of anti-elitism. There are no experts, only opinions, there are no hard data, only poll results. Everyone is equally suited to contribute to any subject. Learning and scholarship are frowned on or even actively discouraged. The public’s taste has completely substituted for good taste. Yardsticks, classics, science – have all been discarded.

Study after study have demonstrated clearly the decline of functional literacy (the ability to read and understand labels, simple instructions, and very basic texts) even as literacy (in other words, repeated exposure to the alphabet) has increased dramatically all over the world.

In other words: most people know how to read but precious few understand what they are reading. Yet, even the most illiterate, bolstered by the Internet’s mob-rule, insist that their interpretation of the texts they do not comprehend is as potent and valid as anyone else’s.

Web 2.0 – Hoarding, Not Erudition

When I was growing up in a slum in Israel, I devoutly believed that knowledge and education will set me free and catapult me from my miserable circumstances into a glamorous world of happy learning. But now, as an adult, I find myself in an alien universe where functional literacy is non-existent even in developed countries, where “culture” means merely sports and music, where science is decried as evil and feared by increasingly hostile and aggressive masses, and where irrationality in all its forms  (religiosity, the occult, conspiracy theories) flourishes.

The few real scholars and intellectuals left are on the retreat, back into the ivory towers of a century ago. Increasingly, their place is taken by self-taught “experts”, narcissistic bloggers, wannabe “authors” and “auteurs”, and partisan promoters of (often self-beneficial) “causes”. The mob thus empowered and complimented feels vindicated and triumphant. But history cautions us that mobs have never produced enlightenment – only concentration camps and bloodied revolutions. the Internet can and will be used against us if we don’t regulate it.

Dismal results ensue:

The Wikipedia “encyclopedia” – a repository of millions of factoids, interspersed with juvenile trivia, plagiarism, bigotry, and malice – is “edited” by anonymous users with unlimited access to its contents and absent or fake credentials.

Hoarding has replaced erudition everywhere. People hoard e-books, mp3 tracks, and photos. They memorize numerous fact and “facts” but can’t tell the difference between them or connect the dots. The synoptic view of knowledge, the interconnectivity of data, the emergence of insight from treasure-troves of information are all lost arts.

In an interview in early 2007, the publisher of the New-York Times said that he wouldn’t mourn the death of the print edition of the venerable paper and its replacement by a digital one. This nonchalant utterance betrays unfathomable ignorance. Online readers are vastly different to consumers of printed matter: they are younger, their attention span is far shorter, their interests far more restricted and frivolous. The New-York Times online will be forced into becoming a tabloid – or perish altogether.

Fads like environmentalism and alternative “medicine” spread malignantly and seek to silence dissidents, sometimes by violent means.

The fare served by the electronic media everywhere now consists largely of soap operas, interminable sports events, and reality TV shows. True, niche cable channels cater to the preferences of special audiences. But, as a result of this inauspicious fragmentation, far fewer viewers are exposed to programs and features on science, literature, arts, or international affairs.

Reading is on terminal decline. People spend far more in front of screens – both television’s and computer – than leafing through pages. Granted, they read online: jokes, anecdotes, puzzles, porn, and e-mail or IM chit-chat. Those who try to tackle longer bits of text, tire soon and revert to images or sounds.

With few exceptions, the “new media” are a hodgepodge of sectarian views and fabricated “news”. The few credible sources of reliable information have long been drowned in a cacophony of fakes and phonies or gone out of business.

It is a sad mockery of the idea of progress. The more texts we make available online, the more research is published, the more books are written – the less educated people are, the more they rely on visuals and soundbites rather than the written word, the more they seek to escape reality and be anesthetized rather than be challenged and provoked.

Even the ever-slimming minority who do wish to be enlightened are inundated by a suffocating and unmanageable avalanche of indiscriminate data, comprised of both real and pseudo-science. There is no way to tell the two apart, so a “democracy of knowledge” reigns where everyone is equally qualified and everything goes and is equally merited. This relativism is dooming the twenty-first century to become the beginning of a new “Dark Age”, hopefully a mere interregnum between two periods of genuine enlightenment.

The Demise of the Expert and the Ascendance of the Layman

In the age of Web 2.0, authoritative expertise is slowly waning. The layman reasserts herself as a fount of collective mob “wisdom”. Information – unsorted, raw, sometimes wrong – substitutes for structured, meaningful knowledge. Gatekeepers – intellectuals, academics, scientists, and editors, publishers, record companies, studios – are summarily and rudely dispensed with. Crowdsourcing (user-generated content, aggregated for commercial ends by online providers) replaces single authorship.

A confluence of trends conspired to bring about these ominous developments:

1. An increasingly narcissistic culture that encourages self-absorption, haughtiness, defiance of authority, a sense of entitlement to special treatment and omniscience, incommensurate with actual achievements. Narcissistic and vain Internet users feel that they are superior and reject all claims to expertise by trained professionals.

2. The emergence of technologies that remove all barriers to entry and allow equal rights and powers to all users, regardless of their qualifications, knowledge, or skills: wikis (the most egregious manifestation of which is the Wikipedia), search engines (Google), blogging (that is rapidly supplanting professionally-written media), and mobiles (cell) phones equipped with cameras for ersatz documentation and photojournalism. Disintermediation rendered redundant all brokers, intermediaries, and gatekeepers of knowledge and quality of content.

3. A series of species-threatening debacles by scientists and experts who collaborated with the darkest, vilest, and most evil regimes humanity has ever produced. This sell-out compromised their moral authority and standing. The common folk began not only to question their ethical credentials and claim to intellectual leadership, but also to paranoidally suspect their motives and actions, supervise, and restrict them. Spates of scandals by scientists who falsified lab reports and intellectuals who plagiarized earlier works did nothing to improve the image of academe and its denizens.

4. By its very nature, science as a discipline and, more particularly, scientific theories, aspire to discover the “true” and “real”, but are doomed to never get there. Indeed, unlike religion, for instance, science claims no absolutes and proudly confesses to being merely asymptotic to the Truth. In medicine, physics, and biology, today’s knowledge is tomorrow’s refuse. Yet, in this day and age of maximal uncertainty, minimal personal safety, raging epidemics, culture shocks and kaleidoscopic technological change, people need assurances and seek immutables.

Inevitably, this gave rise to a host of occult and esoteric “sciences”, branches of “knowledge”, and practices, including the fervid observance of religious fundamentalist rites and edicts. These offered alternative models of the Universe, replete with parent-figures, predictability, and primitive rituals of self-defense in an essentially hostile world. As functional literacy crumbled and people’s intellectual diet shifted from books to reality TV, sitcoms, and soap operas, the old-new disciplines offer instant gratification that requires little by way of cerebral exertion and critical faculties.

Moreover, scientific theories are now considered as mere “opinions” to be either “believed” or “disbelieved”, but no longer proved, or, rather falsified. In his novel, “Exit Ghost”, Philip Roth puts this telling exclamation in the mouth of the protagonist, Richard Kliman: “(T)hese are people who don’t believe in knowledge”.

The Internet tapped into this need to “plug and play” with little or no training and preparation. Its architecture is open, its technologies basic and “user-friendly”, its users largely anonymous, its code of conduct (Netiquette) flexible and tolerant, and the “freedoms” it espouses are anarchic and indiscriminate.

The first half of the 20th century was widely thought to be the terrible culmination of Enlightenment rationalism. Hence its recent worrisome retreat . Moral and knowledge relativism (e.g., deconstruction) took over. Technology obliged and hordes of “users” applied it to gnaw at the edifice of three centuries of Western civilization as we know it.

