RYviewpoint

Selling Social Darwinism

2012-02-01T16:12:00.000-08:00

Robert Reich has a blog that is well worth following. He is a knowledgeable person with the facts and the social empathy to present an honest account of the situation that the 99% find themselves in.

Here is his latest post:

The Republican Myth of Obama's "Entitlement Society"

One of the few things Mitt Romney and Newt Gingrich agree on is that President Obama is turning America into “European-style welfare culture.”

In his standard stump speech Romney charges Obama with creating a nation of dependents. “Over the past three years Barack Obama has been replacing our merit-based society with an entitlement society.”

Gingrich calls Obama “the best food-stamp president in American history.”

What’s their evidence? Both rely on federal budget data showing direct payments to individuals shot up by almost $600 billion, a 32 percent increase, since the start of 2009.

They also point to Census data showing that 49 percent of Americans now live in homes where at least one person is collecting a federal benefit – Social Security, food stamps, unemployment insurance, worker’s compensation, or subsidized housing. That’s up from 44 percent in 2008.

Finally, they trumpet Social Security Administration figures showing that the number of people on Social Security disability jumped 10 percent in Obama’s first two years in office.

They argue our economic problems stem from this sharp rise in “dependency.” Get rid of these benefits and people will work harder.

They have cause and effect backwards. The reason for the rise in food stamps, unemployment insurance, and other safety-net programs is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. They and their families have needed whatever helping hands they could get.

If anything, America’s safety nets have been too small and shot through with holes. That’s why the number and percentage of Americans in poverty has increased dramatically over the past three years, including over a third of families with young children.

One scandal, for example, is that only 40 percent of the unemployed qualify for unemployment benefits because they weren’t working full time or long enough on a single job before they were canned. The unemployment system doesn’t take account of the fact that a large portion of the workforce typically works part time on several jobs, and moves from job to job.

Republicans also object to Obama’s health care law, which covers 30 million more Americans than were covered before. But it still leaves over 20 million without health insurance. They’ll get emergency care when they’re in dire straights — hospitals won’t refuse them — but we all end up paying indirectly.

Regressive Republicans pretend they’re about opportunity. In reality they’re back at what they’ve been doing for years — promoting Social Darwinism.

Go read his blog.

The manipulation of statistics to sell their Social Darwinism is utterly cynical. The political right knows that it is lying. It isn't naive. But it trusts in the big lie technique. They know that if they repeat their right wing lies long enough and through enough media, most people will assume it is true because the message is so prevalent.

I remember being incredulous when I matured and discovered that my father believed that if something was printed it had to be true. In his mind, nobody would go to the expense of printing something unless it was true. I could never change his mind. He proved to me just how effective a propaganda campaign could be. He lived a life believing falsehoods simply because "they were printed" and I could never change his mind because my arguments were "just words" and he refused to look at the printed material I presented to him. Propaganda can be very, very effective.

Quote of the Day

2012-02-01T15:24:00.000-08:00

Here is a snippet from the book Debt: The First 5,000 Years by David Graeber, a book with an endlessly fascinating take on money, debt, and markets over the long history of civilization:

Another way to look at this might be to say that the new age [1450-1971, the Age of Great Capitalist Empires] came to be increasingly uncomfortable with the political nature of money. Politics, after all, is the art of persuasion; the political is that dimension of social life in which things really do become true if enough people believe them. The problem is that in order to play the game effectively, one can never acknowledge this: it may be true that, if I could convince everyone in the world that I was the King of France, I would in fact become the King of France; but it would never work if I were to admit that this was the only basis of my claim. In this sense, politics is very similar to magic -- one reason both politics and magic tend, just ab out everywhere, to be surrounded by a certain halo of fraud

I highly recommend Graeber's book for an alternative analysis of money, debt, and markets. You may not agree with his analysis, but he will help you broaden your understanding through his deep understanding of anthropology/history deeply rooted in 5,000 years of human civilization.

Painting a False Reality

2012-02-01T15:02:00.001-08:00

Here is an excellent example of how the right wing media in the US (especially Fox "News") uses its power to rant and lie to plant false ideas to manipulate the population into holding views that allow right wing politicians to mobilize the public to control elections:

If you watch the video you can see Bill O'Reilly frustrated by being caught in his lies and says in exasperation that he doesn't care what the facts are, he just "knows" that it is bad there and that this evil is coming to get America. In short, despite the facts, he continues to sell his right wing scare story. He isn't a "news" reporter. He is a propagandist selling a story to prop up a political viewpoint.

How Media Misleads

2012-02-01T14:51:00.000-08:00

Even public media like NPR misleads the consumer of its "news". Here is an excellent example by Dean Baker in his Beat the Press blog:

NPR Editorializes Against Growth In Europe

A Morning Edition segment on the recent European Union summit was headlined, "Most EU Nations to Sign Pact to Stop Overspending." This is both flat-out wrong and misleading.

It is flat-out wrong because the pact restricts deficits, not spending. It is misleading because it implies that the current crisis was caused by overspending. It wasn't. Most of the crisis countries had declining debt to GDP ratios before the downturn and two, Spain and Ireland, were actually running budget surpluses. The problem was caused by housing bubbles and the inept management of the economy by the European Central Bank.

If the media lies, then a representative government is impossible. And that makes the constitutional requirement for a free press a waste of effort. At least a significant majority of the press must be honest enough to tell the truth. A free press can be honest or sold out. The hope of the writers of the US Constitution was that the media was so fragmented and numerous that it would be impossible to manipulate the press as a whole. But the writers of the US Constitution lived in a simpler time when the US press was more like the bloggers of today: numerous and cheap to set up. They didn't envision "big media" with wall-to-wall coverage and a practical monopoly on the public's attention.

The coming of radio made possible the horrible dictators of the 1930s. The monopolization of the media in the late 20th century made possible the overweening power of right wing politics today. It took WWII to break the power of the dictators and give back popular democracies. What will it take to break the present day monopoly of big media and the rampant right wing politics that have created?

Looking Through Lovely Libertarian Glasses

2012-01-31T08:23:00.000-08:00

When I was a kid the big complain was the bizarro world painted by "socialist realism". The hyped and deeply false world view sold by the commies.

Today the world is pervaded by its bizarro world version of reality, the kool-aid of Ayn Rand, that worships the individual and ignores any gummy social cohesion or social obligation. It is every man for himself in the wonder world of the political right. No mushy leftist "it takes a village to raise a child" in the libertarian worldview.

Here is a bit from a NY Times op-ed by Paul Krugman that shows the application of this libertarian "individualist realism" to politics in the US:

Mr. Daniels first berated the president for his “constant disparagement of people in business,” which happens to be a complete fabrication. Mr. Obama has never done anything of the sort. He went on: “The late Steve Jobs — what a fitting name he had — created more of them than all those stimulus dollars the president borrowed and blew.”

...

A big report in The Times last Sunday laid out the facts. Although Apple is now America’s biggest U.S. corporation as measured by market value, it employs only 43,000 people in the United States, a tenth as many as General Motors employed when it was the largest American firm.

Apple does, however, indirectly employ around 700,000 people in its various suppliers. Unfortunately, almost none of those people are in America.

...

Germany remains a highly successful exporter even with workers who cost, on average, $44 an hour — much more than the average cost of American workers. And this success has a lot to do with the support its small and medium-sized companies — the famed Mittelstand — provide to each other via shared suppliers and the maintenance of a skilled work force.

The point is that successful companies — or, at any rate, companies that make a large contribution to a nation’s economy — don’t exist in isolation. Prosperity depends on the synergy between companies, on the cluster, not the individual entrepreneur.

But the current Republican worldview has no room for such considerations. From the G.O.P.’s perspective, it’s all about the heroic entrepreneur, the John Galt, I mean Steve Jobs-type “job creator” who showers benefits on the rest of us and who must, of course, be rewarded with tax rates lower than those paid by many middle-class workers.

...

So we should be grateful to Mr. Daniels for his remarks Tuesday. He got his facts wrong, but he did, unintentionally, manage to highlight an important philosophical difference between the parties. One side believes that economies succeed solely thanks to heroic entrepreneurs; the other has nothing against entrepreneurs, but believes that entrepreneurs need a supportive environment, and that sometimes government has to help create or sustain that supportive environment.

And the view that it takes more than business heroes is the one that fits the facts.

For some reason most people want a cartoon cut-out version of reality. They want a simplified story that consoles them with a happy ending. The real world, just like Nature, is totally indifferent to humans, their aspirations, their needs, or their ideological fantasies. The real world is "red in tooth and claw" because it is so different from the normal human social world of cooperation and empathy. Humans have the ability to create a safe harbour from the cruelties of the world. Sadly, right wing nuts want to destroy the paradise and replace it with a fantasy of "the big man" who creates and destroys for his own pleasure with indifference to others. That is a cruel reality that is offered up by the libertarians as a "better future". Nuts!

Neville Chamberlain, the Hero

2012-01-30T16:55:00.000-08:00

You would think in 70 years the world would "progress" and leaders would have incorporated the lessons of the past and we would have a better world.

But, as Brad DeLong points out, despite Chamberlain's horrible appeasement policy with Hitler, he did get one thing right which leaders today in the UK have got horribly wrong:

Neville Chamberlain is remembered today as the British prime minister who, as an avatar of appeasement of Nazi Germany in the late 1930’s, helped to usher Europe into World War II. But, earlier in that fateful decade, relatively soon after the start of the Great Depression, the British economy was rapidly returning to its previous level of output, thanks to Chancellor of the Exchequer Neville Chamberlain’s reliance on fiscal stimulus to restore the price level to its pre-depression trajectory.

Compare that approach to the expansion-through-austerity policy being pursued nowadays by British Prime Minister David Cameron’s government (with Chancellor of the Exchequer George Osborne leading the cheering squad). The country’s real GDP has flat-lined, and the odds are high that British real GDP is headed down again.

Indeed, in less than a year, if current forecasts are correct, Britain’s Cameron-Osborne Depression will not merely be the worst depression in Britain since the Great Depression, but probably the worst depression in Britain…ever.

Willful Ignorance

2012-01-30T11:03:00.001-08:00

Here is a bit from a NY Times op-ed by Paul Krugman that slams what he calls "the serious people", the ideological right, that has called for austerity as the magic elixir for recovering from the worldwide George Bush-induced Depression:

How could the economy thrive when unemployment was already high, and government policies were directly reducing employment even further? Confidence! “I firmly believe,” declared Jean-Claude Trichet — at the time the president of the European Central Bank, and a strong advocate of the doctrine of expansionary austerity — “that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.”

Such invocations of the confidence fairy were never plausible; researchers at the International Monetary Fund and elsewhere quickly debunked the supposed evidence that spending cuts create jobs. Yet influential people on both sides of the Atlantic heaped praise on the prophets of austerity, Mr. Cameron in particular, because the doctrine of expansionary austerity dovetailed with their ideological agendas.

Thus in October 2010 David Broder, who virtually embodied conventional wisdom, praised Mr. Cameron for his boldness, and in particular for “brushing aside the warnings of economists that the sudden, severe medicine could cut short Britain’s economic recovery and throw the nation back into recession.” He then called on President Obama to “do a Cameron” and pursue “a radical rollback of the welfare state now.”

Strange to say, however, those warnings from economists proved all too accurate. And we’re quite fortunate that Mr. Obama did not, in fact, do a Cameron.

Which is not to say that all is well with U.S. policy. True, the federal government has avoided all-out austerity. But state and local governments, which must run more or less balanced budgets, have slashed spending and employment as federal aid runs out — and this has been a major drag on the overall economy. Without those spending cuts, we might already have been on the road to self-sustaining growth; as it is, recovery still hangs in the balance.

And we may get tipped in the wrong direction by Continental Europe, where austerity policies are having the same effect as in Britain, with many signs pointing to recession this year.

The infuriating thing about this tragedy is that it was completely unnecessary. Half a century ago, any economist — or for that matter any undergraduate who had read Paul Samuelson’s textbook “Economics” — could have told you that austerity in the face of depression was a very bad idea. But policy makers, pundits and, I’m sorry to say, many economists decided, largely for political reasons, to forget what they used to know. And millions of workers are paying the price for their willful amnesia.

The tragedy is that policy makers and right wing economists prefer lies and "the confidence fairy" more than the simple truth and hard won economic truths. The economics profession has shown itself to be in the hands of charlatans who are willing to corrupt truths won from the Great Depression experience in order to push a political agenda. Tragic!

As always it is the bottom 99% who die when the 1% "generals" order a charge into an open field where they are gunned down by withering machine gun fire (aka reality). But the generals blame the troops and order up another charge. The 99% are expendable. Everybody knows that the 1% are the "cream of society" and must be protected in their ideological bubble at all costs.

Why the Media is Useless

2012-01-29T17:47:00.000-08:00

Here is a post by Dean Baker in his Beat the Press blog:

The Post devoted a business section article to Newt Gingrich's supply side economics. It would have been useful to note the findings of the research on this topic, for example this Congressional Budget Office study. It found that even in a best case scenario the additional growth sparked by a tax cut could replace less than a third of the lost tax revenue. Even this effect would be temporary, with slower growth in later years implying larger deficits.

The Post should not just throw Gingrich's assertions out to readers as though they might be true. There is extensive research on this topic which the Post's business reporters should be familiar, its readers almost certainly are not.

A democracy works only if it has an informed electorate. The reason why "the press" was acknowledged and highlighted in the First Amendment to the Constitution. A free press is important. But a commercial press that prints only what corporations and the rich elite want the people to hear is not a truly "free" press. The Constitution called for "freedom of the press". Only with a free press that prints facts, truths, revelations, analysis, criticism will the electorate be empowered to vote responsibly.

