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Musings Report 2017-14 4-8-17 Empire and the Value of Signaling
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For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
Empire and the Value of Signaling
The term "signaling" has been in vogue for some time, and as a result the original idea--drawn from economist Michael Spence's job-market signaling model--has become confused with communication.
Spence proposed the notion that a college degree bridges the asymmetrical information gap between employer and employee: the employer has a tough time obtaining useful information on the qualifications and intelligence of job applicants. A college degree signaled employers that the applicant is perseverent enough to get through 4+ years of college, and has enough intelligence (and work ethic) to earn the diploma.
Here is Bloomberg writer Noah Smith's description of the difference between signaling and communicating: "Spence’s signaling model was about proving yourself by doing something difficult -- something so difficult that someone who didn’t have what it takes wouldn't even bother."
In other words, communication isn't a signal. A quizzical raised eyebrow, a scoffing chuckle, a wry comment--all of these telegraph emotional content as well as information.
A signal is a form of communication, but its cost must be high enough to be persuasive. A signal can provide information on intent, depth of commitment, willingness to accept risk and much more.
Longtime readers know I have been reading a wide array of books on various empires: Rome, Eastern Rome (Byzantine Empire), the Mongol Empire and the Bronze Age empires.
Empires rarely rule by brute force alone for long. Force projection is costly, and as the empire expands, the costs of attempting to exert control via force everywhere over vast expanses soon exceeds the empire's income and resources.
Edward Luttwak's books on the Grand Strategy of the Western and Eastern Roman Empires offer an insightful analysis of how imperial forces and leadership must be positioned to credibly threaten the use of force anywhere in the Empire. But the job of maintaining influence/control is done more by signaling the readiness and ability to use force rather than having to pu the force in the field (a very costly and risky venture that often turns out badly).
If we look through this lens, we discern a much different picture of what may be going on with the cruise missile attack on Syria.
Ilargi of The Automatic Earth published a highly insightful analysis of the attack--Symbols of Strength--in which he noted that the entire exercise may well have had little to do with Syria and everything to do with signaling Trump's willingness to use force to China's leader Xi jinping.
If we understand the attack as a signal rather than as a strictly military act, it starts making a lot more sense than the surface narratives being tossed around: that the Neocons have taken control of Trump, that the U.S.is ramping up the war in Syria (you mean the war we've been engaged in for years?), and so on.
Based on my readings of imperial strategies for maintaining influence at the lowest possible cost, it seems to me that the Tomahawk launch was a cost-effective signal to multiple players.
-- It signaled to Russia and its client Assad that they shouldn't take Trump or the U.S. for granted; though this was a purely symbolic attack (with warnings given beforehand to minimize loss of life, etc.), it signaled that next time there might not be warnings.
-- It signaled to everyone that a $94 million pricetag for a symbolic signal is chump change to the U.S.
-- It signaled (as Ilargi described) to President Xi that Trump's desire for good relations is tempered with a willingness to project power/use force if it is deemed necessary to protect the interests of the U.S.
-- Domestically, it gives very useful (to the Trump administration) cover and provides respite from the attacks by the Neocons and their media machine.
To the Neocon Deep State and its political factotums, it seems to signal that Trump has bought into the Neocon narrative (or caved in to the pressure).
But the symbolism of the attack hints at the possibility that the Neocons are being played.
Feigning an alliance or compliance with a powerful enemy is a time-honored tactic. Making the Neocons think they've won is exactly what an Imperial tactician would do to buy time and lower the enemy's guard.
Beneath this surface narrative of Trump being drained by the Swamp, somebody may be playing a 3D chess game against opponents who only see one board and think they're winning. I don't have a clue might this group might be, but this carefully choreographed drama doesn't strike me a random signal or a Neocon "victory." That is simply too pat to be credible.
A successful signal performs on multiple levels, in effect leveraging the effect at a low cost. Even empires cannot afford to use only brute force to maintain influence. Signals may be directed at multiple audiences, and trying to reduce the staged drama to only one stage and one audience risks misunderstanding the value of signals.
Summary of the Blog This Past Week
About that Bug-Out Hideaway.... 4/8/17
Why Is the State in Our Bedrooms and Living Rooms as Well as Our Bank Accounts? 4/7/17
Is Your "Democracy" Actually a Totalitarian State? Take this Quick Quiz 4/6/17
Uncertainty and the Humility of Forecasting an Unknowable Future 4/5/17
A Heightened Sense of Vulnerability 4/4/17
Fed Reportedly "Tired of Waiting for Inflation," Plans to Give Every Household $1 Million in Cash 4/3/17
Best Thing That Happened To Me This Week
Helped a friend who has helped me with major projects the past few months with a very modest material pick-up. Good to do something, no matter how small, for those who've helped us so much.
Market Musings: The Dow 30 (DJIA)
The chart of the Dow Jones Industrial Average (DJIA or DJ-30) is interesting because there are both bearish and bullish possibilities just ahead.
On the bearish side, the 20-week moving average (MA) is descending, and about to cross bearishly through the 50-week MA. The bullish cross of the 20 and 50 in November signaled the rally had legs. A bearish cross that isn't reversed quickly could signal the rally is over.
Also, the MACD is diverging from price: as price pushed higher, MACD hit a lower high. Technicians see divergences such as this as evidence a trend may be weakening.
On the bullish side, MACD has been declining for a month, yet price hasn't dipped all that much. The rally is displaying resilience.
MACD is close to crossing upward in a bullish signal. If that occurs, it would suggest another upleg is likely.
Technical analysis often presents a mix of signals--it's fairly uncommon for all the signals and indicators to line up all bullish or all bearish.
What we can say is a trend change is certainly possible here. But a continuation rally is just as possible. We'll have to let price decide.
From Left Field
Odd Lots: What the Berkshires Learned by Launching its Own Currency (published last week but with the wrong link)
The Urban Poor You Haven’t Noticed: Millennials Who’re Broke, Hungry, But On Trend
The Middle-Class Squeeze Isn't Made Up
This chart explains why Trump’s problems will be much worse in 2020 -- MarketWatch quotes me, heh...
Financialization of the Economy (via Winston S.) -- long read, worth the effort. If you know the story already, this is a good summary...
Disabled, or just desperate? Rural Americans turn to disability as jobs dry up
Democrats Against Single Payer Healthcare
The Platform Press: How Silicon Valley re-engineered journalism
Nowhere to Go: Automation, Then and Now Part Two
Sears and Its Hedge Fund Owner, in Slow Decline Together
Listen Liberals: Russia Is Not Our Enemy
Feel more fun in French? Your personality can change depending on the language you speak
The Roofus Tool Is Revolutionizing Carpentry (via GFB) -- a neat miter-square plus level plus other adjustable functions--
Off one grid, not all the others -- excellent firsthand account of the difficulties in being truly independent of global supply chains...
"An investment in knowledge pays the best interest." Ben Franklin
Thanks for reading--
charles |
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