The Decline of Text and the Re-emergence of the Visual

YouTube has already replaced Yahoo and will shortly overtake Google as the primary Web search destination among children and teenagers. Its repository of videos – hitherto mere entertainment – is now beginning to also serve as a reference library and a news source. This development seals the fate of text. It is being dethroned as the main vehicle for the delivery of information, insight, and opinion.

This is only the latest manifestation in a plague of intellectual turpitude that is threatening to undermine not only the foundations of our civilization, but also our survival as a species. People have forgotten how to calculate because they now use calculators; they don’t bother to memorize facts or poetry because it is all available online; they read less, much less, because they are inundated with sounds and sights, precious few of which convey any useful information or foster personal development.

A picture is worth 1000 words. But, words have succeeded pictograms and ideograms and hieroglyphs for good reasons. The need to combine the symbols of the alphabet so as to render intelligible and communicable one’s inner states of mind is conducive to abstract thought. It is also economical; imposes mental discipline; develops the imagination; engenders synoptic thinking; and preserves the idiosyncrasies and the uniqueness of both the author and its cultural-social milieu. Visual are a poor substitute as far as these functions go.

In a YouTube world, literacy will have vanished and with it knowledge. Visuals and graphics can convey information, but they rarely proffer organizing principles and theories. They are explicit and thus shallow and provide no true insight. They demand little of the passive viewer and, therefore, are anti-intellectual. In this last characteristic, they are true to the Internet and its anti-elitist, anti-expert, mob-wisdom-driven spirit. Visuals encourage us to outsource our “a-ha” moments and the formation of our worldview and to entrust them to the editorial predilections of faceless crowds of often ignorant strangers.

Moreover, the sheer quantity of material out there makes it impossible to tell apart true and false and to distinguish between trash and quality. Inundated by “user-generated-content” and disoriented, future generations will lose their ability to discriminate. YouTube is only the logical culmination of processes started by the Web. The end result will be an entropy of information, with bits isotropically distributed across vast farms of servers and consumed by intellectual zombies who can’t tell the difference and don’t care to.


Also Read:

The Cyber Narcissist

The Six Sins of the Wikipedia

Is Education a Public Good?

The Idea of Reference

The Future of the Book

The Kidnapping of Content

The Internet and the Library

The Future of Online Reference

Will Content Ever be Profitable?

The Disintermediation of Content

The Future of Electronic Publishing

Free Online Scholarship – Interview with Peter Suber

The Pros and Cons of Corruption

Corruption runs against the grain of meritocratic capitalism. It skews the level playing-field; it guarantees extra returns where none should have been had; it encourages the misallocation of economic resources; and it subverts the proper functioning of institutions. It is, in other words, without a single redeeming feature, a scourge.

Strangely, this is not how it is perceived by its perpetrators: both the givers and the recipients. They believe that corruption helps facilitate the flow and exchange of goods and services in hopelessly clogged and dysfunctional systems and markets (corruption and the informal economy “get things done” and “keep people employed”); that it serves as an organizing principle where chaos reins and institutions are in their early formative stages; that it supplements income and thus helps the state employ qualified and skilled personnel; and that it preserves peace and harmony by financing networks of cronyism, nepotism, and patronage.

I. The Facts

In 2002, just days before a much-awaited donor conference, the influential International Crisis Group (ICG) recommended to place all funds pledged to Macedonia under the oversight of a “corruption advisor” appointed by the European Commission. The donors ignored this and other recommendations. To appease the critics, the affable Attorney General of Macedonia charged a former Minister of Defense with abuse of duty for allegedly having channeled millions of DM to his relatives during the recent civil war. Macedonia has belatedly passed an anti-money laundering law recently, but failed, yet again, to adopt strict anti-corruption legislation.

In Albania, the Chairman of the Albanian Socialist Party, Fatos Nano, was accused by Albanian media of laundering $1 billion through the Albanian government. Pavel Borodin, the former chief of Kremlin Property, decided not appeal his money laundering conviction in a Swiss court. The Slovak daily “Sme” described in scathing detail the newly acquired wealth and lavish lifestyles of formerly impoverished HZDS politicians. Some of them now reside in refurbished castles. Others have swimming pools replete with wine bars.

Pavlo Lazarenko, a former Ukrainian prime minister, is detained in San Francisco on money laundering charges. His defense team accuses the US authorities of “selective prosecution”.

They are quoted by Radio Free Europe as saying:

“The impetus for this prosecution comes from allegations made by the Kuchma regime, which itself is corrupt and dedicated to using undemocratic and repressive methods to stifle political opposition … (other Ukrainian officials) including Kuchma himself and his closest associates, have committed conduct similar to that with which Lazarenko is charged but have not been prosecuted by the U.S. government”.

The UNDP estimated, in 1997, that, even in rich, industrialized, countries, 15% of all firms had to pay bribes. The figure rises to 40% in Asia and 60% in Russia.

Corruption is rife and all pervasive, though many allegations are nothing but political mud-slinging. Luckily, in countries like Macedonia, it is confined to its rapacious elites: its politicians, managers, university professors, medical doctors, judges, journalists, and top bureaucrats. The police and customs are hopelessly compromised. Yet, one rarely comes across graft and venality in daily life. There are no false detentions (as in Russia), spurious traffic tickets (as in Latin America), or widespread stealthy payments for public goods and services (as in Africa).

It is widely accepted that corruption retards growth by deterring foreign investment and encouraging brain drain. It leads to the misallocation of economic resources and distorts competition. It depletes the affected country’s endowments – both natural and acquired. It demolishes the tenuous trust between citizen and state. It casts civil and government institutions in doubt, tarnishes the entire political class, and, thus, endangers the democratic system and the rule of law, property rights included.

This is why both governments and business show a growing commitment to tackling it. According to Transparency International’s “Global Corruption Report 2001”, corruption has been successfully contained in private banking and the diamond trade, for instance.

Hence also the involvement of the World Bank and the IMF in fighting corruption. Both institutions are increasingly concerned with poverty reduction through economic growth and development. The World Bank estimates that corruption reduces the growth rate of an affected country by 0.5 to 1 percent annually. Graft amounts to an increase in the marginal tax rate and has pernicious effects on inward investment as well.

The World Bank has appointed in 2001 a Director of Institutional Integrity – a new department that combines the Anti-Corruption and Fraud Investigations Unit and the Office of Business Ethics and Integrity. The Bank helps countries to fight corruption by providing them with technical assistance, educational programs, and lending.

Anti-corruption projects are an integral part of every Country Assistance Strategy (CAS). The Bank also supports international efforts to reduce corruption by sponsoring conferences and the exchange of information. It collaborates closely with Transparency International, for instance.

At the request of member-governments (such as Bosnia-Herzegovina and Romania) it has prepared detailed country corruption surveys covering both the public and the private sectors. Together with the EBRD, it publishes a corruption survey of 3000 firms in 22 transition countries (BEEPS – Business Environment and Enterprise Performance Survey). It has even set up a multilingual hotline for whistleblowers.

The IMF made corruption an integral part of its country evaluation process. It suspended arrangements with endemically corrupt recipients of IMF financing. Since 1997, it has introduced policies regarding misreporting, abuse of IMF funds, monitoring the use of debt relief for poverty reduction, data dissemination, legal and judicial reform, fiscal and monetary transparency, and even internal governance (e.g., financial disclosure by staff members).

Yet, no one seems to agree on a universal definition of corruption. What amounts to venality in one culture (Sweden) is considered no more than hospitality, or an expression of gratitude, in another (France, or Italy). Corruption is discussed freely and forgivingly in one place – but concealed shamefully in another. Corruption, like other crimes, is probably seriously under-reported and under-penalized.

Moreover, bribing officials is often the unstated policy of multinationals, foreign investors, and expatriates. Many of them believe that it is inevitable if one is to expedite matters or secure a beneficial outcome. Rich world governments turn a blind eye, even where laws against such practices are extant and strict.