Sadly, Dean Baker is pointing out that the US now fails the test of democracy. The US is rapidly becoming a banana republic.

For the Love of Art

2012-01-28T13:15:00.000-08:00

It is amazing what people will do for the love of art (and maybe a cash payout)...

Mortgage Fraud: A Glimmer of Hope

2012-01-28T12:51:00.000-08:00

Here is an interview of Matt Taibbi:

Mortgages: Canada vs. US

2012-01-27T18:31:00.000-08:00

Here is a bit by Sherry Cooper, chief economist for the Bank of Montreal. From BMO's weekly publication Focus:

Amid concern about a Canadian housing bubble, the question of the financial strength of the major Canadian mortgage insurer, CMHC, has come to the forefront. The bottom line is that CMHC is solid. CMHC has very prudent underwriting standards and the quality of its insured mortgage portfolio is strong. The rate of delinquencies is very low and stable, remaining in line with the levels for Canadian banks—under 0.5%, compared to 8% in the U.S.

CMHC is governed by a Board of Directors and accountable to Parliament through the Minister of Human Resources and Skills Development. As a Crown corporation, CMHC is also required to meet a number of governance and accountability requirements under the Financial Administration Act and the CMHC Act.

CMHC’s capital is funded by its insurance premiums, fees and investment income on the securitization portfolio of the Canada Housing Trust (CHT). It holds capital at a level nearly three times the mandatory minimum level set by OSFI to protect Canadian taxpayers from the costs arising from the risk of mortgage defaults1. CMHC has an internal (self-imposed) capital target of 150% of the OSFI Minimum Capital Test (MCT) and a capital holding target of 200% of MCT. In addition, they maintain additional capital reserves in retained earnings and unearned premiums and fees.

If CMHC is uncomfortable with the terms of a mortgage loan presented by lenders, then mitigating measures, such as an additional down payment or reduced amortization, would be requested—the minimum standard for the latter was officially reduced in Q1 of last year.

CMHC is also subject to stress testing for extreme circumstances similar to the banks. Even under the most extreme tests, with house prices plunging 30% and the economy going into a deep recession (with spiking interest rates—highly unlikely), CMHC comes through without relying on taxpayer funding.

Indeed, historically, CMHC earns an annual budget surplus that reduces the federal government’s outstanding deficit. Over the last decade, CMHC contributed over $14 billion to the government’s coffers.

The difference between Canada and America is very simple: Canadians believe in government and our regulators take their job seriously. In the US the people hate government and taxes and the regulators drank the kool-aid of "deregulation". Simply put: Canada believes in civil society while the US is a Hobbesian struggle of all-against-all.

A Real Bird's Eye View

2012-01-25T20:27:00.000-08:00

Technology marches on with fancy new airborne platforms for fancy camera shots...

Brain in a Box

2012-01-24T06:07:00.000-08:00

There is no ghost in the machine. It is turtles all the way down. Or as Julien Offray de La Mettrie put it Man a Machine:

The above needs to be tempered. Our positivist and reductionist scientific worldview makes claims that go too far for a pragmatist. From a section in Lecture 47 of Daniel N. Robinson's The Great Ideas of Philosophy, 2^nd Edition:

[William] James the pluralist is not a relativist of the modern stripe. He countered the reigning positivism of his day with fallibilism. There is always more to the account than any current version can include, because there are always other experiences, other beliefs, and needs. We must conduct ourselves in such a way as to record what we take to be our highest interests, while never knowing if we have them right or have matched our interests by our actions. There is no final word.

William James was, above all, a realist: We must accept what is. Unlike the positivists, however, James took this to mean that we must accept that there is a religious element to life, because credible report points to the existence of one, as well as to a striving to perfect oneself and to needs that go beyond the individual soul or body. There are, however, things that we cannot finally know. The fallibilist doesn't deny that there is some absolute point of focus on which human interests can converge, but we are warned to be suspicious of those who come to us with final answers.

The most profound lesson of modernism is to recognize the limits of our reason, the limits to knowlege, and the ultimate fallibility or each of us. The existentialist is right in noting that we project ourselves into our future with a hope that has no foundation. In the end we all die, but we live as if we would live forever. We theorize as if there is "ultimate truth" when in fact we live in a very small corner of an inconceivably huge universe in which we don't even know how many physical dimensions exist or whether there are other "universes out there" beyond our ken.

In some deep sense we are a "brain in a box" but science has not plumbed the depths of what this means. Yes, we are "only" matter in motion. But that matter, the brain, is so infinitely more complex than a figure like de La Mettrie had not a hint of what it truly means. And just as de La Mettrie claimed more than he really knew, so today's scientists and philosophers make claims far beyond what will be ultimately revealed. The universe is far more complex and mysterious than the human mind will ever comprehend. But that doesn't mean that we don't enjoy the quest. Knowledge and truth are still the shining lights on high that we strive to attain.

America Has a Choice of Victims

2012-01-22T13:03:00.001-08:00

Maureen Dowd has a good op-ed in the NY Times in which she looks at the Obamas since of "underappreciation" by the American public. Then she widens it to include Newt Gingerich who feels he is similarly underappreciated and misprepresented by the press:

The Obamas, especially Michelle, have radiated the sense that Americans do not appreciate what they sacrifice by living in a gilded cage. They’ve forgotten Rule No. 1 of politics: No one sheds tears for anyone lucky enough to live at the White House. And after four or eight years of public service, you are assured membership in the 1 percent club.

The Obamas truly feel like victims. But Newt Gingrich, who campaigns by attacking the culture of victimization, plays one on stage. He soared at the Charleston CNN debate by brazenly proclaiming himself the victim of “the elite media protecting Barack Obama” (the same Obama who told Time he was victimized by the press). Newt’s gambit was a calculated way of deflecting attention from a charge by his second wife, Marianne, that the family values he preaches are hypocritical platitudes, given his cheating ways with two wives he divorced when they were ill.

Could 2012, remarkably, be a race between two powerful victims yearning to be lonely at the top?

This is ridiculous. A leader needs to be psychological secure and have a joy in backslapping and glad-handing with people. But the dsyfunctional US political system is giving the American people a choice between flub and flop in the November poll.

Voting in introverts, narcissists, or those who see themselves as victims is asking for perverted politics and a poisoned civil society.

Tilting at Windmills

2012-01-19T18:52:00.000-08:00

Here is Robert Reich, ex-Secretary of Labor under Clinton making a call from the political left for people to take back control of their government from the corruption of money and power by corporations and the ultra-rich.

Sadly, it looks like the plutocrats have got things pretty well sewn up and only if there is real revolution with blood in the streets will the clock be turned back to a true republic. The US over the last few decades has passed over the Rubicon and like the age of Imperial Rome, there is a pretense of "republican" government, but the real control is in the hands of very few, very very rich people. There is no going back. There is only collapse and decay in America's future. I've given up any pretense of optimism. Dark days are ahead.

Clay Shirky on America's Proposed Insane Property Rights

2012-01-19T06:28:00.001-08:00

Here is Clay Shirky talking about SOPA and PIPA:

How the US Plans to Nuke the Rest of the World

2012-01-19T00:26:00.000-08:00

The SOPA/PIPA legislation is in effect a "weapon of mass destruction" that will easily destroy the world as we know it. Here is a very nice description of just how dangerous and "creepy" the proposed SOPA and PIPA laws are:

The above is just one of many, many wonderful instructional videos available from the Khan Academy.

From Wikipedia:

The Khan Academy is a not-for-profit educational organization, created in 2006 by Bangladeshi American educator Salman Khan, a graduate of MIT. With the stated mission of "providing a high quality education to anyone, anywhere", the website supplies a free online collection of more than 2,600 micro lectures via video tutorials stored on YouTube teaching Mathematics, History, Healthcare & Medicine, Finance, Physics, Chemistry, Biology, Astronomy, Economics, Cosmology and Computer Science.

Measuring the "Success" of American Foreign Policy

2012-01-17T12:26:00.000-08:00

The Americans blindly go around the world making bad situations worse while slapping themselves on the back and congratulating themselves about "spreading democracy" and "American values" throughout the world. The poor American public has no idea and little interest in the failed policies of their political leaders.

Here is a bit from an excellent article in the UK's Guardian newspaper giving an example of how Iraq has been "lifted up" from the horrors of Saddam Hussein's dark torture state to the light of a... what? a new torture state...

The walls of Um Hussein's living room in Baghdad are hung with the portraits of her missing sons. There are four of them, and each picture frame is decorated with plastic roses and green ribbons as an improvised wreath for the dead.

Um Hussein had six children. Her eldest son was killed by Sunni insurgents in 2005, when they took control of the neighbourhood. Three of her remaining sons were kidnapped by a Shia militia group when they left the neighbourhood to find work. They were never seen again.

She now lives with the rest of her family – a daughter, her last son, Yassir, and half a dozen orphaned grandchildren – in a tiny two-room apartment where the stink of sewage and cooking oil seeps through a thin curtain that separates the kitchen from the living room.

Um Hussein looks to be in her 60s and has one milky white eye. She is often confused and talks ramblingly about the young men in the portraits as if they are alive, then shouts at her daughter to bring tea. She told the Guardian how she had to fight to release Yassir from jail.

Yassir was detained in 2007. For three years she heard nothing of him and assumed he was dead like his brothers. Then one day she took a phone call from an officer who said she could go to visit him if she paid a bribe. She borrowed the money from her neighbour and set off for the prison.

"We waited until they brought him," she said. "His hands and legs were tied in metal chains like a criminal. I didn't know him from the torture. He wasn't my son, he was someone else. I cried: 'Your mother dies for you, my dear son.' I picked dirt from the floor and smacked it on my head. They dragged me out and wouldn't let me see him again.

"I have lost four. I told them I wouldn't lose this one."

Afterwards, the officers called from prison demanding hefty bribes to let him go while telling the family he was being tortured. Um Hussein told the officers she would pay, but they kept asking for more. First it was 1m Iraqi dinars (£560), then 2m, then 5m.

George Bush was an idiot whose ideology blinded him and allowed him to create horrors under the flag of "nation building" and "bringing democracy to the Middle East".

Obama is a much more sophisticated thinker who actually understands foreign policy, but sadly Obama continues the blunder and outrages of American "policy". It is clear that these horrors go deeper than just an "administration". What the US is doing around the world is obviously driven by a cynical need to control the world for the benefit of the rich elites in the US. The veneer of ideology or the cynical use of worlds like "freedom" and "democracy" and "women's rights" are rolled out to plaster a veneer of respectability to what is in fact a horror story passing for "foreign policy".

Selling Black is White, Up is Down

2012-01-17T06:03:00.000-08:00

Here is a bit from a post by Robert Reich that nails the big lie that the political right in the US is selling to gullible electors:

Mitt Romney is casting the 2012 campaign as “free enterprise on trial” – defining free enterprise as achieving success through “hard work and risking-taking.” Tea-Party favorite Senator Jim DeMint of South Carolina says he’s supporting Romney because “we really need someone who understands how risk, taking risk … is the way we create jobs, create choices, expand freedom.” Chamber of Commerce President Tom Donahue, defending Romney, explains “this economy is about risk. If you don’t take risk, you can’t have success.”

Wait a minute. Who do they think are bearing the risks? Their blather about free enterprise risk-taking has it upside down. The higher you go in the economy, the easier it is to make money without taking any personal financial risk at all. The lower you go, the bigger the risks.

Wall Street has become the center of riskless free enterprise. Bankers risk other peoples’ money. If deals turn bad, they collect their fees in any event. The entire hedge-fund industry is designed to hedge bets so big investors can make money whether the price of assets they bet on rises or falls. And if the worst happens, the biggest bankers and investors now know they’ll be bailed out by taxpayers because they’re too big to fail.

But the worst examples of riskless free enteprise are the CEOs who rake in millions after they screw up royally.

Near the end of 2007, Charles Prince resigned as CEO of Citgroup after announcing the bank would need an additional $8 billion to $11 billion in write-downs related to sub-prime mortgages gone bad. Prince left with a princely $30 million in pension, stock awards, and stock options, along with an office, car, and a driver for five years.

Stanley O’Neal’s five-year tenure as CEO of Merrill Lynch ended about the same time, when it became clear Merrill would have to take tens of billions in write-downs on bad sub-prime mortgages and be bought up at a fire-sale price by Bank of America. O’Neal got a payout worth $162 million.

Philip Purcell, who left Morgan Stanley in 2005 after a shareholder revolt against him, took away $43.9 million plus $250,000 a year for life.

...

But as economic risk-taking has declined at the top, it’s been increasing at the middle and below. More than 20 percent of the American workforce is now “contingent” – temporary workers, contractors, independent consultants – with no security at all.

Even full-time workers who have put in decades with a company can now find themselves without a job overnight – with no parachute, no help finding another job, and no health insurance.

Meanwhile the proportion of large and medium-sized companies (200 or more workers) offering full health care coverage continues to drop – from 74 percent in 1980 to under 10 percent today. Twenty-five years ago, two-thirds of large and medium-sized employers also provided health insurance to their retirees. Now, fewer than 15 percent do.

The risk of getting old with no pension is also rising. In 1980, more than 80 percent of large and medium-sized firms gave their workers “defined-benefit” pensions that guaranteed a fixed amount of money every month after they retired. Now it’s down to under 10 percent. Instead, they offer “defined contribution” plans where the risk is on the workers. When the stock market tanks, as it did in 2008, the 401(k) plan tanks along with it. Today, a third of all workers with defined-benefit plans contribute nothing, which means their employers don’t either.

