Houdiniomics: The New Era of Government Magic

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pale is the art of sorcerers, witches, and conjurors when compared
with that of the government's Treasury Department!"

Ludwig von Mises, The
Theory of Money and Credit

the Great Bailout of October 2008 the US and Europe are leading
the world into a new era of political economy. Its motto is: "Decree
it and it will happen!" This magical slogan in the great tradition
of "abracadabra" is the secret behind the idea that with
a simple strike of the pen governments can and therefore should
control just about everything from the economy to the climate, from
energy to law, from people's health to their consciousness and thoughts.
Since this modern political pseudoscience owes much to the great
American magician Harry Houdini (1884–1926), I suggest calling it

who died on Halloween 82 years ago, chose his artist name in honor
of his French colleague and predecessor Robert-Houdin and earned
fame as a magician, escapologist and stunt performer. Magic, the
art of creating illusions of impossible or supernatural feats that
defy the natural laws of physics as well as common logic has, of
course, a longstanding tradition in all performing arts including

the 19th century it also found its way into the social
sciences under labels like "scientism," "positivism"
and "progressism," claiming that human society can be
shaped at will in order to achieve impossible feats as long as it
is guided by the right ideological politics instead of proven laws
and universal values. In the wake of this doctrine the world has
witnessed a good handful of astute politicians applying this new
discipline with varying ideologies, all sailing under the banner
of "progress" and consequently defying just about every
law of economics, every traditional value of ethics, public moral
and decency, breaking every written and unwritten rule and trampling
on every human right imaginable. The result was truly amazing: Within
just half a century millions were killed on global battlefields,
an equal amount was wiped out by starvation, other millions were
incinerated indiscriminately with atomic bombs and other weapons
of mass destruction or outright exterminated with industrial efficiency
in gas chambers, torture dungeons and killing fields. The total
number of victims of this progressive 20th century is estimated
at 200 Million!

would assume that after such carnage as a result of progressive
ideological politics, societies would ruefully return to ways more
respectful of proven laws and universal values. But not so. Politics
in the industrial democracies of the West, even after the bankruptcy
of socialism, arguably the most progressive ideological camp,
continues on the same road towards what politicians of all parties
still consider progress. Consequently we can see Houdiniomics at
work today in just about every area of society. It is not at all
restricted to politicians, but has become the argumentational basis
of many scientists, intellectuals, journalists, artists and philosophers.
Houdiniomics is not associated to one particular political color
any more. It has been adopted by progressives of the left as well
as by conservatives of the right, as recent developments clearly
demonstrate. Houdiniomics has become the political science of politics
in general.

the age of classical liberalism, politics was not exempt from grounding
arguments and actions in universally acknowledged axiomatic values.
These values, namely free will, self-ownership and property, equality
and respect for life, truth and justice are absolute and, while
not always practiced, were at least recognized norms in every society
("civilized" or not) since eternal times. They are translated
through customs, religions and traditions into natural laws and
basic rules of conduct, outlawing, e.g. to injure, murder, steal,
lie or cheat. By doing so, they at least implicitly assign freedom
of action and personal responsibility for this action to the individual.
They form an axiomatic ethical framework that enables every individual
to generate his own ethical orientation. They are the "Golden
Rule" that says: "Don't do to others what you don't want
them to do to you."

there is "progress" to be observed in history at all,
it applies to the degree of individual freedom and the observation
of these universal values. A more general recognition of these values
results in improved self- orientation of individuals and consequently
in broader social cohesion, more stable institutions, more civilized
conduct, deeper cooperation and increased wealth. Empathy, respect,
tolerance, and peace are qualities we tend to find in individuals
and societies that explicitly uphold these first principles. But
since this type of progress is not a result of any "laws of
history" but rather of specific cultural and social developments,
ideas and discourses, it is always in danger of relapse and repeatedly
did so.

libertarian philosophy respects and conserves universal values as
axiomatic first principles in the line of "natural laws"
and explicitly recognizes and upholds the right of every individual
to exercise these principles in full freedom and responsibility.
Voluntary cooperation and division of labor in free markets are
seen as the basis of social cohesion. Libertarians entrust the development
and enforcement of rules and laws rather to institutions of the
civil society than to the state as an organization of coercion and
power. The means have to incorporate the ends in this political
philosophy, which consequently follows a non-interventionist, "orderly
anarchistic" tendency.

do not cling to the forms of traditions, customs or laws,
but try to identify and conserve the universal principles they represent.
Universal values often get buried and suffocated under ritual and
tradition, which then degenerate into mechanisms for maintaining
an oppressive status quo that has long forgotten, perverted and
abandoned its initial values. Many classical liberals have turned
conservatives today in confusing form with content, turning conservatism
into a force of protecting repressive customs, discriminatory traditions
and illegitimate privilege. They see libertarian anarchism not as
a source of sustainable order, but as a danger to the established
powers. To defend those, they do not hesitate to turn to the progressive
political toolbox.