In his address to the Inter-American Development Bank on March 14, 2002 President Bush promised to “reward nations that root out corruption” within the framework of the Millennium Challenge Account initiative. The USA has pioneered global anti-corruption campaigns and is a signatory to the 1996 IAS Inter-American Convention against Corruption, the Council of Europe’s Criminal Law Convention on Corruption, and the OECD’s 1997 anti-bribery convention. The USA has had a comprehensive “Foreign Corrupt Practices Act” since 1977.

The Act applies to all American firms, to all firms – including foreign ones – traded in an American stock exchange, and to bribery on American territory by foreign and American firms alike. It outlaws the payment of bribes to foreign officials, political parties, party officials, and political candidates in foreign countries. A similar law has now been adopted by Britain.

Yet, “The Economist” reports that the American SEC has brought only three cases against listed companies until 1997. The US Department of Justice brought another 30 cases. Britain has persecuted successfully only one of its officials for overseas bribery since 1889. In the Netherlands bribery is tax deductible. Transparency International now publishes a name and shame Bribery Payers Index to complement its 91-country strong Corruption Perceptions Index.

Many rich world corporations and wealthy individuals make use of off-shore havens or “special purpose entities” to launder money, make illicit payments, avoid or evade taxes, and conceal assets or liabilities. According to Swiss authorities, more than $40 billion are held by Russians in its banking system alone. The figure may be 5 to 10 times higher in the tax havens of the United Kingdom.

In a survey it conducted in February 2002 of 82 companies in which it invests, “Friends, Ivory, and Sime” found that only a quarter had clear anti-corruption management and accountability systems in place.

Tellingly only 35 countries signed the 1997 OECD “Convention on Combating Bribery of Foreign Public Officials in International Business Transactions” – including four non-OECD members: Chile, Argentina, Bulgaria, and Brazil. The convention has been in force since February 1999 and is only one of many OECD anti-corruption drives, among which are SIGMA (Support for Improvement in Governance and Management in Central and Eastern European countries), ACN (Anti-Corruption Network for Transition Economies in Europe), and FATF (the Financial Action Task Force on Money Laundering).

Moreover, The moral authority of those who preach against corruption in poor countries – the officials of the IMF, the World Bank, the EU, the OECD – is strained by their ostentatious lifestyle, conspicuous consumption, and “pragmatic” morality.

II. What to Do? What is Being Done?

A few years ago, I proposed a taxonomy of corruption, venality, and graft. I suggested this cumulative definition:

  1. The withholding of a service, information, or goods that, by law, and by right, should have been provided or divulged.
  1. The provision of a service, information, or goods that, by law, and by right, should not have been provided or divulged.
  1. That the withholding or the provision of said service, information, or goods are in the power of the withholder or the provider to withhold or to provide AND That the withholding or the provision of said service, information, or goods constitute an integral and substantial part of the authority or the function of the withholder or the provider.
  1. That the service, information, or goods that are provided or divulged are provided or divulged against a benefit or the promise of a benefit from the recipient and as a result of the receipt of this specific benefit or the promise to receive such benefit.
  1. That the service, information, or goods that are withheld are withheld because no benefit was provided or promised by the recipient.

There is also what the World Bank calls “State Capture” defined thus:

“The actions of individuals, groups, or firms, both in the public and private sectors, to influence the formation of laws, regulations, decrees, and other government policies to their own advantage as a result of the illicit and non-transparent provision of private benefits to public officials.”

We can classify corrupt and venal behaviors according to their outcomes:

  1. Income Supplement – Corrupt actions whose sole outcome is the supplementing of the income of the provider without affecting the “real world” in any manner.
  1. Acceleration or Facilitation Fees – Corrupt practices whose sole outcome is to accelerate or facilitate decision making, the provision of goods and services or the divulging of information.
  1. Decision Altering (State Capture) Fees Bribes and promises of bribes which alter decisions or affect them, or which affect the formation of policies, laws, regulations, or decrees beneficial to the bribing entity or person.
  1. Information Altering Fees – Backhanders and bribes that subvert the flow of true and complete information within a society or an economic unit (for instance, by selling professional diplomas, certificates, or permits).
  1. Reallocation Fees – Benefits paid (mainly to politicians and political decision makers) in order to affect the allocation of economic resources and material wealth or the rights thereto. Concessions, licenses, permits, assets privatized, tenders awarded are all subject to reallocation fees.

To eradicate corruption, one must tackle both giver and taker.

History shows that all effective programs shared these common elements:

  1. The persecution of corrupt, high-profile, public figures, multinationals, and institutions (domestic and foreign). This demonstrates that no one is above the law and that crime does not pay.
  1. The conditioning of international aid, credits, and investments on a monitored reduction in corruption levels. The structural roots of corruption should be tackled rather than merely its symptoms.
  1. The institution of incentives to avoid corruption, such as a higher pay, the fostering of civic pride, “good behavior” bonuses, alternative income and pension plans, and so on.
  1. In many new countries (in Asia, Africa, and Eastern Europe) the very concepts of “private” versus “public” property are fuzzy and impermissible behaviors are not clearly demarcated. Massive investments in education of the public and of state officials are required.
  1. Liberalization and deregulation of the economy. Abolition of red tape, licensing, protectionism, capital controls, monopolies, discretionary, non-public, procurement. Greater access to information and a public debate intended to foster a “stakeholder society”.
  1. Strengthening of institutions: the police, the customs, the courts, the government, its agencies, the tax authorities – under time limited foreign management and supervision.

Awareness to corruption and graft is growing – though it mostly results in lip service. The Global Coalition for Africa adopted anti-corruption guidelines in 1999. The otherwise opaque Asia Pacific Economic Cooperation (APEC) forum is now championing transparency and good governance. The UN is promoting its pet convention against corruption.

The G-8 asked its Lyon Group of senior experts on transnational crime to recommend ways to fight corruption related to large money flows and money laundering. The USA and the Netherlands hosted global forums on corruption – as did South Korea in 2003. The OSCE has responded with its own initiative, in collaboration with the US Congressional Helsinki Commission.

The south-eastern Europe Stability Pact sports its own Stability Pact Anti-corruption Initiative (SPAI). It held its first conference in September 2001 in Croatia. More than 1200 delegates participated in the 10th International Anti-Corruption Conference in Prague last year. The conference was attended by the Czech prime minister, the Mexican president, and the head of the Interpol.

The most potent remedy against corruption is sunshine – free, accessible, and available information disseminated and probed by an active opposition, uncompromised press, and assertive civic organizations and NGO’s. In the absence of these, the fight against official avarice and criminality is doomed to failure. With them, it stands a chance.

Corruption can never be entirely eliminated – but it can be restrained and its effects confined. The cooperation of good people with trustworthy institutions is indispensable. Corruption can be defeated only from the inside, though with plenty of outside help. It is a process of self-redemption and self-transformation. It is the real transition.

III. Asset Confiscation and Asset Forfeiture

The abuse of asset confiscation and forfeiture statutes by governments, law enforcement agencies, and political appointees and cronies throughout the world is well-documented. In many developing countries and countries in transition, assets confiscated from real and alleged criminals and tax evaders are sold in fake auctions to party hacks, cronies, police officers, tax inspectors, and relatives of prominent politicians at bargain basement prices.

That the assets of suspects in grave crimes and corruption should be frozen or “disrupted” until they are convicted or exonerated by the courts – having exhausted their appeals – is understandable and in accordance with the Vienna Convention. But there is no justification for the seizure and sale of property otherwise.

In Switzerland, financial institutions are obliged to automatically freeze suspect transactions for a period of five days, subject to the review of an investigative judge. In France, the Financial Intelligence Unit can freeze funds involved in a reported suspicious transaction by administrative fiat. In both jurisdictions, the fast track freezing of assets has proven to be a more than adequate measure to cope with organized crime and venality.