And the risk of losing earnings continues to grow. Even before the crash of 2008, the Panel Study of Income Dynamics at University of Michigan found that over any given two-year stretch about half of all families experienced some decline in income. And the downturns were becoming progressively larger. In the 1970s, the typical drop was about 25 percent. By late 1990s, it was 40 percent. By the mid-2000s, family incomes rose and fell twice as much as they did in the mid-1970s, on average.

What Romney and the cheerleaders of risk-taking free enterprise don’t want you to know is the risks of the economy have been shifting steadily away from CEOs and Wall Street – and on to average working people. It’s not just income and wealth that are surging to the top. Economic security is moving there as well, leaving the rest of us stranded.

Go read the whole post.

Pundits like to push the idea that "you get the government you deserve". But the reality is that the average voter doesn't have the time or resources to follow the political fluff thrown at him and sort the wheat from the chaff. When a corrupt political party like the Republicans in the US (and to a lesser degree the Democrats) deliberately sell a false message, it is very hard for the average person to uncover the truth.

Death Knell for America

2012-01-15T13:33:00.000-08:00

Here are the opening paragraphs of a very good article by Nobel Prize-winning economics Joseph Stiglitz:

The year 2011 will be remembered as the time when many ever-optimistic Americans began to give up hope. President John F. Kennedy once said that a rising tide lifts all boats. But now, in the receding tide, Americans are beginning to see not only that those with taller masts had been lifted far higher, but also that many of the smaller boats had been dashed to pieces in their wake.

In that brief moment when the rising tide was indeed rising, millions of people believed that they might have a fair chance of realizing the “American Dream.” Now those dreams, too, are receding. By 2011, the savings of those who had lost their jobs in 2008 or 2009 had been spent. Unemployment checks had run out. Headlines announcing new hiring – still not enough to keep pace with the number of those who would normally have entered the labor force – meant little to the 50 year olds with little hope of ever holding a job again.

This article goes on to spell out the dangers and horrors to be expected in 2012.

Here is his vision of the future:

Even before the crisis, there was a rebalancing of economic power – in fact, a correction of a 200-year historical anomaly, in which Asia’s share of global GDP fell from nearly 50% to, at one point, below 10%. The pragmatic commitment to growth that one sees in Asia and other emerging markets today stands in contrast to the West’s misguided policies, which, driven by a combination of ideology and vested interests, almost seem to reflect a commitment not to grow.

Tragic.

Radicalism: How to Do Effective Politics

2012-01-15T10:37:00.000-08:00

Here is a lecture by Lawrence Lessig:

Technological Innovation

2012-01-14T06:06:00.000-08:00

I need a "set up" like this to help me in my reading. I'm wearing myself out turning pages when a wonderful newfangled contraption like this would alleviate me of the strain and struggle of page-turning...

Why America is Confused

2012-01-14T05:45:00.000-08:00

Here is the start of a post by Dean Baker on his Beat the Press blog that incisively identifies why the average American is completely confused about the economy, the role of big business, and who politics works:

David Brooks Is Projecting His Self Indulgence Again

Undoubtedly projecting from the fact that he can draw a nice 6-figure income for little obvious work, David Brooks complained in his column:

"Today, the country is middle-aged but self-indulgent. Bad habits have accumulated."

For the most part the column is a confused diatribe against the Obama administration's economic policies with a lecture on moral rectitude thrown in for good measure. He starts by condemning the efforts to stimulate the economy by telling readers:

"Today, Americans are more likely to fear government than be reassured by it.

"According to a Gallup survey, 64 percent of Americans polled said they believed that big government is the biggest threat to the country. Only 26 percent believed that big business is the biggest threat. As a result, the public has reacted to Obama’s activism with fear and anxiety. The Democrats lost 63 House seats in the 2010 elections."

One might think that the fact that the Obama administration relied on a stimulus that was only designed to lower the unemployment rate by 1.5-2.0 percentage points might have played a big role in the election defeat. (Read the number of jobs the stimulus was projected to create, not the baseline forecasts for the economy.) If the government had used bigger stimulus to get the unemployment rate down to say -- 7 percent -- it is difficult to believe that the Democrats would have suffered such a big defeat last year, in spite of people's fear of big government.

After dismissing the stimulative policies of the Great Depression, Brooks then gives us a beautifully crafted grand misunderstanding of economics comparing the economy today with the economy of the Progressive era:

"the underlying economic situations are very different. A century ago, the American economy was a vibrant jobs machine. Industrialization was volatile and cruel, but it produced millions of new jobs, sucking labor in from the countryside and from overseas.

"Today’s economy is not a jobs machine and lacks that bursting vibrancy. The rate of new business start-ups was declining even before the 2008 financial crisis. Companies are finding that they can get by with fewer workers. As President Obama has observed, factories that used to employ 1,000 workers can now be even more productive with less than 100."

The fact that factories can produce large amounts of output with 100 workers is in fact evidence of economic vibrancy, not the opposite. This is called "productivity growth." It is the main measure of the economy's ability to raise living standards through time. The fact that 100 people in a factory can produce the same output as 1000 people did 30 years ago means that we are potentially much richer than we were 30 years ago. We can have the other 900 people doing other productive work. Alternatively, we can all work many fewer hours.

Whether or not this productivity growth generates jobs depends on the structure of the economy. If the productivity growth translates into wage growth, as was the case with the very rapid productivity growth of early post-war period, then it is likely to be associated with a vibrant jobs machine. On the other hand, if the One Percent pocket most of the benefits of productivity growth, then we may have real problems of stagnation and lack of job growth, since the Bill Gateses of the world will probably not increase their spending much if they get another billion or two. The key issue here is the distribution of the gains of productivity growth, a simple fact that totally escapes Brooks.

Go read the whole article. There is much more to learn from Dean Baker.

One reason why Americans keep electing the right wing Republicans is because the media is dominated by fools with a glib and seductive writing style like David Brooks. I confess that I was seduced by his book Bobos in Paradise but I've since had the scales fall from my eyes. Brooks is a seductive writer much like William F. Buckley. It is easy to be seduced by those who dismiss the gritty reality and instead focus on grandiose generalities that blame the victim and put robber barons on pedestals.

How to be Successful by Being Consistently Wrong

2012-01-13T21:54:00.000-08:00

Only the big industries can be consistently wrong and continue to be big and dominate their industry. Here is a post by Steve Blank on his blog that nails how the anti-Internet movie industry has made lots of money on technological innovation in the past and despite its current crusade against the Internet will most likely make a killing off the Internet:

This year the movie industry made $30 billion (1/3 in the U.S.) from box-office revenue.

But the total movie industry revenue was $87 billion. Where did the other $57 billion come from?

From sources that the studios at one time claimed would put them out of business: Pay-per view TV, cable and satellite channels, video rentals, DVD sales, online subscriptions and digital downloads.

The Movie Industry and Technology Progress
The music and movie business has been consistently wrong in its claims that new platforms and channels would be the end of its businesses. In each case, the new technology produced a new market far larger than the impact it had on the existing market.
1920’s – the record business complained about radio. The argument was because radio is free, you can’t compete with free. No one was ever going to buy music again.

1940’s – movie studios had to divest their distribution channel – they owned over 50% of the movie theaters in the U.S. “It’s all over,” complained the studios. In fact, the number of screens went from 17,000 in 1948 to 38,000 today.

1950’s – broadcast television was free; the threat was cable television. Studios argued that their free TV content couldn’t compete with paid.

1970’s – Video Cassette Recorders (VCR’s) were going to be the end of the movie business. The movie businesses and its lobbying arm MPAA fought it with “end of the world” hyperbole. The reality? After the VCR was introduced, studio revenues took off like a rocket. With a new channel of distribution, home movie rentals surpassed movie theater tickets.

1998 – the MPAA got congress to pass the Digital Millennium Copyright Act (DMCA), making it illegal for you to make a digital copy of a DVD that you actually purchased.

2000 – Digital Video Recorders (DVR) like TiVo allowing consumer to skip commercials was going to be the end of the TV business. DVR’s reignite interest in TV.

2006 - broadcasters sued Cablevision (and lost) to prevent the launch of a cloud-based DVR to its customers.

Today it’s the Internet that’s going to put the studios out of business. Sound familiar?
Why was the movie industry consistently wrong? And why do they continue to fight new technology?

There is more. Go read the whole article.

What upsets me is that the luddites in the MPAA and RIAA and other big cartels are only too willing to destroy the Internet in their belief that it will make them more money. They are dead wrong. Worse, they are destroying one of the great advances of the past century all for a quick profit. Tragic.

Go read about SOPA. Follow up the leads that Steve Blank highlights in his article. This insane push to destroy the Internet needs to be stopped.

Inside the Divided Brain

2012-01-12T05:45:00.000-08:00

Here is an interesting lecture on brain asymmetry:

Funny

2012-01-10T21:34:00.000-08:00

Here's the future. Beauty has been democratized!

One of Mitt Romney's Houses

2012-01-10T19:31:00.000-08:00

He's got a $12 million house in California and all he wants to do is tear it down and build a bigger and fancier house!

From Cold Fusion to Widom-Larsen

2012-01-09T09:10:00.000-08:00

Here is a bit from an excellent post by Steven Krivit in his excellent blog NewEnergyTimes. This reviews the history of investigations and thinking about the unexpected energy production by the Fleischmann–Pons experiment to the latest thinking centred on Widom-Larsen theory. Here is the history as understood by Krivit and presented at Mitre Corp (an R&D outfit for the US government):

The first phase is 1989-1993. The initial problem is that nuclear experts had never known of any kind of nuclear energy that did not produce commensurate levels of dangerous radioactive emissions. Few people at this time were aware of weak interactions, let alone the possibility that weak interactions could lead to high reaction rates. So, for most scientists, the claimed results were inexplicable according to what they knew at the time.

Nuclear physicists couldn't conceive of a way that deuterons could penetrate or overcome the Coulomb barrier at room temperature. Some people, like Hagelstein, tried to come up with explanations for this, but they all relied on imaginary physics.

From the experimental side, the field suffered early on from "experimenter's regress," which is explained by author Harry Collins: "When the normal criterion - successful outcome - is not available, scientists disagree about which experiments are competently done."

When the field emerged in 1989, there was a lot of initial opposition. Many people in science academia responded to it unprofessionally and with outright hostility. Some of these opponents lacked the courage to consider something so radically new and potentially disruptive; some lacked imagination. On a psychological level, it threatened their fundamental understanding of physics. On a practical level, it threatened their stature and funding. It threatened to make their textbooks and coursework obsolete. There were also some other opponents who were researchers who attempted to replicate the initial claim but failed and then may have felt embarrassed and frustrated and then became angry.

The second phase is 1993-2004. During this period, the field was largely neglected by mainstream science and mainstream media. To a great degree, although the researchers would certainly have liked to receive more financial support, I think they were happy to be left alone. However, significant misinformation which occurred from the onset of the field was never corrected in the broader public awareness [during this time]. But that started changing as of [the publication of] Charles Beaudette's Excess Heat & Why Cold Fusion Research Prevailed in 2000 and Steven B. Krivit and Nadine Winocur's The Rebirth of Cold Fusion in 2004. These books began to help correct some of the historical record.

The third phase starts in 2005, when Widom and Larsen came out with their theory, and has continued to the present. During this phase, the field has been experiencing bitter factionalism between two groups. One group is people who maintain their belief in "cold fusion" or, if not [in name], at least the idea of deuterons somehow overcoming the Coulomb barrier. Sometimes, they seem to have loyalty only to the name of "cold fusion." [Often, many of these proponents defend either the concept or the term "cold fusion," much like adherents to a religion defend their right to their beliefs.]

The other group of people, whom you don't hear much about, recognizes low-energy nuclear reactions as real, but they don't presume or assert that it’s a fusion mechanism.

Here is a presentation from SPAWR that gives a more technical view of developments in LENR:

Follow developments of LENR at Steven Krivits NewEnergyTimes blog.

Crystal Balling America's Future

2012-01-08T15:57:00.000-08:00

Blogger The Big Picture has a post that notes that five years ago the Wall Street Journal had an article by Robert Frank clearly identifying the brave new world of "plutonomy" that the US, UK, Canada, and Australia were entering.

Exactly 5 years ago today, the WSJ published this post (Plutonomics) about a rather fascinating study on wealth inequality.

It was written by of all folks, Citigroup global strategist Ajay Kapur. In 2005, Kapur’s research team “came up with the term ‘Plutonomy’ in 2005 to describe a country that is defined by massive income and wealth inequality. According to their definition, the U.S. is a Plutonomy, along with the U.K., Canada and Australia.”

What are the basic characteristics of Plutonomies? According to Kapur:
1. They are all created by “disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants…the rule of law and patenting inventions. Often these wealth waves involve great complexity exploited best by the rich and educated of the time.”

2. There is no “average” consumer in Plutonomies. There is only the rich “and everyone else.” The rich account for a disproportionate chunk of the economy, while the non-rich account for “surprisingly small bites of the national pie.” Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.

3. Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity and globalization.
Kapur also noted the impact massive income and wealth inequality had on other aspects of the economy: Savings rates, national debt level, spending patterns, reaction to high commodity prices, and more. All of these, he claimed are substantially affected by the ultra wealthy.

Note that this was from 5 years ago today — circa January 2007 was, ten months before the market peaked, 11 months before the Great Recession began, and 15 months before Bear Stearns, 21 months before Wall Street (AIG BAC C FNM LEH, etc.) collapsed, and about 55 months before Occupy Wall Street began.

Quite fascinating . . .

It is worth your time to go read the entire Robert Frank post in the WSJ. I haven't read his upcoming book The High-Beta Rich: How the Manic Wealthy Will Take Us to the Next Boom, Bubble, and Bust but I've got a hold on it at the library and expect to be entertained and appalled.

