Friday, January 14, 2011

How To Deal With Liars? Expose Them

The circle jerks at the EconomicPolicyJournal—a bunch of losers with hairy palms—have come out with a piece called “The Tragedy of Gonzalo Lira”.

The piece is a reaction to my Democratic Bankruptcy Paradox—actually, it’s not a “reaction”: These wankers wrote a smear job, deliberately using lies.

Now I know what you are saying to yourselves, Gentle Readers & Kind Fans: “GL! Why are you comparing these poor souls to serial masturbators? Can’t you politely defend your arguments—like a civilized person—and refrain from the insults?”

Ordinarily, you’d be right: Whenever I debate someone, either in person or in print, I make the effort to be courteous and kind and respectful. If they misunderstand my arguments, I either try to gently make them see what I’m getting at, or decide not to engage—

—but not in this case. Why not this case? Because these assholes are doing something which is supremely uncool:

They are lying about my work.

Specifically, they are claiming my work is actually a recycling of someone else’s work—in other words, they’re calling me a plagiarist.

They are saying that my Democratic Bankruptcy Paradox is “little more than an unpolished, incomplete, poorly structured and formulated version of what economists, across the board, know as the Tragedy of the Commons.”

Someone who doesn’t know or is not familiar with the Tragedy of the Commons might well take their word for this smear—especially as these pasty-faced meat-beaters at EPJ cite several sources and make a to-do about being “serious”.

But people with specialized knowledge—such as myself, such as these herky jerks—realize that the Tragedy of the Commons problem and my Democratic Bankruptcy Paradox have absolutely nothing in common: They are issues in completely unrelated fields, dealing with completely different problems. 

But most people don’t know this—which is what these chicken chokers are counting on: They’re counting on the fact that anyone who isn’t an adept will simply take their word for it, and think that I’m ripping off someone else’s work—which is a flat-out lie on their part. 

And a lie which is too obvious for them to have made a mistake.

A lie which I cannot let slide. 

I say that they’re lying—but don’t take my word for it: Let me recap both concepts, so that you, Gentle Reader & Kind Fan, can make up your own mind.

For people who don’t know, The Tragedy of the Commons is a paradox formulated by Garrett Hardin in 1968, based on insights by the XIX century mathematician William Forster Lloyd. The original 1968 article is here. According to Wikipedia:
The tragedy of the commons is a dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource even when it is clear that it is not in anyone's long-term interest for this to happen. 
Right there, you realize it’s an issue of property rights and the common good: Or rather, individual good affecting the common good—ie., the common environment. The Wikipedia entry continues:
Hardin's Commons Theory is frequently cited to support the notion of sustainable development, meshing economic growth and environmental protection, and has had an effect on numerous current issues, including the debate over global warming.
Central to Hardin's article is an example (first sketched in an 1833 pamphlet by William Forster Lloyd) of a hypothetical and simplified situation based on medieval land tenure in Europe, of herders sharing a common parcel of land, on which they are each entitled to let their cows graze. In Hardin's example, it is in each herder's interest to put the next (and succeeding) cows he acquires onto the land, even if the quality of the common is temporarily or permanently damaged for all as a result, through over grazing. The herder receives all of the benefits from an additional cow, while the damage to the common is shared by the entire group. If all herders make this individually rational economic decision, the common will be depleted or even destroyed to the detriment of all.
As you can see, it is a dilemma of individuals encroaching and exploiting the common environment for their own benefit. It addresses the problem of how an individual good can come at the cost of the group, but how the cost to each individual within the group is dispersed to the point where it is negligible and/or unnoticed.

On the other hand, my Democratic Bankruptcy Paradox is—
the paradox by which every democracy eventually goes bankrupt—regardless of the people’s will and intention of keeping it from going bankrupt.
That’s why it’s a paradox: The citizens of a democratic state are supposed to control its destiny. They obviously do not want their nation to suffer bankruptcy—yet in spite of their will and intent, democratic states always go bankrupt. Always.
Right away, you see that the problem I am discussing is radically different from the Tragedy of the Commons problem.

In order to formulate my Democratic Bankruptcy Paradox, I use the discursive dilemma, a recently developed paradox regarding group agency. As I acknowledge in the post, I rely on Pettit, List and Dietrich for the formulation of the discursive dilemma. They apply the dilemma to legal theory, whereas I apply it to macro-economics and political theory.