The presumption of innocence must fully apply and due process upheld to prevent self-enrichment and corrupt dealings with confiscated property, including the unethical and unseemly use of the proceeds from the sale of forfeited assets to close gaping holes in strained state and municipal budgets.

In the United States, according to The Civil Asset Forfeiture Reform Act of 2000 (HR 1658), the assets of suspects under investigation and of criminals convicted of a variety of more than 400 minor and major offenses (from soliciting a prostitute to gambling and from narcotics charges to corruption and tax evasion) are often confiscated and forfeited (“in personam, or value-based confiscation”).

Technically and theoretically, assets can be impounded or forfeited and disposed of even in hitherto minor Federal civil offenses (mistakes in fulfilling Medicare or tax return forms)

The UK’s Assets Recovery Agency (ARA) that is in charge of enforcing the Proceeds of Crime Act 2002, had this chilling statement to make on May 24, 2007:

“We are pursuing the assets of those involved in a wide range of crime including drug dealing, people trafficking, fraud, extortion, smuggling, control of prostitution, counterfeiting, benefit fraud, tax evasion and environmental crimes such as illegal dumping of waste and illegal fishing.” (!)

Drug dealing and illegal fishing in the same sentence.

The British firm Bentley-Jennison, who provide Forensic Accounting Services, add:

In some cases the defendants will even have their assets seized at the start of an investigation, before any charges have been considered. In many cases the authorities will assume that all of the assets held by the defendant are illegally obtained as he has a “criminal lifestyle”. It is then down to the defendant to prove otherwise. If the defendant is judged to have a criminal lifestyle then it will be assumed that physical assets, such as properties and motor vehicles, have been acquired through the use of criminal funds and it will be necessary to present evidence to contradict this.

The defendant’s bank accounts will also be scanned for evidence of spending and any expenditure on unidentified assets (and in some cases identified assets) is also likely to be included as alleged criminal benefit. This often leads to the inclusion of sums from legitimate sources and double counting both of which need to be eliminated.”

Under the influence of the post-September 11 United States and the FATF (Financial Action Task Force on Money Laundering), Canada, Australia, the United Kingdom, Greece, South Korea, and Russia have similar asset recovery and money laundering laws in place.

International treaties (for instance, the 1959 European Convention on Mutual Legal Assistance in Criminal Matters, the 1990 Convention of the Council of Europe on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (ETS 141), and The U.N. Convention against Corruption 2003- UNCAC) and European Union Directives (e.g., 2001/97/EC) allow the seizure and confiscation of the assets and “unexplained wealth” of criminals and suspects globally, even if their alleged or proven crime does not constitute an offense where they own property or have bank accounts.

This abrogation of the principle of dual criminality sometimes leads to serious violations of human and civil rights. Hitler could have used it to ask the United Kingdom’s Assets Recovery Agency (ARA) to confiscate the property of refugee Jews who committed “crimes” by infringing on the infamous Nuremberg race laws.

Only offshore tax havens, such as Andorra, Antigua, Aruba, the British Virgin Islands, Guernsey, Monaco, the Netherlands Antilles, Samoa, St. Vincent, the US Virgin Islands, and Vanuatu still resist the pressure to join in the efforts to trace and seize suspects’ assets and bank accounts in the absence of a conviction or even charges.

Even worse, unlike in other criminal proceedings, the burden of proof is on the defendant who has to demonstrate that the source of the funds used to purchase the confiscated or forfeited assets is legal. When the defendant fails to furnish such evidence conclusively and convincingly, or if he has left the United States or had died, the assets are sold at an auction and the proceeds usually revert to various law enforcement agencies, to the government’s budget, or to good social causes and programs. This is the case in many countries, including United Kingdom, United States, Germany, France, Hong Kong, Italy, Denmark, Belgium, Austria, Greece, Ireland, New Zealand, Singapore and Switzerland.

According to a brief written by Jack Smith, Mark Pieth, and Guillermo Jorge at the Basel Institute on Governance, International Centre for Asset Recovery:

Article 54(1)(c) of the UNCAC recommends that states parties establish non-criminal systems of confiscation, which have several advantages for recovery actions: the standard of evidence is lower (“preponderance of the evidence” rather than “beyond a reasonable doubt”); they are not subject to some of the more restrictive traditional safeguards of international cooperation such as the offense for which the defendant is accused has to be a crime in the receiving state (dual criminality); and it opens more formal avenues for negotiation and settlements. This is already the practice in some jurisdictions such as the US, Ireland, the UK, Italy, Colombia, Slovenia, and South Africa, as well as some Australian and Canadian States.”

In most countries, including the United Kingdom, the United States, Austria, Germany, Indonesia, Macedonia, and Ireland, assets can be impounded, confiscated, frozen, forfeited, and even sold prior to and without any criminal conviction.

In Australia, Austria, Ireland, Hong-Kong, New Zealand, Singapore, United Kingdom, South Africa, United States and the Netherlands alleged and suspected criminals, their family members, friends, employees, and partners can be stripped of their assets even for crimes they have committed in other countries and even if they have merely made use of revenues obtained from illicit activities (this is called “in rem, or property-based confiscation”). This often gives rise to cases of double jeopardy.

Typically, the defendant is notified of the impending forfeiture or confiscation of his or her assets and has recourse to a hearing within the relevant law enforcement agency and also to the courts. If he or she can prove “substantial harm” to life and business, the property may be released to be used, though ownership is rarely restored.

When the process of asset confiscation or asset forfeiture is initiated, banking secrecy is automatically lifted and the government indemnifies the banks for any damage they may suffer for disclosing confidential information about their clients’ accounts.

In many countries from South Korea to Greece, lawyer-client privilege is largely waived. The same requirements of monitoring of clients’ activities and reporting to the authorities apply to credit and financial institutions, venture capital firms, tax advisers, accountants, and notaries.

Elsewhere, there are some other worrying developments:

In Bulgaria, the assets of tax evaders have recently begun to be confiscated and turned over to the National Revenue Agency and the State Receivables Collection Agency. Property is confiscated even when the tax assessment is disputed in the courts. The Agency cannot, however, confiscate single-dwelling houses, bank accounts up to 250 leva of one member of the family, salary or pension up to 250 leva a month, social care, and alimony, support money or allowances.

Venezuela has recently reformed its Organic Tax Code to allow for:

” (P)re-judgment enforcement measures (to) include closure of premises for up to ten days and confiscation of merchandise. These measures will be applied in addition to the attachment or sequestration of personal property and the prohibition against alienation or encumbrance of realty. During closure of premises, the employer must continue to pay workers, thereby avoiding an appeal for constitutional protection.”

Finally, in many states in the United States, “community responsibility” statutes require of owners of legal businesses to “abate crime” by openly fighting it themselves. If they fail to tackle the criminals in their neighborhood, the police can seize and sell their property, including their apartments and cars. The proceeds from such sales accrue to the local municipality.

In New-York City, the police confiscated a restaurant because one of its regular patrons was an alleged drug dealer. In Alabama, police seized the home of a senior citizen because her yard was used, without her consent, for drug dealing. In Maryland, the police confiscated a family’s home and converted it into a retreat for its officers, having mailed one of the occupants a package of marijuana.

Note – The Psychology of Corruption

Most politicians bend the laws of the land and steal money or solicit bribes because they need the funds to support networks of patronage. Others do it in order to reward their nearest and dearest or to maintain a lavish lifestyle when their political lives are over.

But these mundane reasons fail to explain why some officeholders go on a rampage and binge on endless quantities of lucre. All rationales crumble in the face of a Mobutu Sese Seko or a Saddam Hussein or a Ferdinand Marcos who absconded with billions of US dollars from the coffers of Zaire, Iraq, and the Philippines, respectively.