Here is a different Robert Frank, this is Robert H. Frank who teaches at Cornell University in a PBS Newshour interview with Paul Solman:

If you listen to 8:00 into the above video you find an interesting straddling of the middle. He argues from the right for the value of the free market and from the left for the importance of government in regulating the market and ensuring a fair playing field. (Funny, this isn't Darwinian. This is Adam Smith who has been misconstrued by the political right to be only the "invisible hand" guy when, in fact, he very much appreciated the role of government in helping to establish the possibility of a market.)

Don't confuse the Robert Frank who writes for the Wall Street Journal with the Cornell professor. Both have something interesting to say, but they are two different voices, but unfortunately with the same name.

As for America's future, it will succeed only if it gets off the destructive path that is creating a more and more unequal society and gets back to something more like the 1950s and 1960s when the middle class bloomed, America was prosperous, and the future looked unlimited. The future requires a more pragmatic politics that isn't dogmatic right or dogmatic left. It needs a politics that overthrows the idiocy of Reaganism and that overthrows the idiocy of a nanny state. The US needs a renewed robust middle, a real middle class, and a real political middle.

What Does 2012 Hold for Employment in the US?

2012-01-08T15:38:00.000-08:00

Here is an excellent post by the Calculated Risk blog:

Question #5 for 2012: Employment

by CalculatedRisk

Earlier I posted some questions for next year: Ten Economic Questions for 2012. I'm trying to add some thoughts, and a few predictions for each question.

5) Employment: The U.S. economy added 1.64 million total non-farm jobs or just 137 thousand per month in 2011. There were 1.92 million private sector jobs added in 2011, or about 160 thousand per month. Although this was an improvement from 2010, this was still weak payroll growth for a recovery. How many payroll jobs will be added in 2012?

First a little "good" news. It appears that most of the state and local government job cuts will be over by mid year 2012. Just eliminating the employment drag from these job cuts will help.

from: Calculated Risk
Click to Enlarge
Here is a graph of the annual change in government payrolls since 1970. Over the last 3 year government employment has decreased significantly (this is a combination of Federal, State and local government). It appears job cuts will slow in the first half of 2012, and government employment might be neutral in the 2nd half of this year.

For 2011, the BLS reported 280 thousand government jobs lost, and my guess is this will slow to around 100 thousand in 2012 and most of the jobs lost will be in the first half of the year.

As predicted a year ago, construction employment increased in 2011. Although the increase was small - just 46 thousand jobs - this was the first increase for construction employment since 2006, and the first increase for residential construction employment since 2005.

I expect construction employment to increase at a faster rate in 2012 - not a boom - but better than in 2011. Unfortunately employment growth will probably slow in some other sectors. As an example, although auto sales will probably continue to increase in 2012, the rate of increase will slow since most of the recovery in auto sales has already happened. This suggests that private job creation will probably be about the same in 2012 as in 2011, even with some pickup in construction.

Private Payroll JobsHere is a graph of the annual change in private payrolls since 1970.

From: Calculated Risk
Click to Enlarge
Last year was disappointing given the high level of unemployment, but it was still the 2nd best year for private job creation since the 1990s.

My guess is private employment will increase around 150 to 200 thousand per month on average in 2012; about the same rate as in 2011.

With over 13 million unemployed workers - and 5.6 million unemployed for more than 26 weeks - adding 2 million private sector jobs will not seem like much of job recovery for many Americans. Hopefully I'm too pessimistic.

One of the tragedies of the "too small to succeed" stimulus of 2009 was that it didn't include enough money covering a long enough period to prevent the massive firing of state and local public workers including teachers, police, firement, etc. The Republicans have been intransigent on stimulating the economy because for them "job #1" was hurting the economy to prevent Obama being re-elected. They weren't interested in helping the 99% who are suffering from the greatest unemployment since the Great Depression or the ten million homes that were repossessed by the banks throwing people out onto the street. Their only concern is to make sure that the top 0.01% continue to make the multi-million incomes and hold on to the hundreds of millions and billions in wealth.

The only economic stimulus the Republicans believe in is the trickle down effect of activites such as the new boom in super-sized yachts. The only "jobs" that the ultra-rich want to hand on to are those personal service jobs where people "service" the rich for meagre wages while all the good wages, the middle class wages, disappear in the "new economy" that trickle down Reaganism has delivered over the last 30 years.

An Honest Assessment of the US's Federal Reserve

2012-01-08T14:23:00.001-08:00

From a post at the Eschaton blog:

If this really is the Fed's view, then they're saying that monetary policy is generally going to be utterly useless in fighting recessions as they won't be willing to do anything. Time to rewrite all the textbooks. As in, instead of the usual "fiscal policy is less likely to be useful during recessions due to lags in recognition, implementation, and impact" claptrap, we should have "monetary policy is unlikely to be useful during recessions due to the fact that modern central bankers are sociopaths whose only concerns are inflation and the economic wellbeing of the creditor class."

It is clear that all central banks are more concerned about the creditor class than the debtor class. The tragedy of the 2008 financial crisis is that central bankis have shown themselves more dedicated to ensuring the wealth of the rich than the economic well-being (jobs, houses, retirement, education, etc.) of the bottom 99%. Sad.

A Canadian Solution to American Political Travails

2012-01-07T21:54:00.000-08:00

Here is a reasonable proposition from a decent people to solve the insoluble problems of Americans in the upcoming elections...

The "Complexities" of American Law

2012-01-07T17:30:00.000-08:00

With the full unveiling of the concept of corporations are "people" (as Mitt Romney happily repeats on the presidential nomination trail), the Citizens United case settled by the Supreme Court has demonstrated the wondefully "complex" nature of American law.

Here is a bit from a post by UC Berkeley economist Brad DeLong expatiating on the subtleties:

Justinian: How does this Fourteenth Amendment read?

Edward Coke: Like this:
Section. 1. All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens.... No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section. 2. Representatives shall be apportioned... counting the whole number of persons in each State....
Justinian: So if you have more corporations in your state, you get more representatives in the legislature?

John of Salisbury: No, no, no! "Persons" in Section 2 refers only to human beings...

Edward Coke: And "persons" at the start of Section 1 refers only to human beings...

John of Salisbury: Only "persons" at the end of Section 1 refers to legal persons, i.e. corporations, as well as human beings...

If the US were consistent in its "law" then there would be a rush by the ultra-rich to incorporate all kinds of "companies", millions of companies, so that at the next election the ballot boxes could be happily stuffed with all kinds of votes from the corporate "persons" acting under the full weight of the law as laid down by the Fourteenth Amendment. If ever the poor organized themselves, it would simply require a renewed effort to incorporate some one "instant corporations" to help the "people" of America to keep the 99% in their place. Because... as the Supreme Court has affirmed, corporations are "people" too!

The 1% Attack on Public Goods

2012-01-05T02:26:00.000-08:00

Here is a bit from a post by Robert Reich on his blog:

America no longer values public goods as we did before.

The great expansion of public institutions in America began in the early years of 20th century when progressive reformers championed the idea that we all benefit from public goods. Excellent schools, roads, parks, playgrounds, and transit systems would knit the new industrial society together, create better citizens, and generate widespread prosperity. Education, for example, was less a personal investment than a public good — improving the entire community and ultimately the nation.

In subsequent decades — through the Great Depression, World War II, and the Cold War — this logic was expanded upon. Strong public institutions were seen as bulwarks against, in turn, mass poverty, fascism, and then communism. The public good was palpable: We were very much a society bound together by mutual needs and common threats. (It was no coincidence that the greatest extensions of higher education after World War II were the GI Bill and the National Defense Education Act, and the largest public works project in history called the National Defense Interstate Highway Act.)

But in a post-Cold War America distended by global capital, distorted by concentrated income and wealth, undermined by unlimited campaign donations, and rocked by a wave of new immigrants easily cast by demagogues as “them,” the notion of the public good has faded. Not even Democrats any longer use the phrase “the public good.” Public goods are now, at best, “public investments.” Public institutions have morphed into “public-private partnerships;” or, for Republicans, simply “vouchers.”

Mitt Romney’s speaks derisively of what he terms the Democrats’ “entitlement” society in contrast to his “opportunity” society. At least he still envisions a society. But he hasn’t explained how ordinary Americans will be able to take advantage of good opportunities without good public schools, affordable higher education, good roads, and adequate health care.

His “entitlements” are mostly a mirage anyway. Medicare is the only entitlement growing faster than the GDP but that’s because the costs of health care are growing faster than the economy, and any attempt to turn Medicare into a voucher — without either raising the voucher in tandem with those costs or somehow taming them — will just reduce the elderly’s access to health care. Social Security, for its part, hasn’t contributed to the budget deficit; it’s had surpluses for years.

Other safety nets are in tatters. Unemployment insurance reaches just 40 percent of the jobless these days (largely because eligibility requires having had a steady full-time job for a number of years rather than, as with most people, a string of jobs or part-time work).

What could Mitt be talking about? Outside of defense, domestic discretionary spending is down sharply as a percent of the economy. Add in declines in state and local spending, and total public spending on education, infrastructure, and basic research has dropped from 12 percent of GDP in the 1970s to less than 3 percent by 2011.

Only in one respect is Romney right. America has created a whopping entitlement for the biggest Wall Street banks and their top executives — who, unlike most of the rest of us, are no longer allowed to fail. They can also borrow from the Fed at almost no cost, then lend the money out at 3 to 6 percent.

All told, Wall Street’s entitlement is the biggest offered by the federal government, even though it doesn’t show up in the budget. And it’s not even a public good. It’s just private gain.

We’re losing public goods available to all, supported by the tax payments of all and especially the better off. In its place we have private goods available to the very rich, supported by the rest of us.

America is becoming a banana republic. As the public sphere melts away, little fiefdoms are left where private armies control access. The rich get "special treatment" and the masses are left to mob the gates and beg for a crust of bread. Sad.

Obama's Persecution of Whistleblowers

2012-01-04T09:29:00.000-08:00

Here is a talk given by whistleblower Jesselyn Radack:

As Racack points out in the video, the chilling fact is that "supposed left-leaning" Obama has brought more charges against whistleblowers than all previous administrations combined. With "friends" like Obama, the political left has no need for enemies.

Psychopaths Are Among Us

2012-01-04T08:35:00.000-08:00

Here is a bit from an excellent article by William D. Cohan in Bloomberg News:

Did Psychopaths Take Over Wall Street Asylum?: William D. Cohan

It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.

Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”

As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”

How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”

Go read the whole article because the reporter includes a great deal more detail about Brody's thesis.

I found the book Snakes in Suits: When Psychopaths Go to Work to be useful in exposing this problem with modern corporations. This book has Robert D. Hare as co-author. It is Hare who developed the Psychopath Check List - Revised (PCL-R) which is the standard instrument for identifying psychopaths.

Bottom line is that these monsters create havoc and ruin many, many lives:

Then, according to Boddy’s “Corporate Psychopaths Theory of the Global Financial Crisis,” these men were “able to influence the moral climate of the whole organization” to wield “considerable power.”

They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”

Boddy doesn’t name names, but the type of personality he describes is recognizable to all from the financial crisis.

He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events, are very convincing in blaming others for what has happened and have no doubts about their own worth and value. They are happy to walk away from the economic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.”

And if you need more scare put into you. Here is a bit from an article in The Los Angeles Times by Andrew Malcolm:

Using his law enforcement experience and data drawn from the FBI's behavioral analysis unit, Jim Kouri has collected a series of personality traits common to a couple of professions.

Kouri, who's a vice president of the National Assn. of Chiefs of Police, has assembled traits such as superficial charm, an exaggerated sense of self-worth, glibness, lying, lack of remorse and manipulation of others.

These traits, Kouri points out in his analysis, are common to psychopathic serial killers.

But -- and here's the part that may spark some controversy and defensive discussion -- these traits are also common to American politicians. (Maybe you already suspected.)

Yup. Violent homicide aside, our elected officials often show many of the exact same character traits as criminal nut-jobs, who run from police but not for office.

Kouri notes that these criminals are psychologically capable of committing their dirty deeds free of any concern for social, moral or legal consequences and with absolutely no remorse.

"This allCapitol Hill Domeows them to do what they want, whenever they want," he wrote. "Ironically, these same traits exist in men and women who are drawn to high-profile and powerful positions in society including political officeholders."

Good grief! And we not only voted for these people, we're paying their salaries and entrusting them to spend our national treasure in wise ways.

2011 as a Turning Point

2012-01-04T08:20:00.001-08:00

Here is a bit from an interesting article by Rick Salutin in The Toronto Star:

Time magazine named The Protester its 2011 “Person of the Year” because, for decades till recently, most protests “seemed ineffectual and irrelevant.” That’s just silly. You can always find resistance and, depending on how you judge, it’s often relevant. ...

What may have been unique this past year was something else: a collapse of the conventional fountains of authority and respect. In the Arab world that meant governments. But in the West, it meant big business and finance. The brilliance of Occupy Wall Street was that it didn’t go to Washington. The Tea Party did; it directed its rage toward politicians and so it was eclipsed by the Occupiers, who targetted the bankers and financiers who control governments. That clearly resonated, but it wouldn’t have, 20 or 30 years ago.

Think back to the torrent of bestselling business bios and takeover epics like Iacocca or Barbarians at the Gate that began around 1980. Business was the hero; government was the “problem” because it impeded business’s freedom (even if business icons like Lee Iacocca demanded and relied on public money). Pro-business think-tanks proliferated; they disgorged “educational” series, often on public TV, by advocates like Milton Friedman. This accelerated through the Clinton-Bush years and beyond. Disdain for the über-rich was unthinkable until —

It wasn’t the crash of 2008 that led to their fall from grace, nor exposure of the greed and stupidity that required a massive public rescue. It was their graceless reaction to the bailouts: no apologies, remorse or gratitude — even faked; just more arrogance, bonuses, takeovers, foreclosures. Wall Street begged to be occupied. The Unrepentant Financier could have been Time’s Person.