philosophy believes in the superior power of social design. Since
Plato's Republic, it assumes that societies cannot improve rapidly
enough through voluntary human coordination and free discourse,
but should be centrally shaped, improved and imposed following ideological
doctrines independent of universal values. In fact, if universal
values stand in the way of the progressive design of the day, they
should be discarded.

progressive idea of progress is to positively define an ideal condition
or society (often justified by assumed "laws of history")
where some selective -mostly egalitarian- values are to be concretized,
and then to enforce this utopia through coercive re-distribution,
control and oversight by a powerful state apparatus. The ends justify
the means in this philosophy, which has an inbuilt interventionist
and statist tendency. The progressive mind is continuously developing
new concepts, projects and plans for a better world, a more just,
more equal, more energy conserving, more friendly, more caring,
more ecological, more vegetarian, more moral, more solidary or plainly
more "conscious" society. It claims to be "liberal"
for proclaiming liberation from universal values. But the progressive
mind harbors a deeply ingrained illiberal distrust in the abilities
of the individual to make the right decisions for and by him which
at the same time benefit society through voluntary cooperation.
This negative anthropology towards the individual coupled with a
strong belief in coercive collective solutions under the guidance
of a self-proclaimed elite is a consistent strain among progressives
of any brand and leads to their love affair with the state as the
great provider, regulator, enforcer and decider.

houdiniomic approach of progressism manifests itself in the belief
that human culture and society can be shaped, designed and engineered
independently of its underlying universal principles. These principles
are not considered absolute constituents of social cohesion, they
are not upheld as the social "laws of gravity," but are
entirely plastic material in the hands of social engineers.

of the first achievements of modern political Houdiniomics was the
magic feat of the elimination of money as the world has known and
understood it for thousands of year. Money spontaneously emerged
as a medium of exchange when people began to cooperate by dividing
labor. Money could originally be anything that people put enough
trust in. In small societies this trust could be based on the stability
of social relations upheld through ancient customs in small, homogenous
groups. As cooperation and division of labor grew, involving more
and more strangers with different customs and traditions, a common
medium emerged that was held in equally high esteem by most societies:
gold. Money now was liberated from local customs because it was
nearly universally valued on its own. From then on, even today,
gold remains the standard that all currencies eventually are measured

had great impact on trade and commerce, but also limited the sovereignty
of governments, who quickly took over the monopoly of issuing and
controlling money. Money represents and is tied to real goods and
real savings of people. As a medium of exchange it serves its function
independently of its volume, size or mass. Expanding it does not
expand the total value of the money stock, but rather reduces the
purchasing power of each unit. This is why money backed 100% by
gold was essentially stable over very long periods of time.

the system of "Fractional Reserve Banking" under the direction
of a government-controlled central bank, money is whatever the government
decides. Money is no longer covered by gold, but can be created
"out of thin air" by government fiat and decree. In this
houdiniomic financial system, money and credit are not part of a
free market of necessarily responsible banks, lenders and borrowers,
but are centrally planned by central banks. As in every economic
area, central planning of money not only lacks but actively prevents
information about true supply and demand for money and credit which
a free market provides in the form of price signals. On the other
hand, the price of credit (interest rate) set by the central bank
still transmits a signal to the markets. But since credit prices
in central banking are not the result of market mechanisms, but
are set politically, they inevitably give false signals to the markets:
low interest rates suggesting a high savings rate encourage long
term investments in capital goods. But if these low interest rates
were artificially decreed by the central bank without being backed
by the respective savings, and if real savings are replaced by printing
and pumping of fresh money, much of these investments will prove
to be malinvestments, eventually forcing corrections by the market
in the form of inflation, bankruptcies and recession.

current financial system with its fiat money is a veritable example
of applied Houdiniomics. But in contrast to the magic theatre, where
at the end of the show the curtain hides the mirrors and mechanisms
before the lights go on, and audiences can end their suspension
of disbelief in full comfort, life outside the theater lacks the
equivalent of the curtain. There are plenty of smoke and mirrors,
but when the miracles fail, the illusions become obvious and the
ancillary devices are embarrassingly exposed.

science is complete without certain ancillary devices helping it
along. For Houdiniomics, the main ancillary device is Euphemistics,
the science (and art) of giving unpleasant things a new, more pleasant
name. One will find Houdiniomics always closely associated with
Euphemistics as both depend and build on each other. The Great Bailout
of 2008 is a good and recent example: its obvious purpose is to
bail out privileged investors and failing banks and most of all,
to rescue the politically convenient fractional-reserve banking
system. Such a plan is hardly popular among ordinary citizens, who
eventually have to foot the bill by way of inflation, prolonged
recession, higher taxes, less jobs and reduced income. So it was
officially renamed a "rescue plan" — not of the privileged
investors, banks and the financial manipulation system as a whole,
but of "the ordinary citizen" as politicians are busy
to explain through the ever-obliging media.