These inconceivable dollops of hard cash and valuables often remain stashed and untouched, moldering in bank accounts and safes in Western banks. They serve no purpose, either political or economic. But they do fulfill a psychological need. These hoards are not the megalomaniacal equivalents of savings accounts. Rather they are of the nature of compulsive collections.

Erstwhile president of Sierra Leone, Momoh, amassed hundreds of video players and other consumer goods in vast rooms in his mansion. As electricity supply was intermittent at best, his was a curious choice. He used to sit among these relics of his cupidity, fondling and counting them insatiably.

While Momoh relished things with shiny buttons, people like Sese Seko, Hussein, and Marcos drooled over money. The ever-heightening mountains of greenbacks in their vaults soothed them, filled them with confidence, regulated their sense of self-worth, and served as a love substitute. The balances in their bulging bank accounts were of no practical import or intent. They merely catered to their psychopathology.

These politicos were not only crooks but also kleptomaniacs. They could no more stop thieving than Hitler could stop murdering. Venality was an integral part of their psychological makeup.

Kleptomania is about acting out. It is a compensatory act. Politics is a drab, uninspiring, unintelligent, and, often humiliating business. It is also risky and rather arbitrary. It involves enormous stress and unceasing conflict. Politicians with mental health disorders (for instance, narcissists or psychopaths) react by decompensation. They rob the state and coerce businessmen to grease their palms because it makes them feel better, it helps them to repress their mounting fears and frustrations, and to restore their psychodynamic equilibrium. These politicians and bureaucrats “let off steam” by looting.

Kleptomaniacs fail to resist or control the impulse to steal, even if they have no use for the booty. According to the Diagnostic and Statistical Manual IV-TR (2000), the bible of psychiatry, kleptomaniacs feel “pleasure, gratification, or relief when committing the theft.” The good book proceeds to say that ” … (T)he individual may hoard the stolen objects …”.

As most kleptomaniac politicians are also psychopaths, they rarely feel remorse or fear the consequences of their misdeeds. But this only makes them more culpable and dangerous.

Also Read:

Legalizing Crime

The Greatest Savings Crisis in History

The Typology of Financial Scandals

The Bursting Asset Bubbles

(Case Studies: The Savings and Loans Crisis, Crash of 1929, British Real Estate)

The Shadowy World of International Finance

Hawala, or the Bank that Never Was

Money Laundering in a Changed World

The Varieties of Corruption

Straf – Corruption in CEE

The Criminality of Transition

The Kleptocracies of the East

The Enrons of the East

Bully at Work – Interview with Tim Field

The Economics of Conspiracy Theories

The Industrious Spies

The Business of Torture

Fimaco Wouldn’t Die – Russia’s Missing Billions

Treasure Island Revisited – Maritime Piracy

Organ Trafficking in Eastern Europe

Begging Your Trust in Africa

Slush Funds

Is God Necessary?

Could God have failed to exist (especially considering His omnipotence)? Could He have been a contingent being rather than a necessary one? Would the World have existed without Him and, more importantly, would it have existed in the same way? For instance: would it have allowed for the existence of human beings?

To say that God is a necessary being means to accept that He exists (with His attributes intact) in every possible world. It is not enough to say that He exists only in our world: this kind of claim will render Him contingent (present in some worlds – possibly in none! – and absent in others).

We cannot conceive of the World without numbers, relations, and properties, for instance. These are necessary entities because without them the World as we known and perceive it would not exist. Is this equally true when we contemplate God? Can we conceive of a God-less World?

Moreover: numbers, relations, and properties are abstracts. Yet, God is often thought of as a concrete being. Can a concrete being, regardless of the properties imputed to it, ever be necessary? Is there a single concrete being – God – without which the Universe would have perished, or not existed in the first place? If so, what makes God a privileged concrete entity?

Additionally, numbers, relations, and properties depend for their existence (and utility) on other beings, entities, and quantities. Relations subsist between objects; properties are attributes of things; numbers are invariably either preceded by other numbers or followed by them.

Does God depend for His existence on other beings, entities, quantities, properties, or on the World as a whole? If He is a dependent entity, is He also a derivative one? If He is dependent and derivative, in which sense is He necessary?

Many philosophers confuse the issue of existence with that of necessity. Kant and, to some extent, Frege, argued that existence is not even a logical predicate (or at least not a first-order logical predicate). But, far more crucially, that something exists does not make it a necessary being. Thus, contingent beings exist, but they are not necessary (hence their “contingency”).

At best, ontological arguments deal with the question: does God necessarily exist? They fail to negotiate the more tricky: can God exist only as a Necessary Being (in all possible worlds)?

Modal ontological arguments even postulate as a premise that God is a necessary being and use that very assumption as a building block in proving that He exists! Even a rigorous logician like Gödel fell in this trap when he attempted to prove God’s necessity. In his posthumous ontological argument, he adopted several dubious definitions and axioms:

(1) God’s essential properties are all positive (Definition 1); (2) God necessarily exists if and only if every essence of His is necessarily exemplified (Definition 3); (3) The property of being God is positive (Axiom 3); (4) Necessary existence is positive (Axiom 5).

These led to highly-debatable outcomes:

(1) For God, the property of being God is essential (Theorem 2); (2) The property of being God is necessarily exemplified.

Gödel assumed that there is one universal closed set of essential positive properties, of which necessary existence is a member. He was wrong, of course. There may be many such sets (or none whatsoever) and necessary existence may not be a (positive) property (or a member of some of the sets) after all.

Worst of all, Gödel’s “proof” falls apart if God does not exist (Axiom 3’s veracity depends on the existence of a God-like creature). Plantinga has committed the very same error a decade earlier (1974). His ontological argument incredibly relies on the premise: “There is a possible world in which there is God!”

Veering away from these tautological forays, we can attempt to capture God’s alleged necessity by formulating this Axiom Number 1:

“God is necessary (i.e. necessarily exists in every possible world) if there are objects or entities that would not have existed in any possible world in His absence.”

We should complement Axiom 1 with Axiom Number 2:

“God is necessary (i.e. necessarily exists in every possible world) even if there are objects or entities that do not exist in any possible world (despite His existence).”

The reverse sentences would be:

Axiom Number 3: “God is not necessary (i.e. does not necessarily exist in every possible world) if there are objects or entities that exist in any possible world in His absence.”

Axiom Number 4: “God is not necessary (i.e. does not necessarily exist in every possible world) if there are no objects or entities that exist in any possible world (despite His existence).”

Now consider this sentence:

Axiom Number 5: “Objects and entities are necessary (i.e. necessarily exist in every possible world) if they exist in every possible world even in God’s absence.”

Consider abstracta, such as numbers. Does their existence depend on God’s? Not if we insist on the language above. Clearly, numbers are not dependent on the existence of God, let alone on His necessity.

Yet, because God is all-encompassing, surely it must incorporate all possible worlds as well as all impossible ones! What if we were to modify the language and recast the axioms thus:

Axiom Number 1:

“God is necessary (i.e. necessarily exists in every possible and impossible world) if there are objects or entities that would not have existed in any possible world in His absence.”

We should complement Axiom 1 with Axiom Number 2:

“God is necessary (i.e. necessarily exists in every possible and impossible world) even if there are objects or entities that do not exist in any possible world (despite His existence).”

The reverse sentences would be:

Axiom Number 3: “God is not necessary (i.e. does not necessarily exist in every possible and impossible world) if there are objects or entities that exist in any possible world in His absence.”

Axiom Number 4: “God is not necessary (i.e. does not necessarily exist in every possible and impossible world) if there are no objects or entities that exist in any possible world (despite His existence).”