...

Whose authority has also declined? How about Time magazine? The newsmag style used to sound authoritative and serenely confident. Now it sounds inane. “Everywhere, it seems, people said they’d had enough. . . . They dissented; they demanded —” Everywhere? Like out my window right now? And “it seems”? Seems to who(m)? Who makes these claims? What voice would you need to actually say words so pompous and vacuous? You can see Jon Stewart (if he did print) wincing as he reads it. Where did that invincible authority go?

The power of authority diminishes when you can hear credible, contesting voices. Print tends to be monotonal and univocal, unlike the oral tradition that preceded it. But the Internet, though it often lacks actual speech, is oral in the sense of interactive, like a Socratic dialogue. In oral mode, less is often more because speech is so laden with gesture, tone etc.; even something as short as a tweet can suffice. That too diminishes normal authority, which likes to rumble on.

Go read the whole article. It is very thought-provoking.

I personally like the analysis that says that our culture is moving from hierarchy where the "experts" dictate to a collective where everybody's voice gets a chance to contend for attention and authority. I understand the need for an organizing principle to reduce the cacophony, but I'm also aware that elitism tends to suffocate the voice of the dissenter and prevents the rise of the new. We need diversity. Life is a race and we need change and innovation to help us to get from here with all its problems to there with its promise of a better future.

Politics in the "Land of the Free (to be Bought & Sold)"

2012-01-03T14:50:00.000-08:00

America loves to thump its chest about its "democracy". But the facts say something else. Here is a bit from an article by Matt Taibbi in Rolling Stone magazine:

But the ugly reality, as Dylan Ratigan continually points out, is that the candidate who raises the most money wins an astonishing 94% of the time in America.

That damning statistic just confirms what everyone who spends any time on the campaign trail knows, which is that the presidential race is not at all about ideas, but entirely about raising money.

The auctioned election process is designed to reduce the field to two candidates who will each receive hundreds of millions of dollars apiece from the same pool of donors. Just take a look at the lists of top donors for Obama and McCain from the last election in 2008.

Obama’s top 20 list included:

Goldman Sachs ($1,013,091)
JPMorgan Chase & Co ($808,799)
Citigroup Inc ($736,771)
WilmerHale LLP ($550,668)
Skadden, Arps et al ($543,539)
UBS AG ($532,674), and...
Morgan Stanley ($512,232).

McCain’s list, meanwhile, included (drum roll please):

JPMorgan Chase & Co ($343,505)
Citigroup Inc ($338,202)
Morgan Stanley ($271,902)
Goldman Sachs ($240,295)
UBS AG ($187,493)
Gibson, Dunn & Crutcher ($160,346)
Greenberg Traurig LLP ($147,437), and...
Lehman Brothers ($126,557).

Obama’s list included all the major banks and bailout recipients, plus a smattering of high-dollar defense lawyers from firms like WilmerHale and Skadden Arps who make their money representing those same banks. McCain’s list included exactly the same banks and a similar list of law firms, the minor difference being that it was Gibson Dunn instead of WilmerHale, etc.

The numbers show remarkable consistency, as Chase, Morgan Stanley, and Citigroup all gave roughly twice or just over twice as much to Obama as they did to McCain, almost perfectly matching the overall donations profile for both candidates: overall, Obama raised just over twice as much ($730 million) as McCain did ($333 million).

Those numbers tell us that both parties rely upon the same core of major donors among the top law firms, the Wall Street companies, and business leaders – basically, the 1%. Those one-percenters always give generously to both parties and both presidential candidates, although they sometimes will hedge their bets significantly when they think one side or the other has a lopsided chance at victory. That’s clearly what happened in 2008, when Wall Street correctly called Obama as a 2-1 (or maybe a 7-3) favorite to beat McCain.

The 1% donors are remarkably tolerant. They’ll give to just about anyone who polls well, provided they fall within certain parameters. What they won’t do is give to anyone who is even a remote threat to make significant structural changes, i.e. a Dennis Kucinich, an Elizabeth Warren, or a Ron Paul (hell will freeze over before Wall Street gives heavily to a candidate in favor of abolishing their piggy bank, the Fed). So basically what that means is that voters are free to choose anyone they want, provided it isn’t Dennis Kucinich, or Ron Paul, or some other such unacceptable personage.

Go read the original to get the whole story and the links to follow up.

When will the American public wake up to the charade that passes for "democracy" where the rich have bought and sold the whole process and only let the "little people" play bit roles before they are shuffled aside to let the big boys milk the system for what they want.

The whole process is so predictable that Taibbi can already read the presidential election results ten months before the election is held:

Most likely, it’ll be Mitt Romney versus Barack Obama, meaning the voters’ choices in the midst of a massive global economic crisis brought on in large part by corruption in the financial services industry will be a private equity parasite who has been a lifelong champion of the Gordon Gekko Greed-is-Good ethos (Romney), versus a paper progressive who in 2008 took, by himself, more money from Wall Street than any two previous presidential candidates, and in the four years since has showered Wall Street with bailouts while failing to push even one successful corruption prosecution (Obama).

When the "voice of the people" can be ignored because the rich have already bought the result, that isn't "democracy". That is plutocracy.

The Story of America

2012-01-03T05:11:00.000-08:00

The great middle class society known as "America" is dead. Dead as a dodo. Buried by the "greed is good" 1980s and the glorification of "me first" family values of the political right over the last few decades.

Here is a nice summary by Bob Lefsetz in his blog The Lefsetz Letter:

What Happened To My Country?

My father was a real estate appraiser.

He started out as an engineer, but that lasted less than a year, he wasn’t an ass-kisser, he couldn’t play the game, he was bounced out.

So he opened a liquor store and tried his hand at commercial real estate. Unsuccessfully, because he didn’t have enough money to purchase property.

Trying to improve his lot in life, he relocated the package store next to an exit by the newly-finished I-95, otherwise known as the Connecticut Turnpike. And when redevelopment hit Bridgeport, his friend Maury Magilnick said no one knew as much about local real estate as my dad, and if he became an appraiser, he’d hire him.

My father spent a week at UConn. Another at the University of Chicago. He got licensed. And with his engineering background and his natural acumen he became a legend in the state, Attorneys General feared him, and my dad garnered the income of a doctor or a lawyer, he sent three children to private universities and graduate schools.

That dream is dead today.

I’m in Vail, Colorado. My family started skiing when I was ten. Used to be an egalitarian sport, you saw Beetles in the parking lot, sandwiches were de rigueur in the base lodge, brought from home. Skiers were not the upper crust, they were us.

No more.

So I’m riding up the lift with a fourth year medical student. I ask him what he’s gonna be.

"An anesthesiologist."

Why? Because he loves it? No, because he can make good bread and vacation and live the high life.

I’d like to tell you I met some musicians on the lift, some regular people, but I kid you not when I tell you the only people I met were in finance. Oh, and there was one dentist.

They traded for the family account. They were "consultants". They worked for hedge funds. They had their own private ski instructors, at $700 a day. They were the 1%.

And everybody in America is scrambling to get into the club.

That’s what’s wrong with the music business. The executives want to be as rich as the bankers, they too want to fly in private jets and tip with hundred dollar bills. What is the right tip these days? For a ride through town? I’m thinking $20, because the bankers have driven up the rate and the employees expect it and they’re struggling to make ends meet.

I grew up in the sixties. We were all in it together. Sure, my dad told me to be a lawyer, so he didn’t have to worry about me, but instead of taking the LSAT, I went to Montreal. There were no corporate recruiters on campus. Life was about personal fulfillment.

But now life is about money.

Either you’ve got it or you’re struggling to get it.

That wannabe anesthesiologist? He’s a Republican. He doesn’t want socialized medicine and he doesn’t want taxes.

Nobody wants taxes. Everybody thinks life is a personal struggle, that there’s no common infrastructure, no freeways, no police department, no power utility.

What’s mine is mine.

And if you don’t watch out, I’m gonna take yours.

No wonder musicians sell out to the Fortune 500. They too want to be rich. But the joke is upon them, they can never be that rich, the corporations laugh at them, they’re pawns in their game.

We live in a completely duplicitous country where no one’s honest, no one does what he believes in, everybody’s just motivated by the money.

And the problem?

PUBLIC EMPLOYEES!

Those teachers ruined the economy. Hell, you can barely make it on a teacher’s salary, you can’t vacation in Vail, Colorado, you’re closed out.

And somehow we accept all this. We shrug our shoulders and say it’s the way it is and will always be.

Why?

I feel like I’ve been asleep for thirty-odd years. While I was pursuing my dream, everybody else was pursuing the dollar. Reagan made greed legitimate and the baby boomers filled that hole and now their kids want more of the same. They just want to play on their hand-helds and feed at the trough. No one wants to innovate, they just want to get rich.

Ever speak to someone in finance? It’s a rare bird who likes it.

They do it for the money.

And with this money they buy up those concert tickets so you can’t get a good seat. They’ve got a shortage of time. When they get to the amusement park, they want to close you out. Get concierge treatment, cut the line…and you think this is okay because you think you’re gonna be rich too.

Ain’t that a laugh.

At least at Middlebury I saw what rich was.

Most people can’t afford a private college education any longer. 50k a year? Hell, public education keeps going up and up. Most people never even get into the game they think they’re gonna win.

There’s a ruling class, pulling the strings, and you’re not a member.

This is not a Democratic or Republican issue. This is a money issue. Money’s corrupted the system. You’ve got to be on the take to get elected. So you’re beholden to the corporations, not the people.

But you’ve read Steve Jobs’s biography and you think you’re gonna make it.

Don’t you get it? The odds of music success are infinitesimal, all the things you want most musicians haven’t got, a house, a spouse, kids, health insurance…

Don’t be angry with me.

And don’t be angry with the music business titans, keeping you out. They’re just worrying about themselves, they don’t care about you, they just want to live in a gated community and vacation where you aren’t.

They’re revolting in Russia. And they overthrew the government in a bunch of Middle Eastern countries. And if you don’t think it can happen here, you’re nuts.

Everybody thinks just because people have flat screens, they’re happy. But have you been following the shenanigans in cable? You’re paying for all this stuff you don’t watch just to keep rich people rich.

Music is a game for the poor. A place where the uneducated with no status can get a bit of notoriety and money. And as long as someone makes it, no one pays attention to the real problem.

The game is rigged.

You’re gonna be left behind unless you start making yourself number one and doing what’s expedient to get ahead.

What kind of country is that?

Not one I want to live in.

P.S. That great middle class of yore? It created the classic rock you’re still listening today. Music was a reasonable pursuit, rock stars were as rich as anybody in America. That framework expired decades ago, rock stars are no longer rich. There are bankers who make $20 million a year every year! So the Grace Slicks of today, people born with a silver spoon in their mouths, don’t go into the arts, it just doesn’t pay. Tom Rush was a Harvard graduate. He revolutionized the folk circuit, he pioneered the singer-songwriter game. Now we’ve just got poor people rapping about Benzes and boats. How fulfilling is that? I get it, they want in. But you used to follow your dreams, not the dollar. But now if you ain’t got the moolah, you’re gonna have a heart attack and no health insurance and you’re gonna be bankrupted. Hell, the dirty little secret is one health episode puts many people in bankruptcy even when they have insurance! But we’ve got to have less corporate regulation and as far as health insurance goes…you’re on your own. Don’t you see, health insurance is a metaphor for our entire country! Can you imagine someone writing "Get Together" today? Come on people now, smile on your brother, everybody get together and love one another right now… Who sings about that? Chumps.

The Occupy movement is trying to raise the dead, get the 99.99% to rise up against the rapacious 0.01% who have bought the politicians and dictate the rules that has put America on a path careening downwards towards doom.

Europe as the Apocalypse

2012-01-03T03:44:00.000-08:00

Here is a doom-and-gloom view of the world from the Wall Street Journal. They look at the problems in Europe and spin a tale of imminent calamity for the whole world. I, however, see the WSJ as a Cassandra:

The WSJ is like those prophets in mid 1940 wrote off England and proclaimed the end of the world as we know it and the start of a new age of barbarism. On the other hand, I believe in "muddle through". The Brits muddled, Hitler over-reached in Russia, and finally America joined the fray and the world managed to find a way to avoid the obvious bleak tragedy that all the experts foretold.

Excusing Rogue Cops

2012-01-02T17:33:00.000-08:00

Here is a nice post on The Agitator blog citing a new low in police "professionalism" in the US:

Maybe there’s a legitimate law enforcement reason to strip a man naked, strap him to a chair, tie a “spit hood” around his mouth, put a hood over his head (see video at the link), and douse him with pepper spray until he dies. That’s what sheriff’s deputies in Lee County, Florida did to 62-year-old Nick Christie two-and-a-half years ago.

I certainly can’t think of any such legitimate reason. But Lee County State’s Attorney Stephen Russell apparently can. Because he cleared the deputies involved of any wrongdoing.

Christie’s family just filed a lawsuit.

The cop's crime is obvious. But the more insidious crime is the State Attorney who looked but could find no "crime" in this brutal case.