What is the discursive theory? I defined it quite carefully in my original post, with three separate examples to make the point clear, so I will only give a brief explanation of it here: In any situation such that two propositions are incompatible—that is, ¬ (q)—a majority can believe that p is the case, another majority can believe that q is the case, with no one believing p ⋏ q, because such an outcome is impossible by definition—yet as a group (or as a democratic nation), the whole believes p ⋏ q, which is an incoherent outcome.

The discursive dilemma has absolutely nothing to do with the Tragedy of the Commons—the discursive dilemma is about group agency: The will of a group of people, and how it is not necessarily the same as the will of the individuals who make up the group—how indeed, the group agency can go directly counter to the agency of all of the individuals making up the group.

I take this paradox in group agency and use it to explain how a democracy always arrives at a fiscal incoherence, which is solved necessarily resolved by compromise. I then explain that, when the cost of resolving the fiscal incoherence is greater than the cost of sovereign debt, the democracy will take on debt. This will accelerate and spiral into a debt trap—regardless of the will of the individuals of the democracy, none of whom might want sovereign debt—until eventual, the democracy goes bankrupt.

So it’s quite obvious that my Democratic Bankruptcy Paradox theory has absolutely nothing to do with the Tragedy of the Commons problem.

But these wankers at EPJ? They’re counting on people’s lack of knowledge so that they can smear my argument, and use weasel words to make it seem that I stole my argument, and that my insight is no insight at all.

These people at EconomicPolicyJournal are liars, who smear me so that they can get some traffic.

I would have respected them if they’d engaged with what I actually wrote—even if it was just to disagree. But lying? Lying to get a boost in their site’s traffic?



If you go to EPJ’s site—which I wish you wouldn’t, as it only encourages them—don’t bother posting comments on their site.

Unlike The Hourly G and my regular blog site, EPJ moderates and culls their comments—they don’t have the stones to have open debate, much less criticism.


  1. In comments on your post Democratic Bankruptcy Paradox, there was a reference to Rise and Decline of Nation, clearly that reference is closer to the tragedy of the commons.

    So if I reframe your point slightly and call the credit worthiness of a democracy a shared asset ie a "commons" that no one wants to see exhausted how are the end results different?

    It almost forms a tautology.

    How is the end result differnt?

  2. Responding to Paul Breed:

    You say, "So if I reframe your point slightly"—

    —but now you're talking about something completely different from what I was talking about: This is not a "slight reframing". You're now twisting around what I wrote to make it "fit" with what the buffoons at EPJ lied about me.

    If you have to "slightly reframe" what I said, then it's really not what I said, is it?

    Besides—and to take your point head-on—I'm not talking about credit-worthiness as the issue: I’m talking about the discursive dilemma as it applies to fiscal priorities in a democracy, and how those incompatible fiscal priorities create a fiscal incoherence which has to be resolved. And my point was, when that fiscal incoherence is not resolved, because its cost is too high relative to the cost of issuing debt, then the democracy will issue debt in order to avoid resolving its fiscal incoherence, and eventually spiral into a debt trap and eventual bankruptcy. My point was, the moment sovereign credit is cheaper than resolving the fiscal incoherence is the moment a democracy starts issuing debt, until it eventually goes bankrupt.

    So bottom line, you're not addressing my argument: You're trying to change my argument into something it's not.


  3. Many of the founders of the USA saw Switzerland as a good model democracy and tried to design a similar thing in America. Switzerland is 700 years old and running fine, I think without any bankruptcies. America started out as a bunch of sovereign states very similar to the Swiss model. However, over time the US has evolved from a Federation to a strong central government. I don't think you can claim Switzerland is not a democracy. It only takes one counterexample to disprove a theory.

    If the US central government had stayed small then competition between the states for companies and taxpayers could then keep them from getting out of control.

    Some may say "that is a republic not a democracy". If you have any modern examples of democracies that are not republics or republics that are not democracies, please post them.

  4. First I really like your blog and I agree with
    95% of what you write. I also believe all valid arguments are strengthed with good debate.

    So back to the debate....

    If you take the same set of facts and using different logical steps arrive at the same conclusion are they not equal?

    I'm not saying the logical steps are the same only the result.