Now consider this sentence:

Axiom Number 5: “Objects and entities are necessary (i.e. necessarily exist in every possible and impossible world) if they exist in every possible world even in God’s absence.”

According to the Vander Laan modification (2004) of the Lewis counterfactuals semantics, impossible worlds are worlds in which the number of propositions is maximal. Inevitably, in such worlds, propositions contradict each other (are inconsistent with each other). In impossible worlds, some counterpossibles (counterfactuals with a necessarily false antecedent) are true or non-trivially true. Put simply: with certain counterpossibles, even when the premise (the antecedent) is patently false, one can agree that the conditional is true because of the (true, formally correct) relationship between the antecedent and the consequent.

Thus, if adopt an expansive view of God – one that covers all possibilities and impossibilities – we can argue that God’s existence is necessary.

Is Energy Security Desirable?

The pursuit of “energy security” has brought us to the brink. It is directly responsible for numerous wars, big and small; for unprecedented environmental degradation; for global financial imbalances and meltdowns; for growing income disparities; and for ubiquitous unsustainable development.
It is energy insecurity that we should seek.
The uncertainty incumbent in phenomena such “peak oil”, or in the preponderance of hydrocarbon fuels in failed states fosters innovation. The more insecure we get, the more we invest in the recycling of energy-rich products; the more substitutes we find for energy-intensive foods; the more we conserve energy; the more we switch to alternatives energy; the more we encourage international collaboration; and the more we optimize energy outputs per unit of fuel input.
A world in which energy (of whatever source) will be abundant and predictably available would suffer from entropy, both physical and mental. The vast majority of human efforts revolve around the need to deploy our meager resources wisely. Energy also serves as a geopolitical “organizing principle” and disciplinary rod. Countries which waste energy (and the money it takes to buy it), pollute, and conflict with energy suppliers end up facing diverse crises, both domestic and foreign. Profligacy is punished precisely because energy in insecure. Energy scarcity and precariousness thus serves a global regulatory mechanism.
But the obsession with “energy security” is only one example of the almost religious belief in “scarcity”.

It is only a mild overstatement to say that the science of economics, such as it is, revolves around the Malthusian concept of scarcity. Our infinite wants, the finiteness of our resources and the bad job we too often make of allocating them efficiently and optimally – lead to mismatches between supply and demand. We are forever forced to choose between opportunities, between alternative uses of resources, painfully mindful of their costs.

This is how the perennial textbook “Economics” (seventeenth edition), authored by Nobel prizewinner Paul Samuelson and William Nordhaus, defines the dismal science:

“Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.”

The classical concept of scarcity – unlimited wants vs. limited resources – is lacking. Anticipating much-feared scarcity encourages hoarding which engenders the very evil it was meant to fend off. Ideas and knowledge – inputs as important as land and water – are not subject to scarcity, as work done by Nobel laureate Robert Solow and, more importantly, by Paul Romer, an economist from the University of California at Berkeley, clearly demonstrates. Additionally, it is useful to distinguish natural from synthetic resources.

The scarcity of most natural resources (a type of “external scarcity”) is only theoretical at present. Granted, many resources are unevenly distributed and badly managed. But this is man-made (“internal”) scarcity and can be undone by Man. It is truer to assume, for practical purposes, that most natural resources – when not egregiously abused and when freely priced – are infinite rather than scarce. The anthropologist Marshall Sahlins discovered that primitive peoples he has studied had no concept of “scarcity” – only of “satiety”. He called them the first “affluent societies”.

This is because, fortunately, the number of people on Earth is finite – and manageable – while most resources can either be replenished or substituted. Alarmist claims to the contrary by environmentalists have been convincingly debunked by the likes of Bjorn Lomborg, author of “The Skeptical Environmentalist”.

Equally, it is true that manufactured goods, agricultural produce, money, and services are scarce. The number of industrialists, service providers, or farmers is limited – as is their life span. The quantities of raw materials, machinery and plant are constrained. Contrary to classic economic teaching, human wants are limited – only so many people exist at any given time and not all them desire everything all the time. But, even so, the demand for man-made goods and services far exceeds the supply.

Scarcity is the attribute of a “closed” economic universe. But it can be alleviated either by increasing the supply of goods and services (and human beings) – or by improving the efficiency of the allocation of economic resources. Technology and innovation are supposed to achieve the former – rational governance, free trade, and free markets the latter.

The telegraph, the telephone, electricity, the train, the car, the agricultural revolution, information technology and, now, biotechnology have all increased our resources, seemingly ex nihilo. This multiplication of wherewithal falsified all apocalyptic Malthusian scenarios hitherto. Operations research, mathematical modeling, transparent decision making, free trade, and professional management – help better allocate these increased resources to yield optimal results.

Markets are supposed to regulate scarcity by storing information about our wants and needs. Markets harmonize supply and demand. They do so through the price mechanism. Money is, thus, a unit of information and a conveyor or conduit of the price signal – as well as a store of value and a means of exchange.

Markets and scarcity are intimately related. The former would be rendered irrelevant and unnecessary in the absence of the latter. Assets increase in value in line with their scarcity – i.e., in line with either increasing demand or decreasing supply. When scarcity decreases – i.e., when demand drops or supply surges – asset prices collapse. When a resource is thought to be infinitely abundant (e.g., air) – its price is zero.

Armed with these simple and intuitive observations, we can now survey the dismal economic landscape.

The abolition of scarcity was a pillar of the paradigm shift to the “new economy”. The marginal costs of producing and distributing intangible goods, such as intellectual property, are negligible. Returns increase – rather than decrease – with each additional copy. An original software retains its quality even if copied numerous times. The very distinction between “original” and “copy” becomes obsolete and meaningless. Knowledge products are “non-rival goods” (i.e., can be used by everyone simultaneously).

Such ease of replication gives rise to network effects and awards first movers with a monopolistic or oligopolistic position. Oligopolies are better placed to invest excess profits in expensive research and development in order to achieve product differentiation. Indeed, such firms justify charging money for their “new economy” products with the huge sunken costs they incur – the initial expenditures and investments in research and development, machine tools, plant, and branding.

To sum, though financial and human resources as well as content may have remained scarce – the quantity of intellectual property goods is potentially infinite because they are essentially cost-free to reproduce. Plummeting production costs also translate to enhanced productivity and wealth formation. It looked like a virtuous cycle.

But the abolition of scarcity implied the abolition of value. Value and scarcity are two sides of the same coin. Prices reflect scarcity. Abundant products are cheap. Infinitely abundant products – however useful – are complimentary. Consider money. Abundant money – an intangible commodity – leads to depreciation against other currencies and inflation at home. This is why central banks intentionally foster money scarcity.

But if intellectual property goods are so abundant and cost-free – why were distributors of intellectual property so valued, not least by investors in the stock exchange? Was it gullibility or ignorance of basic economic rules?

Not so. Even “new economists” admitted to temporary shortages and “bottlenecks” on the way to their utopian paradise of cost-free abundance. Demand always initially exceeds supply. Internet backbone capacity, software programmers, servers are all scarce to start with – in the old economy sense.

This scarcity accounts for the stratospheric erstwhile valuations of dotcoms and telecoms. Stock prices were driven by projected ever-growing demand and not by projected ever-growing supply of asymptotically-free goods and services. “The Economist” describes how WorldCom executives flaunted the cornucopian doubling of Internet traffic every 100 days. Telecoms predicted a tsunami of clients clamoring for G3 wireless Internet services. Electronic publishers gleefully foresaw the replacement of the print book with the much heralded e-book.

The irony is that the new economy self-destructed because most of its assumptions were spot on. The bottlenecks were, indeed, temporary. Technology, indeed, delivered near-cost-free products in endless quantities. Scarcity was, indeed, vanquished.