Intro to Global Warming

2012-01-02T06:19:00.000-08:00

Here is a nice hour video that explains the ins and outs of "global warming". It is by Warren Meyer who runs climate-skeptic.com:

I like the point he makes at 28:00 into this video: In twenty years environmentalists and conservationists are going to look back on this era of "global warming" and see it as a period when that single issue "sucked the air" out of the movement. Put simply, the fanatics have seized one issue and are driving the "green movement" over a cliff with an issue which they over-hyped and which won't pan out. This will undermine legitimate environmental and conservation issues that could have profited from the energy and attention which was stolen by the "global warming" crowd.

Canadian Senate Hearing on Global Warming

2012-01-02T05:58:00.000-08:00

Here is testimony by Ross McKitrick on global warming. You should skip to 4:40 in the video to get to the start of his testimony and it ends by 16:00. This is well worth watching:

The various presenters:

Ross McKitrick, Department of Economics, University of Guelph

Ian Clark, Department of Earth Science, University of Ottawa

Jan Veizer, Department of Earth Science, University of Ottawa

Timothy Patterson, Department of Earth Sciences, Carleton University

I find it amusing to see respected senior scientists in Canada giving testimony that the IPCC story of "global warming" is incomplete, misleading, and wrong. Unlike the fanatics who claim "the science is settled", these researchers make it very clear that the science is still very much open to debate and in need of serious research.

In the video at 1:24:00 a senator has laid out the extreme cases and asks the panel "what to do". Ross McKitrick very intelligently replies that under those extremes it is very hard to know what to do. But he does a very clever thing, an economic trick, to force everybody to pay attention to climate and do the right thing:

He proposes a carbon tax that will be moved up or down based on real measurements. That forces corporations and institutions and people who deal with long term planning to build in expectations to their plans. This is the "invisible hand" of economics being used to control people to do the right thing. It is very clever and it should be implemented everywhere.

I sure would like to see governments around the world adopt this kind of stabilizing, automatic economic guidance for "doing the right thing" with respect to climate change. The tax would go down if the data shows no temperature increase, and it would steeply go up if temperatures showed an alarming rate of rise. Perfect.

Misrepresenting Debt

2012-01-02T05:37:00.000-08:00

Here is a bit from a NY Times op-ed by Paul Krugman that tries to explain why the political right's obsession with deficits and debt is wrong-headed:

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

But isn’t this time different? Not as much as you think.

It’s true that foreigners now hold large claims on the United States, including a fair amount of government debt. But every dollar’s worth of foreign claims on America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that’s already deep in hock to the Chinese, you’ve been misinformed. Nor are we heading rapidly in that direction.

Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest.

And that’s why nations with stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of G.D.P. for 81 of the last 170 years. When Keynes was writing about the need to spend your way out of a depression, Britain was deeper in debt than any advanced nation today, with the exception of Japan.

Of course, America, with its rabidly antitax conservative movement, may not have a government that is responsible in this sense. But in that case the fault lies not in our debt, but in ourselves.

So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.

It is utterly amazing how many times Krugman has made this point and those on the political right simply ignore him and continue with their lies and deceits. The media never call the Republicans to task for their lies. The poor people of America live in an intellectual ghetto because powerful forces conspire to treat them like mushrooms: keep them in the dark and feed them shit.

Gell-Mann on Languages

2012-01-01T10:59:00.001-08:00

The great physicist Murray Gell-Mann has a hobby of studying the origins of languages.

Here is a two minute interview from March 2007 where he talks of his interest at a TED conference:

And here is an hour long talk he gave at CERN in 2011:

The study of anthropology, genetics, and language evolution are helping us to understand the spread of modern man out of Africa. Fascinating stuff.

Dead Hands Reach Out from the Past

2012-01-01T09:48:00.001-08:00

Corporate greed has gotten the US Congress to change copyright to make it last longer and longer and longer. Here are some bits from an excellent post by Duke University's Center for the Study of the Public Domain:

Current US law extends copyright protection for 70 years after the date of the author’s death. (Corporate “works-for-hire” are copyrighted for 95 years after publication.) But prior to the 1976 Copyright Act (which became effective in 1978), the maximum copyright term was 56 years (an initial term of 28 years, renewable for another 28 years). Under those laws, works published in 1955 would be passing into the public domain on January 1, 2012.

What might you be able to read or print online, quote as much as you want, or translate, republish or make a play or a movie from? In this centennial year of the sinking of R.M.S. Titanic (April 15, 1912), how about Walter Lord’s A Night to Remember? Lord first published A Night to Remember in 1955. If we were still under the copyright laws that were in effect until 1978, A Night to Remember would be entering the public domain on January 1, 2012 (even assuming that Lord or his publisher had renewed the copyright). Under current copyright law, we’ll have to wait until 2051. This is because the copyright term for works published between 1950 and 1963 was extended to 95 years from the date of publication, so long as the works were published with a copyright notice and the term renewed (which is generally the case with famous works such as this). All of these works from 1955 won't enter the public domain until 2051.

...

Most of the works highlighted here are famous — that is why we included them. And if that fame meant that the work was still being exploited commercially 28 years after its publication, the authors would probably renew the copyright. (This is true for many of the works featured on this page, though even a surprising percentage of successful works exhaust their commercial potential very quickly.) But we know from the Copyright Office that 85% of authors did not renew their copyrights (for books, the number is even higher — 93% did not renew), since most works exhaust their commercial value very quickly.

That means that all these examples from 1955 are only the tip of the iceberg. If the pre-1978 law were still in effect, we could have seen 85% of the works created in 1983 enter the public domain on January 1, 2012. Imagine what that would mean to our archives, our libraries, our schools and our culture. Such works could be digitized, preserved, and made available for education, for research, for future creators. Instead, they will remain under copyright for decades to come, perhaps even into the next century. Think of the cultural harm that does. In addition, because most of these works are orphan works — works that are still presumably under copyright, but commercially unavailable and with no identifiable copyright holder — no one is benefiting from continued protection, while the works remain both commercially unavailable and culturally off limits. (You can read more about the current costs associated with orphan works here and here.) It seems that The Public Domain Snatchers is not the stuff of fiction.

These "property rights" stolen from the public are just one more example of how the ultra-rich buy politicians to write laws that that enrich the rich at the expense of the 99%. They have literally stolen the cultural patrimony and locked it up and demand big bucks to access what rightfully should belong to everybody.

Great Recession

2011-12-31T20:35:00.001-08:00

There is no better concise picture of the Great Recession than this graph from the Calculated Risk blog:

Click to Enlarge
This clearly shows that all previous post World War II recessions which had fully recovered employment by 4 years after the start of the recession. Even the pathetic "recovery" brought about Bush's two tax cuts to "inspire" entrepreneurial spirit got employment back to pre-recession levels in four years. But the recession is different. This is a credit crunch just like the Great Depression.

Obama's "stimulus" was pathetically inadequate with one-third of the money going to "tax cuts" which clearly are very poor stimulants (see the four year delay in recovery due to Bush's tax cut strategy). The other two-thirds was money that truly stimluated but was about three to four times too small for the size of the real problem. But Obama spent all of 2009 and 2010 assuring everybody that his stimulus was a Goldilocks "just right" amount. Then in 2011 Obama compounded his mistake by focusing on "deficits" (read austerity budgets) instead of stimulation to get the economy to come back.

The US economy is in a complete mess because both major political parties are more interested in catering to corporate interest than they are in the people and the real economy. They both spin masterful stories about how their policies are "effective" when it is utterly evident that they fail. Of course the Republicans are grievously wrong-headed. The Democrats at least pretend to cater to the interests of the 99%, but in reality they are just junior partners with the Republicans in acting as the minions of Wall Street, big corporations, and the ultra-rich. Tragic.

DeLong on the Financial Sickness in America

2011-12-31T16:29:00.000-08:00

The financial "industry" is a bloated, corrupt section of the economy that grows at the expense of everything else. Here is a bit from UC Berkeley economist Brad DeLong on the Project Syndicate blog:

In 1950, finance and insurance in the United States accounted for 2.8% of GDP, according to US Department of Commerce estimates. By 1960, that share had grown to 3.8% of GDP, and reached 6% of GDP in 1990. Today, it is 8.4% of GDP, and it is not shrinking. The Wall Street Journal’s Justin Lahart reports that the 2010 share was higher than the previous peak share in 2006.

...

But if the US were getting good value from the extra 5.6% of GDP that it is now spending on finance and insurance – the extra $750 billion diverted annually from paying people who make directly useful goods and provide directly useful services – it would be obvious in the statistics. At a typical 5% annual real interest rate for risky cash flows, diverting that large a share of resources away from goods and services directly useful this year is a good bargain only if it boosts overall annual economic growth by 0.3% – or 6% per 25-year generation.

There have been many shocks to the US economy over the past couple of generations, and many factors have added to or subtracted from economic growth. But it is not obvious that the US economy today would be 6% less productive if it had had the finance-insurance system of 1950 rather than the one that prevailed during the past 20 years.

There are five ways that an economy gains from a well-functioning finance-insurance system. First, people are no longer as vulnerable to the effects of fires, floods, medical disasters, unemployment, business collapses, sectoral shifts, and so forth, because a well-working finance-insurance system diversifies and thus dissipates some risks, and deals with others by matching those who fear risk with those who can comfortably bear it. While it might be true that America’s current finance-insurance system better distributes risk in some sense, it is hard to see how that could be the case, given the experience of investors in equities and housing over the past two decades.

Second, well-functioning financial systems match large, illiquid investment projects with the relatively small pools of money contributed by individual savers who value liquidity highly. There has been one important innovation over the past two generations: businesses can now issue high-yield bonds. But, given the costs of the bankruptcy process, it has never been clear why a business would rather issue high-yield bonds (besides gaming the tax system), or why investors would rather buy them than take an equity stake.

Third, improved opportunities to borrow allow one to spend more now, when one is poor, and save more later, when one is rich. Households are certainly much more able to borrow, thanks to home-equity loans, credit-card balances, and payday loans. But what are they really buying? Many are not buying the ability to spend when they are poor and save when they are rich, but instead appear to be buying postponement of the “unpleasant financial retrenchment” talk with the other members of their household. And that is not something you want to buy.

Fourth, we have seen major improvements in the ease of transactions. But, while electronic transactions have made a great deal of financial life much easier, this should have been accompanied by a decrease, not an increase, in the finance share of GDP, just as automated switching in telecommunications led to a decrease in the number of telephone switchboard operators per phone call. Indeed, the operations of those parts of the financial system most closely related to technological improvements have slimmed down markedly: consider what has happened to the checking operations of the regional Federal Reserve Banks.

Finally, better finance should mean better corporate governance. Since shareholder democracy does not provide effective control over entrenched, runaway, self-indulgent management, finance has a potentially powerful role to play in ensuring that corporate managers work in the interest of shareholders. And a substantial change has indeed occurred over the past two generations: CEOs focus much more attention than they used to on pleasing the stock market, and this is likely to be a good thing.

Overall, however, it remains disturbing that we do not see the obvious large benefits, at either the micro or macro level, in the US economy’s efficiency that would justify spending an extra 5.6% of GDP every year on finance and insurance. Lahart cites the conclusion of New York University’s Thomas Philippon that today’s US financial sector is outsized by two percentage points of GDP. And it is very possible that Philippon’s estimate of the size of the US financial sector’s hypertrophy is too small.

Why has the devotion of a great deal of skill and enterprise to finance and insurance sector not paid obvious economic dividends? There are two sustainable ways to make money in finance: find people with risks that need to be carried and match them with people with unused risk-bearing capacity, or find people with such risks and match them with people who are clueless but who have money. Are we sure that most of the growth in finance stems from a rising share of financial professionals who undertake the former rather than the latter?

This is a pretty astounding indictment of the sleaze, corruption, and fraud in America's financial industry that has let it grow huge despite providing no real benefits to justify its larger share of national GDP.

Sadly, no govenment has taken on this issue and tried to cut the financial industry down to size to make it more economically efficient. Exactly the opposite has occurred. Over the last 30 years great laudatory sermons have been given about "enterprise" and "unleashing business from regulation" when in fact this has proven to be catchwords for turning a blind eye to corruption and crime on an unimaginable scale. The American people have been hoodwinked and lied to and nobody has yet been held accountable because the rich and powerful have bought off the politiians.

Religion in America

2011-12-30T23:24:00.000-08:00

Here is Penn Jillette, half of my favourite magician duo, gives an monologue on religion in America...

He says some very interesting things. This is well worth listening to.

An Indictment of Obama and Most Western Governments

2011-12-30T06:34:00.000-08:00

Here is Paul Krugman in a NY Times op-ed laying bare the open secret: Obama and European governments are contemptuous of Keynes, rejecting his advise, and imperiling the tenuous "recovery" that countries have been experiencing by calling for "deficit reduction" which is just another name for austerity:

“The boom, not the slump, is the right time for austerity at the Treasury.” So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.

Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.

... the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits.

This wasn’t supposed to happen, according to the ideology that dominates much of our political discourse. In March 2011, the Republican staff of Congress’s Joint Economic Committee released a report titled “Spend Less, Owe Less, Grow the Economy.” It ridiculed concerns that cutting spending in a slump would worsen that slump, arguing that spending cuts would improve consumer and business confidence, and that this might well lead to faster, not slower, growth.

Sadly a generation will pay the price for this obtuse ideological refusal to accept standard economics in favour if the idiocies of right wing economics that created the deregulation fiasco leading to the S&L crisis, the dot.com bust, and the 2008 financial crisis. These are the failures of government by right wing politicians who have sold the public on the idea that "government is not the solution to our problems; government is the problem". For 30 years bad ideas pushed by right wing politicians have enriched the ultra-rich while the bottom 99% have been left to tread water. Wealth has increased but "trickle down" economics delivered nothing to the poor who are poorer now than since the Great Depression when the lot of the poor was to live in Hoovervilles and stand in bread lines.