    Maybe I should have said, take the tragedy of the commons and re frame that so credit worthiness is the commons and you end up in dissipating this credit worthiness.

    Not credit worthy is pretty close to the definition of bankruptcy???

    We are already using a pretty loose definition of bankruptcy, because I see it likely the U.S. will default on the spirit of its obligations, but not on the detail by inflating the dollar so loans and social contracts are repaid in worthless inflated fiat. This is not technically bankruptcy.

  5. To Paul Breed—

    Reframing my argument so that sovereign credit-worthiness is now the "common good" is simply not my argument, full stop.

    Also—and this ought to be quite obvious—I can be “not credit-worthy” and still be perfectly solvent. A nation’s credit—it’s “common-good”—could be completely wrecked . . . but the democracy be perfectly solvent, maybe even with a little budget surplus. Far from bankruptcy, at any rate.

    So the issue of "credit-worthiness" as being a common good, and therefore this is all a case of Hardin's Tragedy of Common? Completely misses the boat.

    Paul, you seem alright. So no offense, but if you can't engage my argument, and insist on turning it into something it's not—even when, I have just shown, it is completely besides the points I am making—then there's really no point in having a discussion. Sorry.

    If you want to engage with my proof and debate what I actually wrote—even if you totally disagreed—then you've got my full attention.


  6. I fully admire the fact that you are taking a stand on this issue. You are a very thoughtful and excellent writer on all of the subjects you discuss and or bring to our attention. I do think it prudent you stand up for yourself, especially here.

    I am very new to any of this discussion/debate on the economy in general and more recently (as I learn more and more each day) the specifics. It is helpful to find one as succinct as you are and trust me, as one of the "newbies" or the ignorants out here (who desperately wants to learn) it was very important for me to see that you have steadfastly defended yourself from the smears.

    As you say, some of us do not know and we might well have fallen prey to that sort of nasty rhetoric. Frustrating because now is not the time to be playing these sorts of games. Most of the time we (us ignorants, or uninformed types when it comes to deeper understanding of economics) can tell the difference when it comes to "news" outlets and make adjustments accordingly. Not so here, this is all too new and some of us could be led astray. I’m not calling myself stupid mind you, just ignorant. I do not want to STAY ignorant...that would be stupid. LOL

    Thank you very much for your honesty and standing right up to the lies. I can testify that it was indeed needed. I might have become one that was pulled away. I read several different blogs and sites on economics and I would never have known they were lying. I may not have had or taken the time to research what they were saying and just drifted away from your work.

    Once more...thank you!

    Warm regards, Christine

  7. Why do you guys keep talking about democracy?? Where the fudge does it say that America is a democratic country?? You will NOT find this in Constitution, the Bill of Rights, Declaration of Independence or any other document written by Founding Fathers.

    They were talking about INDIVIDUAL LIBERTIES and RIGHTS... which are obviously not possible in democracy. In fact, the Founding Fathers were AGAINST democracy. Democracy is a situation where 51% controls 49% of the population... it's like two wolves and a sheep vote what to eat for lunch. This is NOT even remotely related to individual liberties and rights.

    So please stop quoting that peace of shit Bush (and Obama) when it comes to America being a democracy. This is b.s..........

  8. The real Tragedy of Gonzalo Lira is that he does not write more..

    GL I disagree with your comments on masturbation, as it is "Sex with someone you love"

  9. There are issues of fatal flaws in GL's work. America is a Constitutional Republic and is not subject to the frailties of a Democracy. For example in a Democracy 50% plus 1 vote can take all the wealth of the 50% minus 1 posses. this can not occur in the American reality.

    Some have said there is no difference in a Republic and a Democracy - read the Federalist papers and the Framers papers and the Convention notes. You will quickly walk that backwards as the Founder refereed to John Lock and the natural law.

    From there the Founders took serious care to protect the smallest minority from a majority when they explained the "SOVEREIGN INDIVIDUAL".
    They defined the Rule - by - Law and not The - Rule by - Man and gave all the power to the individuals over government. [Amendment 10 - Powers of the States and People. Ratified 12/15/1791. Note

    The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.]

    The next fatal flaw is use of the concept of Bankrupt. for any entity to be bankrupt it's debts must exceed it's ASSETS and clearly the government assets like land Islands, mile of water front land, buildings all over the world, gold, silver, military posts, airports, highways. The assets far exceed the debt [not bankrupt].