Per the same cost, the amount of information one can transfer through a single fiber optic swelled 100 times. Computer storage catapulted 80,000 times. Broadband and cable modems let computers communicate at 300 times their speed only 5 years ago. Scarcity turned to glut. Demand failed to catch up with supply. In the absence of clear price signals – the outcomes of scarcity – the match between the two went awry.

One innovation the “new economy” has wrought is “inverse scarcity” – unlimited resources (or products) vs. limited wants. Asset exchanges the world over are now adjusting to this harrowing realization – that cost free goods are worth little in terms of revenues and that people are badly disposed to react to zero marginal costs.

The new economy caused a massive disorientation and dislocation of the market and the price mechanism. Hence the asset bubble. Reverting to an economy of scarcity is our only hope. If we don’t do so deliberately – the markets will do it for us, mercilessly.

A Comment on “Manufactured Scarcity”

Conspiracy theorists have long alleged that manufacturers foster scarcity by building into their products mechanisms of programmed obsolescence and apoptosis (self-destruction). But scarcity is artificially manufactured in less obvious (and far less criminal) ways.

Technological advances, product revisions, new features, and novel editions render successive generations of products obsolete. Consumerism encourages owners to rid themselves of their possessions and replace them with newer, more gleaming, status-enhancing substitutes offered by design departments and engineering workshops worldwide. Cherished values of narcissistic competitiveness and malignant individualism play an important socio-cultural role in this semipternal game of musical chairs.

Many products have a limited shelf life or an expiry date (rarely supported by solid and rigorous research). They are to be promptly disposed of and, presumably, instantaneously replaced with new ones.

Finally, manufacturers often knowingly produce scarcity by limiting their output or by restricting access to their goods. “Limited editions” of works of art and books are prime examples of this stratagem.

Facts and Fictions in the Securities Industry

The securities industry worldwide is constructed upon the quicksand of self-delusion and socially-acceptable confabulations. These serve to hold together players and agents whose interests are both disparate and diametrically opposed. In the long run, the securities markets are zero-sum games and the only possible outcome is win-lose.

The first “dirty secret” is that a firm’s market capitalization often stands in inverse proportion to its value and valuation (as measured by an objective, neutral, disinterested party). This is true especially when agents (management) are not also principals (owners).

Owing to its compensation structure, invariably tied to the firms’ market capitalization, management strives to maximize the former by manipulating the latter. Very often, the only way to affect the firm’s market capitalization in the short-term is to sacrifice the firm’s interests and, therefore, its value in the medium to long-term (for instance, by doling out bonuses even as the firm is dying; by speculating on leverage; and by cooking the books).

The second open secret is that all modern financial markets are Ponzi (pyramid) schemes. The only viable exit strategy is by dumping one’s holdings on future entrants. Fresh cash flows are crucial to sustaining ever increasing prices. Once these dry up, markets collapse in a heap.

Thus, the market prices of shares and, to a lesser extent debt instruments (especially corporate ones) are determined by three cash flows:

(i) The firm’s future cash flows (incorporated into valuation models, such as the CAPM or FAR)

(ii) Future cash flows in securities markets (i.e., the ebb and flow of new entrants)

(iii) The present cash flows of current market participants

The confluence of these three cash streams translates into what we call “volatility” and reflects the risks inherent in the security itself (the firm’s idiosyncratic risk) and the hazards of the market (known as alpha and beta coefficients).

In sum, stocks and share certificates do not represent ownership of the issuing enterprise at all. This is a myth, a convenient piece of fiction intended to pacify losers and lure “new blood” into the arena. Shareholders’ claims on the firm’s assets in cases of insolvency, bankruptcy, or liquidation are of inferior, or subordinate nature.

Stocks are shares are merely options (gambles) on the three cash flows enumerated above. Their prices wax and wane in accordance with expectations regarding the future net present values of these flows. Once the music stops, they are worth little.

Also Read:

The Friendly Trend

Models of Stock Valuation

Portfolio Management Theory and Technical Analysis Lecture Notes

A Classification of Abusive Behaviors

Abusive conduct is not a uniform, homogeneous phenomenon. It stems and emanates from multiples sources and manifests in a myriad ways. Following are a few useful distinctions which pertain to abuse and could serve as organizing, taxonomical principles (dimensional typologies) in a kind of matrix.

1. Overt vs. Covert abuse

Overt abuse is the open and explicit, easily discernible, clear-cut abuse of another person in any way, shape, or form (verbal, physical, sexual, financial, psychological-emotional, etc.).

Covert abuse revolves around the abuser’s need to assert and maintain control over his victim. It can wear many forms, not all of which are self-evident, unequivocal, and unambiguous.

2. Explicit vs. Stealth or Ambient abuse (Gaslighting)

A more useful distinction, therefore, is between explicit (manifest, obvious, indisputable, easily observable even by a casual spectator or interlocutor) and stealth (or ambient) abuse, also known as gaslighting. This is the fostering, propagation and enhancement of an atmosphere of fear, intimidation, instability, unpredictability and irritation. There are no acts of traceable explicit abuse, nor any manipulative settings of control.

3. Projective vs. Directional abuse

Projective abuse is the outcome of the abuser’s projection defense mechanism. Projection is when the abuser attributes to others feelings and traits and motives that he possesses but deems unacceptable, discomfiting, and ill-fitting. This way he disowns these discordant features and secures the right to criticize and chastise others for having or displaying them. Such abuse is often cathartic (see the next pair of categories).

Directional abuse is not the result of projection. It is a set of behaviors aimed at a target (the victim) for the purpose of humiliating, punishing, or manipulating her. Such abusive conduct is functional, geared towards securing a favored and desired outcome.

4. Cathartic vs. Functional abuse

While pair number (3) above deals with the psychodynamic roots of the abuser’s misbehavior, the current pair of categories is concerned with its consequences. Some abusers behave the way they do because it alleviates their anxieties; enhances their inflated, grandiose self-image; or purges “impurities” and imperfections that they perceive either in the victim, or in the situation (e.g., in their marriage). Thus, such abuse is cathartic: it is aimed at making the abuser feel better. Projective abuse, for instance, is always cathartic.

The other reason to abuse someone is because the abuser wants to motivate his victim to do something, to feel in a certain way, or to refrain from committing an act. This is functional abuse in that it helps the abuser to adapt to his environment and operate in it, however dysfunctionally.

5. Pattern (or structured) vs. Stochastic (or Random) abuse

Some abusers heap abuse all the time on everyone around them: spouse, children, neighbors, friends, bosses, colleagues, authority figures, and underlings. Abusive conduct is the only way they know how to react to a world which they perceive to be hostile and exploitative. Their behaviors are “hard-wired”, rigid, ritualistic, and structured.

Other abusers are less predictable. They are explosive and impulsive. They have a problem with managing their anger. They respond with temper tantrums to narcissistic injuries and real and imaginary slights (ideas of reference). These abusers appear to strike “out of the blue”, in a chaotic and random manner.

6. Monovalent vs. Polyvalent abuse

The monovalent abuser abuses only one party, repeatedly, viciously, and thoroughly. Such abusers perpetrate their acts in well-defined locations or frameworks (e.g., at home, or in the workplace). They take great care to hide their hideous exploits and present a socially-acceptable face (or, rather, facade) in public. Their are driven by the need to annihilate the object of their maltreatment, or the source of their frustration and pathological envy.

In contrast, the polyvalent abuser casts his net wide and far and does not “discriminate” in choosing his prey. He is an “equal opportunity abuser” with multiple victims, who, often, have little in common. He is rarely concerned with appearances and regards himself above the Law. He holds everyone – and especially authority figures – in contempt. He is usually antisocial (psychopathic) and narcissistic.