recent example is "compliance markets," usually describing
the coercive artificial "trading" of industrial emission
rights on pseudo-exchange markets. The term "compliance market"
is a typical contradictio in adjectum: markets by their very definition
are institutions of voluntary exchange where buyers and sellers
reach uncoerced agreements on the valuation of goods, and exchange
them based on voluntary contracts. Whenever force and coercion is
introduced into a market, it seizes to be a true market and consequently
its prices will not reflect the true valuations and the free will
of the participants any longer.

second ancillary device of Houdiniomics is Metaphorics, the
art of using metaphors to first explain and then to prove a theory.
Metaphors are extremely helpful for applying knowledge about one
area to a completely different one, when the abstract relational
patterns of both are recognized to be similar. In this case the
metaphor serves as a qualitative model. But while using a
metaphor as an explanatory device can be very helpful, it can never
be used to prove anything. Scientists have a habit of setting up
and then falling into this logical trap. Metaphorics becomes especially
misleading when we "reify" relations into things and qualities
into quantities. "Just," e.g., is a quality, an abstract
value characterizing a relation like a voluntary exchange. "Social
Justice," however, is treated as a quantitative "thing"
that can be concretely measured and managed. Value describes a preference
that can mathematically only be expressed as an ordinal number (1.,
2., 3. …) representing ranks of priorities in a specific situation.
Mathematics and computers, however, cannot calculate with qualities
and ordinal numbers. Only a quantity can be mathematically expressed
as a cardinal number and integrated into a computer model. The resulting
simulations thus are principally unable to model or even predict
individual action or social systems.

metaphorical error of "artificial intelligence," where
the human brain was first used as a metaphor ("electronic brain")
for the computer, followed by the reversal of the metaphor, where
the computer became the metaphor and then even a model for the brain,
led to the reification of the human mind and consequently to the
erroneous but widespread reliance on computer models. Computers
principally cannot model human creativity or the complexity of human
action that emerges from it. Intelligence is not about the quantitative
number of calculations and decisions a human can make per second
vs. a computer, but the quality of human ingenuity, creativity and

similar metaphoric fallacy is at the root of the current climate
debate: to describe our warm planet, the metaphor of the greenhouse
is used, although according to physics the warming mechanisms of
the atmosphere have nothing at all in common with air in a greenhouse
warmed by preventing air circulation and exchange. The metaphor
is plainly wrong in this context. Yet a giant global system of indoctrination,
intervention and taxation is being built on it, headed by politicians,
scientists and activists, all under the magical spell of quantitative
computer models. In true houdinistic tradition, the laws of physics
become irrelevant: we find scientists embracing a CO2 theory
based on the physics of the perpetuum mobile, and engineers promoting
the most inefficient energy conversion technologies (like photovoltaic
and wind energy) as an imminent and efficient energy solution, although
in the foreseeable future they can only be made "competitive"
in markets by heavy direct government subsidies, government enforced
regulations and price fixing.

why is Houdiniomics so attractive and so persistent, in spite of
consistent debunking and continuous failure to achieve its feats?
Houdiniomics suggests that we can sustainably "liberate"
ourselves from absolute constraints — whether physical, social,
cultural or biological. Through technology we could indeed overcome
many limits and restrictions that seemed quite absolute to our ancestors.
It was therefore no accident that the industrial revolution was
accompanied by philosophical and social movements that applied the
engineering approach to the totality of human existence. Social
engineering was to leapfrog the long and tedious process of philosophical,
economic and social enquiry and discourse. The ancient idea of universal
values was discarded as old-fashioned and obsolete.

The progressive
idea has always been especially attractive to a few who consider
themselves as intellectual vanguards of society and thus as destined
leaders of others. Through some magic they claim privileged access
to reality and to superior information and thus feel uniquely qualified
to evaluate and decide what is good for the rest of mankind and
what is not. Since they have absolutely no doubts about the correctness
and general benefit of their ideas and judgments, they tend to condone
and endorse coercion in realizing and enforcing their plans on others.
They are — at least in their own minds and in the minds of their
followers — the great Houdinis of their day, shaping and reshaping
society with their magic wand of governmental power and decree…

seems that once again we are falling under the spell of a new generation
of political Houdinis promising extraordinary feats through magic
new deals. Short of controlling gravity they declare to eradicate
poverty by decree, manage the world's climate, provide us with cheap
renewable energy and a new compliance-market economy planned and
coordinated by the wisdom of bureaucrats armed with infallible computer

and practitioners of Houdiniomics could learn from Harry Houdini
to his very end: he died of a burst appendix after ignoring the
symptoms and refusing professional treatment: a radical, yet minor
operation. Consequently, it took one punch to kill him.

28, 2008

Krieg [send him mail] is
a German filmmaker and producer currently developing a libertarian
IPTV channel

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