The common people need to rise up and say "enough!" and vote in politicians who want to grow the economy for the benefit of the 99% and who want to see a profound redistribution of income so that those who work hard in the 99% get the kind of rewards that for the last 30+ years have only flowed to the ultra-rich. Stop the privatization of government for the bottom 99% with the cutting of services and the raising of "hidden" taxes. Stop the socialization of government for the top 1% with the quiet fraud that lets the rich milk the poor, demand and get sweetheart deals from government, and the continued policy of handouts and bailouts and tax cuts and special tax loop holes for those who can buy government via lobbyists.

Krugman perfectly characterizes the failures of politics today:

We entered 2011 amid dire warnings about a Greek-style debt crisis that would happen as soon as the Federal Reserve stopped buying bonds, or the rating agencies ended our triple-A status, or the superdupercommittee failed to reach a deal, or something. But the Fed ended its bond-purchase program in June; Standard & Poor’s downgraded America in August; the supercommittee deadlocked in November; and U.S. borrowing costs just kept falling. In fact, at this point, inflation-protected U.S. bonds pay negative interest: investors are willing to pay America to hold their money.

The bottom line is that 2011 was a year in which our political elite obsessed over short-term deficits that aren’t actually a problem and, in the process, made the real problem — a depressed economy and mass unemployment — worse.

For three years the political right has been screaming "inflation" and called for austerity to stop the devaluation of "fiat money". In truth, there has been no runaway inflation despite the trillions that the Federal Reserve has pumped into the monetary system.

Keynes called for a coordinated fight on both the monetary and fiscal fronts to fight depression. But since 2008 there has been only a monetary policy in place that is now being withdrawn and there was a very, very small fiscal policy with Obama's 2009 stimulus package. The tools that Keynes outlined have not been used. That is why the Great Recession continues to plague the United States.

How US Companies Help Set Up Repressive Regimes

2011-12-29T07:37:00.000-08:00

Here is a bit from a post by Cory Doctorow on the BoingBoing blog:

Two thirds of the way through the talk, they broaden the context to talk about the role of American companies in the war waged against privacy and free speech -- SmartFilter (now an Intel subsidiary, and a company that has a long history of censoring Boing Boing) is providing support for Iran's censorship efforts, for example. They talked about how Blue Coat and Cisco produce tools that aren't just used to censor, but to spy (all censorware also acts as surveillance technology) and how the spying directly leads to murder and rape and torture.

Then, they talked about the relationship between corporate networks and human rights abuses. Iran, China, and Syria, they say, lack the resources to run their own censorship and surveillance R&D projects, and on their own, they don't present enough of a market to prompt Cisco to spend millions to develop such a thing. But when a big company like Boeing decides to pay Cisco millions and millions of dollars to develop censorware to help it spy on its employees, the world's repressive governments get their R&D subsidized, and Cisco gets a product it can sell to them.

They concluded by talking about how Western governments' insistence on "lawful interception" back-doors in network equipment means that all the off-the-shelf network gear is readymade for spying, so, again, the Syrian secret police and the Iranian telcoms spies don't need to order custom technology that lets them spy on their people, because an American law, CALEA, made it mandatory that this technology be included in all the gear sold in the USA.

Here is the video of the talk which Doctorow attended given by Tor technologists:

It is depressing that US politicians pass laws that set up the basis for the spyware and then US corporations do the multi-million dollar R&D to develop the spyware that is then deployed by repressive regimes worldwide (plus the US government and big US corporations). We live in a "big brother" world. Orwell thought he was writing a cautionary tale with his book Nineteen Eighty-Four, but he was documenting the hellish future we now all live in.

Thinking about Debt

2011-12-28T09:15:00.000-08:00

Here is a key bit from a post by Paul Krugman on his NY Times blog:

People think of debt’s role in the economy as if it were the same as what debt means for an individual: there’s a lot of money you have to pay to someone else. But that’s all wrong; the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources.

That’s not to say that high debt can’t cause problems — it certainly can. But these are problems of distribution and incentives, not the burden of debt as is commonly understood. And as Dean says, talking about leaving a burden to our children is especially nonsensical; what we are leaving behind is promises that some of our children will pay money to other children, which is a very different kettle of fish.

The political right has made a career out of packaging up bad politics as reasonable sounding phrases which don't hold up to scrutiny:

running government is just like running a business, so the country needs a CEO not a politician

government is not the solution, government is the problem

the need to put "God back into the nation's schools", and they don't mean the loving Jesus, or Krishna, Odin, or Moloch, they know that God is that white haired old man sitting on a throne up there in the air somewhere, the avenger of the Old Testament, the guy who is the fixer of the political right

what America needs is "family values" as laid down by the womanizing, sex-crazed, power hungry politicians of the political right who find time to sit in Congress between screwing their secretaries and divorcing the wives and refusing to pay child support

get government off our backs by bringing back Joe McCarthy with his demand of "loyalty oaths", or Goldwater with his decision to bomb Vietnam back to the Stone Age with nukes, or Reagan who wanted to stop the limousine liberals from giving money to welfare queens by putting up layer after layer of bureaucratic restriction of aiding the poor while ranting that the problem with government was that it needed to "cut regulations", or the 2000 George Bush who ranted that government had to get out of the business of "nation building" and then he started a couple of trillion dollar wars to bring "democarcy" and "good government" to Afghanistan and Iraq

Debt as a public policy is something that the economists understand but which gets twisted and distorted by right wing politicians into a lie on the same level as the 50 year lie that the United Nations was a front for Communism and that the US should "get out of the UN".

Understanding the Evil and Nefarious Schemes of Marketers

2011-12-28T09:05:00.001-08:00

Here is truth laid bare...

I was well into my twenties before I had this level of sophisticated understanding of the evil marketing schemes of merchandisers.

A Glimpse into the Future

2011-12-28T06:45:00.001-08:00

Here is a talk by Cory Doctorow on the future of computers given the impulse by corporations to control "rights" that require them to tie down their "customers" in thousands of ways to ensure maximum profit:

Skip the first 2 minutes of intros to get into the Doctorow talk.

A full transcription of the talk can be found here.

Cory offers up lots of thoughtful points. This video is well worth your time.

New Rules for the New Economy

2011-12-27T06:26:00.001-08:00

Rule #1: He who writes the rules owns the gold.

Here is a bit from an article by Simon Johnson that rips into the insanity of the US government letting the big banks make big bucks on their housing bubble fraud but then demanding that the little guy, the taxpayer, first fork over billions to "make whole" the fraudulent banks, then stand by and look down at our feet while the big bank's top people get billions in bonuses, then go through a charade of "law enforcement" where the bankers get off the hook with pitifully small fines for bad behaviour and no jail time:

Santa Claus came early this year for four former executives of Washington Mutual (WaMu), a large US bank that failed in fall 2008. The Federal Deposit Insurance Corporation (FDIC) had brought a lawsuit against the four, actions that included taking huge financial risks while “knowing that the real estate market was in a ‘bubble.’” The FDIC sought to recover $900 million, but the executives have just settled for $64 million, almost all of which will be paid by their insurers; their out-of-pockets costs are estimated at just $400,000.

To be sure, the executives lost their jobs and now must drop claims for additional compensation. But, according to the FDIC, the four still earned more than $95 million from January 2005 through September 2008. So they are walking away with a great deal of cash. This is what happens when financial executives are compensated for “return on equity” unadjusted for risk. The executives get the upside when things go well; when the downside risks materialize, they lose nothing (or close to it).

Here is the problem with the current "system" that is shafting the 99%:

But capitalism without the prospect of failure is not any kind of market economy. We are running a large-scale, nontransparent, and dangerous government subsidy scheme for the benefit primarily of a very few, extremely wealthy people.

Jon Huntsman, a candidate for the Republican presidential nomination, is addressing this directly – insisting that we should force the largest banks to break up and to become safer. No other candidate for the presidency is seriously confronting this issue head-on: just saying “we’ll let them fail” is no kind of answer when the failure of megabanks would cause so much damage.

We should learn from both the WaMu and the Occupy movement. In both cases, the lesson is the same: concentrated financial power is a gift that keeps on giving – but not to you.

How to Know That Your Government is Rotten

2011-12-26T20:15:00.000-08:00

Here is a bit from a Washington Post article that points out that while the "representatives" of the people have gotten fabulously wealthy over the last 25 years, the common people are either treading water or slowly sinking:

Between 1984 and 2009, the median net worth of a member of the House more than doubled, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home equity.

Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.

The comparisons exclude home equity because it is not included in congressional reporting, and 1984 was chosen because it is the earliest year for which consistent wealth statistics are available.

The growing disparity between the representatives and the represented means that there is a greater distance between the economic experience of Americans and those of lawmakers.

...

The growing financial comfort of Congress relative to most Americans is consistent with the general trends in the United States toward inequality of wealth: Members of Congress have long been wealthier than average Americans, and in recent decades the wealth of the wealthiest Americans has outpaced that of the average.

In 1984, the 90th percentile of U.S. families had holdings worth six times the median family’s; by 2009, the 90th percentile was worth 12 times the median family, according to the University of Michigan study, a longitudinal panel survey. These figures include home equity.

This growing inequality, not surprisingly, is seen in Congress. Not only has the median wealth increased, but the proportion of representatives who have little besides a home has shrunk. In 1984, one in five House members had zero or negative net worth excluding home equity, according to the disclosures; by 2009, that number had dropped to one in 12.

When the guardians of the government are stuffing their pockets with money while the people are slowly sinking, things are rotten. There is corruption and incompetence in government.

The Republicans loved to say that "government is the problem, not the solution". That's got it wrong. The problem is that the government politicians are the problem, not the solution. These "elected representatives" have been using their power to feed at the trough of government, taking money from lobbyists, selling their votes, all while they have been telling the ordinary citizens that the problem is "big government", not crooked, greedy politicians.

Rather than pass laws to help their constituents. These pigs have been feasting off tax money while blaming "big government" for everything. They are hypocrites, crooks, and liars. And they and their buddies, the elite 1% are doing this at the expense of the bottom 99%.

Note: From this same article. Here is how the rich view themselves as deserving their wealth. This is what a guy who married into the Phillips petroleum empire says of how "hard work" will make you a billionaire:

In 1973, Kelly married Victoria Phillips, an heir to the oil fortune. Kelly’s financial disclosure forms show that among her holdings is stock in Phillips Resources Inc., which is valued at between $5 million and $25 million and which generated more than $100,000 annually in dividends.

Four years out of college in 1974, Mike and Victoria were able to buy a home for $50,000, roughly twice the median value of homes in Pennsylvania at the time, a large, stately house close to downtown.

In 1997, Kelly bought his dad’s business from him, taking out a $1.6 million mortgage to pay for it.

When discussing his wealth and how it came to him, Kelly, who was called “Millionaire Mike” during the 2010 campaign, grows animated.

“The way my dad taught me was pretty basic: You have to kill more than you eat. You gotta wake up every day before anyone else, you better get to work, and you better stay later than everybody else,” he said. “I’m a rich guy because I’ve worked hard. I gotta work every fricking day. Listen, nobody gives it to you. I compete. I’m not the only guy selling hot dogs at the ballpark, okay?”

I don't doubt he worked hard. But tens of millions of people work hard, real hard. A lot of poor people hold down two jobs at minimum wage working incredibly hard. But they don't "build up" car dealerships. This guy Mike Kelly, a Republican, worked hard. I don't doubt it. But he didn't get fabulously wealthy from working hard. His dad owned a car dealership and he bought out his father (probably at a steeply discounted price) and he married an heiress to a fortune. I bet a lot of janitors would me multi-millionaires if their fathers owned car dealerships and they married heiresses. And I bet they would be millionaires if they only put in an "average day" at work. It wasn't the hard work that made Mike Kelly rich. It was his education, his connections, his charm, probably his "flexible" ethics, and certainly some good old fashioned hard work.

Interesting Article on Young Love Between Autistics

2011-12-26T14:36:00.001-08:00

Here is a bit from a very interesting NY Times article that looks at two young autistic people negotiating the strange world of love and intimacy. You need to be aware of the basics of ASD to appreciate this article:

Jack, Kirsten noticed, bit his lips, a habit he told her came from not knowing how he was supposed to arrange his face to show his emotions. Kirsten, Jack noticed, cracked her knuckles, which she later told him was her public version of the hand-flapping she reserved for when she was alone, a common autistic behavior thought to ease stress.

Their difficulty discerning unspoken cues might have made it harder to know if the attraction was mutual. Kirsten stalked Jack on Facebook, she later told him, but he rarely posted. In one phone conversation, Jack wondered, “Is she flirting with me?” But he could not be sure.

But Jack, who had never known how to hide his feelings, wrote Kirsten an e-mail laying them out. And when Kirsten’s boyfriend pleaded with her to tell him what was wrong, she did, sobbing. She could not explain, she said. She knew only that she felt as if she had found her soul mate.

From the beginning, their physical relationship was governed by the peculiar ways their respective brains processed sensory messages. Like many people with autism, each had uncomfortable sensitivities to types of touch or texture, and they came in different combinations.

Jack recoiled when Kirsten tried to give him a back massage, pushing deeply with her palms.

“Pet me,” he said, showing her, his fingers grazing her skin. But Kirsten, who had always hated the feeling of light touch, shrank from his caress.

“Only deep pressure,” she showed him, hugging herself.

He tried to kiss her, but it was hard for her to enjoy it, so obvious was his aversion. To him, kissing felt like what it was, he told her: mashing your face against someone else’s. Neither did he like the sweaty feeling of hand-holding, a sensation that seemed to dominate all others whenever they tried it.

“I’m sorry,” he said helplessly.

They found ways to negotiate sex, none of them perfect. They kept trying.