    The final flaw is the basic structure of the REPUBLIC form of government that is the Constitution. GL uses three entities to work his hypothesis the merging of a majority would work to make alternate conclusions.

    That can not happen in the American situation - If the house passes a bill the Senate can stop it, If congress passes a bill, the Executive can veto it, if they all three pass the bill the courts can set it aside, if the Courts approve the action of the three then the States can void that, if the States fail then it falls to the people and they as the owners of the Constitution can stop the usurping actions.

    So, while well written and argued the proof fails the standards of false premises.

  10. Gonzolo, I read the post you are referring to and EPJ NEVER, not once, said you were a plagiarist. He accused you of rehashing old, well-understood, commonly accepted ideas, which is NOT the same thing. So it seems to me you are distracting from the crux of his argument.

  11. Also, it's not like your insight is all that novel:

    "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship."

    Alexander Tyler (on the fall of the Athenian Republic)

    (For the record, I just copied this from another site, but I was aware of quotes like this that go way back, and this is just one of several that express similar sentiment.)

  12. Shimshon, you post might be a valid statement in another thread but GL's proposition that America is a Democracy is fundamentally and factually wrong [false as in failed]

    You can not simply call a egg a chicken because it might hatch and become one.

  13. LOCKJ, Yeah, I know America is a republic, not a democracy, and I tell people that all the time. That doesn't change the fact that it is run like a democracy TODAY.

  14. Seriously GL? Wikipedia? And you want us to believe that you are well versed in the Tragedy of the Commons?

    How about you quote those Austrian Economists that you tried to denounce before you go off on your "I have the argument," "I can explain," "I can prove" rampage? And as many people said in your comments (I'll paraphrase) No Shit Sherlock. We already know this.

    Enter the real economists: (via EPJ)
    "Lira also fails to acknowledge, or perhaps isn't aware of, work done in greater detail about the relationship of a government and its subjects. There is no acknowledgement, for example, or awareness, of Murray Rothbard's Power and Market. In Power and Market, Rothbard discusses and categorizes intervention into three categories, autistic, binary, and triangular. He further specifically discusses subsidies, eminent domain, wage taxes, corporate taxes, capital gains taxes, property taxes, progressive taxes, the single tax, government ownership of anything, and all forms of government spending. In Bureaucracy, Ludwig von Mises discusses the subject from a slightly different angle:The difference between profit management and bureaucratic management, the philosophy of bureaucratism, the bureaucrat as a voter, the bureaucratization of the mind, past failures, economics versus planning and totalitarianism, and the plain citizen versus the professional propagandist of bureaucratization."

  15. GL, you have cojones and serious intellectual horsepower which you have employed to discuss some of the critical issues facing the Western Christian world. As an American similar to yourself who has been everywhere in LatAm and Western Europe many times, I understand why you make interesting neurological associations that reveal what most fail to see.

    There is an ancient German saying "viele feinde - viele ehre" which translate to "many enemies much honor" I complement that with the Visigoth Celtic Iberian saying "Que le importa al tigre una mancha mas"

    Keep up the noble fight!

  16. To LOCKJ,

    You say: " ...then it falls to the people and they as the owners of the Constitution can stop the usurping actions."

    Really? So in the Fall of 2008 when the people were calling Congress demanding not to pass the bailout to the banks(by about a 200-to-1 ratio), did that stop the usurping actions?

  17. Anonymous,

    Because they did not go to the State legislatures and demand action. The 200 to 1 number you use is still a minority of the voters in total if you research the numbers reported.

  18. i like GL's posts

    but i don't have time to read the complete works of every economist or political theorist who ever lived and who wrote dozens of volumes each

    because if i did, then it'd be the only thing i had time to do -- and my skillset would be much less diversified as a result

    so i don't really give a shit who assigns originality on what grounds, even if they actually are talking about two different phenomena

    i like GL because he keeps it short and sweet -- i can read the general principles he puts forth in less than 10 minutes, and my intuition and instincts put together the rest .. .. 9 times out of 10, the things written here sync up with my worldview

    and that's all that matters

    i'll sit down and read the complete works of murray rothbard and ludwig von mises when i realize i have absolutely no work to do for the next 8 years

    or did someone already say that in 1989? i don't remember, i was only 5 years old at the time

    j.j. from pittsburgh


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