7. Characteristic (personal style) vs. Atypical abuse

Abuse amounts to the personal style of most Pattern, or Structured abusers (see point 5 above). Demeaning, injurious, humiliating, and offensive behavior is their modus operandi, their reflexive reaction to stimuli, and their credo. Stochastic, or Random abusers act normatively and “normally” most of the time. Their abusive conduct is an aberration, a deviation, and perceived by their nearest and dearest to be atypical and even shocking.

8. Normative vs. Deviant abuse.

We all inflict abuse on others from time to time. Some abusive reactions are within the social norms and not considered to be indicative or a personal pathology, or of a socio-cultural anomie. In certain circumstances, abuse as a reaction is called for and deemed healthy and socially-commendable.

Still, the vast majority of abusive behaviors should be regarded as deviant, pathological, antisocial, and perverse.


It is important to distinguish between normative and deviant abuse. A total lack of aggression is as unhealthy as a surfeit. The cultural context is critical in assessing when someone crosses the line and becomes an abuser.

A Typology of Codependence and the Dependent Personality Disorder

Typology of Codependents

Codependence is a complex, multi-faceted, and multi-dimensional defence against the codependent’s fears and needs. There are four categories of codependence, stemming from their respective aetiologies:

(i) Codependence that aims to fend of anxieties related to abandonment. These codependents are clingy, smothering, prone to panic, are plagued with ideas of reference, and display self-negating submissiveness. Their main concern is to prevent their victims (friends, spouses, family members) from deserting them or from attaining true autonomy and independence.

(ii) Codependence that is geared to cope with the codependent’s fear of losing control. By feigning helplessness and neediness such codependents coerce their environment into ceaselessly catering to their needs, wishes, and requirements. These codependents are “drama queens” and their life is a kaleidoscope of instability and chaos. They refuse to grow up and force their nearest and dearest to treat them as emotional and/or physical invalids. They deploy their self-imputed deficiencies and disabilities as weapons.

Both these types of codependents use emotional blackmail and, when necessary, threats to secure the presence and blind compliance of their “suppliers“.

(iii) Vicarious codependents live through others. They “sacrifice” themselves in order to glory in the accomplishments of their chosen targets. They subsist on reflected light, on second-hand applause, and on derivative achievements. They have no personal history, having suspended their wishes, preferences, and dreams in favour of another’s.

From my book “Malignant Self Love – Narcissism Revisited”:

Inverted Narcissist

Also called “covert narcissist”, this is a co-dependent who depends exclusively on narcissists (narcissist-co-dependent). If you are living with a narcissist, have a relationship with one, if you are married to one, if you are working with a narcissist, etc. – it does NOT mean that you are an inverted narcissist.

To “qualify” as an inverted narcissist, you must CRAVE to be in a relationship with a narcissist, regardless of any abuse inflicted on you by him/her. You must ACTIVELY seek relationships with narcissists and ONLY with narcissists, no matter what your (bitter and traumatic) past experience has been. You must feel EMPTY and UNHAPPY in relationships with ANY OTHER kind of person. Only then, and if you satisfy the other diagnostic criteria of a Dependent Personality Disorder, can you be safely labelled an ‘inverted narcissist’.”

(iv) Finally, there is another form of dependence that is so subtle that it eluded detection until very recently.


Counterdependents reject and despise authority and often clash with authority figures (parents, boss, the Law). Their sense of self-worth and their very self-identity are premised on and derived from (in other words, are dependent on) these acts of bravura and defiance. Counterdependents are fiercely independent, controlling, self-cantered, and aggressive. Many of them are antisocial and use Projective Identification (i.e. force people to behave in ways that buttresses and affirm the counterdependent’s view of the world and his expectations).

These behavior patterns are often the result of a deep-seated fear of intimacy. In an intimate relationship, the counterdependent feels enslaved, ensnared, and captive. Counterdependents are locked into “approach-avoidance repetition complex” cycles. Hesitant approach is followed by avoidance of commitment. They are “lone wolves” and bad team players.

From my book “Malignant Self Love – Narcissism Revisited”:

“Counterdependence is a reaction formation. The counterdependent dreads his own weaknesses. He seeks to overcome them by projecting an image of omnipotence, omniscience, success, self-sufficiency, and superiority.

Most “classical” (overt) narcissists are counterdependent. Their emotions and needs are buried under “scar tissue” which had formed, coalesced, and hardened during years of one form of abuse or another. Grandiosity, a sense of entitlement, a lack of empathy, and overweening haughtiness usually hide gnawing insecurity and a fluctuating sense of self-worth.”

There is great confusion regarding the terms co-dependent, counter-dependent, and dependent. Before we proceed to study the Dependent Personality Disorder in our next article, we would do well to clarify these terms.


Like dependents (people with the Dependent Personality Disorder), codependents depend on other people for their emotional gratification and the performance of both inconsequential and crucial daily and psychological functions.

Codependents are needy, demanding, and submissive. They suffer from abandonment anxiety and, to avoid being overwhelmed by it, they cling to others and act immaturely. These behaviors are intended to elicit protective responses and to safeguard the “relationship” with their companion or mate upon whom they depend. Codependents appear to be impervious to abuse. No matter how badly mistreated, they remain committed.

This is where the “co” in “co-dependence” comes into play. By accepting the role of victims, codependents seek to control their abusers and manipulate them. It is a danse macabre in which both members of the dyad collaborate.

The Dependent Personality Disorder is a much disputed mental health diagnosis.

We are all dependent to some degree. We all like to be taken care of. When is this need judged to be pathological, compulsive, pervasive, and excessive? Clinicians who contributed to the study of this disorder use words such as “craving”, “clinging”, “stifling” (both the dependent and her partner), and “humiliating”, or “submissive”. But these are all subjective terms, open to disagreement and differences of opinion.

Moreover, virtually all cultures encourage dependency to varying degrees. Even in developed countries, many women, the very old, the very young, the sick, the criminal, and the mentally-handicapped are denied personal autonomy and are legally and economically dependent on others (or on the authorities). Thus, the Dependent Personality Disorder is diagnosed only when such behavior does not conform with social or cultural norms.

Codependents, as they are sometimes known, are possessed with fantastic worries and concerns and are paralyzed by their abandonment anxiety and fear of separation. This inner turmoil renders them indecisive. Even the simplest everyday decision becomes an excruciating ordeal. This is why codependents rarely initiate projects or do things on their own.

Dependents typically go around eliciting constant and repeated reassurances and advice from a myriad sources. This recurrent solicitation of succour is proof that the codependent seeks to transfer responsibility for his or her life to others, whether they have agreed to assume it or not.

This recoil and studious avoidance of challenges may give the wrong impression that the Dependent is indolent or insipid. Yet, most Dependents are neither. They are often fired by repressed ambition, energy, and imagination. It is their lack self-confidence that holds them back. They don’t trust their own abilities and judgment.

Absent an inner compass and a realistic assessment of their positive qualities on the one hand and limitations on the other hand, Dependents are forced to rely on crucial input from the outside. Realizing this, their behavior becomes self-negating: they never disagree with meaningful others or criticizes them. They are afraid to lose their support and emotional nurturance.

Consequently, as I have written in the Open Site Encyclopedia entry on this disorder:

“The codependent molds himself/herself and bends over backward to cater to the needs of his nearest and dearest and satisfy their every whim, wish, expectation, and demand. Nothing is too unpleasant or unacceptable if it serves to secure the uninterrupted presence of the codependent’s family and friends and the emotional sustenance s/he can extract (or extort) from them.

The codependent does not feel fully alive when alone. S/he feels helpless, threatened, ill-at-ease, and child-like. This acute discomfort drives the codependent to hop from one relationship to another. The sources of nurturance are interchangeable. To the codependent, being with someone, with anyone, no matter whom – is always preferable to solitude.”

Read Notes from the therapy of a Dependent (Codependent) Patient