What mattered more to Kirsten was how comfortable she felt for the first time in a relationship. Even if she did something wrong, she believed, Jack would not leave her. When he remarked on her obliviousness after she chattered on one day about vertebrate anatomy to their neighbor — “Matson was totally bored,” he informed her — there was no judgment, only pride that he had managed to notice. “Is that why he was yawning?” she asked, laughing with him.

...

She tolerated his discomfort with public displays of affection, though she pushed for more in private. When he explained that his lack of expression did not mean a lack of warmth for her — he often simply forgot — she devised a straightforward strategy to help him.

“When I put my hand on your leg,” she said, “you put your arm on my back.”

...

Looking for clues to fix her new relationship, Kirsten began frequenting autism Web sites like WrongPlanet.net, where hundreds of messages a day are posted. “Eligible Odd-Bods,” read one. Another, “Are relationships harder for Aspies?”

In the library, she paged through autism guidebooks, few of which contained any information about relationships, not to mention sex. But as she read about the manifestations of the condition, she recognized them — and not only in Jack.

A passage about the difficulty that people with autism have reading facial expressions reminded her of being mocked by a friend at age 5 with whom she had agreed to draw “angry ghosts.” The friend’s ghost had zigzag lines for scowling lips and a knitted brow. Kirsten, unsure how to depict anger, had drawn a blank-faced ghost with a dialogue box above its head that read “Grrr.”

I love the odd connections this article brought up in me:

The Jack Robison in the article is the son of John Elder Robison who has written a very interesting book on the autistic experience Look Me in the Eye.

The brother of John Elder Robison is also a writer, Augusten Burroughs, who has written two books about his bizarre upbringing caused by the fact that his father was autistic and his mother suicidal. The first book was Running with Scissors which was made into a move. And the second was A Wolf at the Table which looked more deeply into his relatioship with his autistic father.

These connections remind me of the "small world" phenomenon that was first researched by Stanley Milgram who is famous for his early 1960s experiments in authority.

And these connections of course remind me of the famous science historian James Burke who had a very popular TV series called "Connections" and who wrote many books on the deep connections through scientific history.

The world is fascinating because it is all tied together by multiple connections. This wondrous fact makes learning so very satisfying. Not only do you get to discover the hidden connections, you find that these connections make a framework which makes learning new facts and connections so much easier.

I get utterly disgusted by religious fanatics who claim that "all knowledge" is captured in some millennia old "sacred text" that records the sketchy, ill-informed, and stuffed with magical thinking "explanation" of the world. The real world is much more fascinating. But religious bigots refuse to open their eyes and look. Very much like the famous scholastics of the Middle Ages who could interminably "debate" over how many teeth in a horse's head based on the various writing of ancient "sages" when in fact the solution lay at hand: go out on the street, open a horse's mouth, and count the teeth!

EFF's List of Shame

2011-12-24T11:11:00.000-08:00

Here is a list of US government "secrecy" actions that are mindless and counter-productive published by the Electronic Frontier Foundation (EFF):

As the year draws to a close, EFF is looking back at the major trends influencing digital rights in 2011 and discussing where we are in the fight for a free expression, innovation, fair use, and privacy.

The government has been using its secrecy system in absurd ways for decades, but 2011 was particularly egregious. Here are a few examples:
Government report concludes the government classified 77 million documents in 2010, a 40% increase on the year before. The number of people with security clearances exceeded 4.2. million, more people than the city of Los Angeles.

Government tells Air Force families, including their kids, it’s illegal to read WikiLeaks. The month before, the Air Force barred its service members fighting abroad from reading the New York Times—the country’s Paper of Record.

Lawyers for Guantanamo detainees were barred from reading the WikiLeaks Guantanamo files, despite their contents being plastered on the front page of the New York Times.

President Obama refuses to say the words “drone” or “C.I.A” despite the C.I.A. drone program being on the front pages of the nation’s newspapers every day.

CIA refuses to release even a single passage from its center studying global warming, claiming it would damage national security. As Secrecy News' Steven Aftergood said, “That’s a familiar song, and it became tiresome long ago.”

The CIA demands former FBI agent Ali Soufan censor his book criticizing the CIA’s post 9/11 interrogation tactics of terrorism suspects. Much of the material, according to the New York Times, “has previously been disclosed in open Congressional hearings, the report of the national commission on 9/11 and even the 2007 memoir of George J. Tenet, the former C.I.A. director.”

Department of Homeland Security has become so bloated with secrecy that even the “office's budget, including how many employees and contractors it has, is classified,” according to the Center for Investigative reporting. Yet their intelligence reports “produce almost nothing you can’t find on Google,” said a former undersecretary.

Headline from the Wall Street Journal in September: “Anonymous US officials push open government.”

NSA declassified a 200 year old report which they said demonstrated its “commitment to meeting the requirements” of President Obama’s transparency agenda. Unfortunately, the document “had not met the government's own standards for classification in the first place,” according to J. William Leonard, former classification czar.

Government finally declassifies the Pentagon Papers 40 years after they appeared on the front page of the New York Times and were published by the House’s Armed Services Committee.

Secrecy expert Steve Aftergood concludes after two years “An Obama Administration initiative to curb overclassification of national security information… has produced no known results to date.”

President Obama accepts a transparency award…behind closed doors.

Government attorneys insist in court they can censor a book which was already published and freely available online.

Department of Justice refuses to release its interpretation of section 215 of the Patriot Act, a public law.

U.S. refuses to release its legal justification for killing an American citizen abroad without a trial, despite announcing the killing in a press conference.

U.S. won’t declassify legal opinion on 2001’s illegal warrantless wiretapping program.

National Archive announced it was working on declassifying “a backlog of nearly 400 million pages of material that should have been declassified a long time ago.”

The CIA refused to declassify Open Source Works, “which is the CIA’s in-house open source analysis component, is devoted to intelligence analysis of unclassified, open source information” according to Steve Aftergood.

Twenty-three year State Department veteran gets his security clearance revoked for linking to a WikiLeaks document on his blog.

The ACLU sued asking the State Department to declassify 23 cables out of the more than 250,000 released by WikiLeaks. After more than a year, the government withheld 12 in their entirety. You can see the other 11, heavily redacted, next to the unredacted copies on the ACLU website.

The ACLU said it sued the State Department in part to show the "absurdity of the US secrecy regime."

Go to the original EFF posting to access the embedded links.

The Bush administration was blatant in its disregard for law and its disrespect for sensible security. The Obama regime is more devious. It gives the pretense of "concern" but its actions belie the truth. There is little difference between the Republicans and the Democrats. They both believe in the "mushroom theory" of government: keep the people in the dark and feed them shit.

My Kind of App

2011-12-24T07:42:00.001-08:00

Here's a great app to get your mind off your troubles and cares...

Yep... life has a way of biting back!

Take a Tour Through Airport Security Theatre

2011-12-24T07:20:00.000-08:00

Here is a bit from an article in Vanity Fair in which the reporter takes a walk through Reagan National Airport with security critic Bruce Schneier who points out the security weaknesses and the incredible expense to achieve this "security":

Since 9/11, the U.S. has spent more than $1.1 trillion on homeland security.

To a large number of security analysts, this expenditure makes no sense. The vast cost is not worth the infinitesimal benefit. Not only has the actual threat from terror been exaggerated, they say, but the great bulk of the post-9/11 measures to contain it are little more than what Schneier mocks as “security theater”: actions that accomplish nothing but are designed to make the government look like it is on the job. In fact, the continuing expenditure on security may actually have made the United States less safe.

...

Two months after 9/11, the Bush administration created the Transportation Security Agency, ordering it to hire and train enough security officers to staff the nation’s 450 airports within a year. Six months after that, the government vastly expanded the federal sky-marshal program, sending thousands of armed lawmen to ride planes undercover. Meanwhile, the T.S.A. steadily ratcheted up the existing baggage-screening program, banning cigarette lighters from carry-on bags, then all liquids (even, briefly, breast milk from some nursing mothers). Signs were put up in airports warning passengers about specifically prohibited items: snow globes, printer cartridges. A color-coded alert system was devised; the nation was placed on “orange alert” for five consecutive years. Washington assembled a list of potential terror targets that soon swelled to 80,000 places, including local libraries and miniature-golf courses. Accompanying the target list was a watch list of potential suspects that had grown to 1.1 million names by 2008, the most recent date for which figures are available. Last year, the Department of Homeland Security, which absorbed the T.S.A. in 2003, began deploying full-body scanners, which peer through clothing to produce nearly nude images of air passengers.

Bruce Schneier’s exasperation is informed by his job-related need to spend a lot of time in Airportland. He has 10 million frequent-flier miles and takes about 170 flights a year; his average speed, he has calculated, is 32 miles and hour. “The only useful airport security measures since 9/11,” he says, “were locking and reinforcing the cockpit doors, so terrorists can’t break in, positive baggage matching”—ensuring that people can’t put luggage on planes, and then not board them —“and teaching the passengers to fight back. The rest is security theater.”

...

Terrorists will try to hit the United States again, Schneier says. One has to assume this. Terrorists can so easily switch from target to target and weapon to weapon that focusing on preventing any one type of attack is foolish. Even if the T.S.A. were somehow to make airports impregnable, this would simply divert terrorists to other, less heavily defended targets—shopping malls, movie theaters, churches, stadiums, museums. The terrorist’s goal isn’t to attack an airplane specifically; it’s to sow terror generally. “You spend billions of dollars on the airports and force the terrorists to spend an extra $30 on gas to drive to a hotel or casino and attack it,” Schneier says. “Congratulations!”

What the government should be doing is focusing on the terrorists when they are planning their plots. “That’s how the British caught the liquid bombers,” Schneier says. “They never got anywhere near the plane. That’s what you want—not catching them at the last minute as they try to board the flight.”

To walk through an airport with Bruce Schneier is to see how much change a trillion dollars can wreak. So much inconvenience for so little benefit at such a staggering cost. And directed against a threat that, by any objective standard, is quite modest. Since 9/11, Islamic terrorists have killed just 17 people on American soil, all but four of them victims of an army major turned fanatic who shot fellow soldiers in a rampage at Fort Hood. (The other four were killed by lone-wolf assassins.) During that same period, 200 times as many Americans drowned in their bathtubs. Still more were killed by driving their cars into deer. The best memorial to the victims of 9/11, in Schneier’s view, would be to forget most of the “lessons” of 9/11. “It’s infuriating,” he said, waving my fraudulent boarding pass to indicate the mass of waiting passengers, the humming X-ray machines, the piles of unloaded computers and cell phones on the conveyor belts, the uniformed T.S.A. officers instructing people to remove their shoes and take loose change from their pockets. “We’re spending billions upon billions of dollars doing this—and it is almost entirely pointless. Not only is it not done right, but even if it was done right it would be the wrong thing to do.”

The article is well worth reading. Go read the whole thing.

The Sleaze that Passes for Politics in America

2011-12-22T20:19:00.000-08:00

Here are some bits from a NY Times op-ed by Paul Krugman exposing the cynical manipulation of truth by Republicans, Romney in particular:

Suppose that President Obama were to say the following: “Mitt Romney believes that corporations are people, and he believes that only corporations and the wealthy should have any rights. He wants to reduce middle-class Americans to serfs, forced to accept whatever wages corporations choose to pay, no matter how low.”

How would this statement be received? I believe, and hope, that it would be almost universally condemned, by liberals as well as conservatives. Mr. Romney did once say that corporations are people, but he didn’t mean it literally; he supports policies that would be good for corporations and the wealthy and bad for the middle class, but that’s a long way from saying that he wants to introduce feudalism.

But now consider what Mr. Romney actually said on Tuesday: “President Obama believes that government should create equal outcomes. In an entitlement society, everyone receives the same or similar rewards, regardless of education, effort, and willingness to take risk. That which is earned by some is redistributed to the others.”

And in an interview the same day, Mr. Romney declared that the president “is going to put free enterprise on trial.”

This is every bit as bad as my imaginary Obama statement. Mr. Obama has never said anything suggesting that he holds such views, and, in fact, he goes out of his way to praise free enterprise and say that there’s nothing wrong with getting rich. His actual policy proposals do involve a rise in taxes on high-income Americans, but only back to their levels of the 1990s. And no matter how much the former Massachusetts governor may deny it, the Affordable Care Act established a national health system essentially identical to the one he himself established at a state level in 2006.

Over all, Mr. Obama’s positions on economic policy resemble those that moderate Republicans used to espouse. Yet Mr. Romney portrays the president as the second coming of Fidel Castro and seems confident that he will pay no price for making stuff up.

Welcome to post-truth politics.

...

So here’s my forecast for next year: If Mr. Romney is in fact the Republican presidential nominee, he will make wildly false claims about Mr. Obama and, occasionally, get some flack for doing so. But news organizations will compensate by treating it as a comparable offense when, say, the president misstates the income share of the top 1 percent by a percentage point or two.

The end result will be no real penalty for running an utterly fraudulent campaign. As I said, welcome to post-truth politics.

If there were any justice in the world, this farce that passes for politics would quickly lead to the complete collapse of America. Instead, the Republicans have been pulling this fraud for 30+ years and the only penalty has been a slow decay within America and a slow collapse of their economy. And the electorate continues like sheep to the slaughter. They don't complain. They keep electing these liars to positions of power, to positions that let them enrich the top 1% at the expense of the bottom 99%.

America, Land of the Freely Arrested

2011-12-22T16:56:00.000-08:00

From an article in the NY Times:

By age 23, almost a third of Americans have been arrested for a crime, according to a new study that researchers say is a measure of growing exposure to the criminal justice system in everyday life.

The study, the first since the 1960s to look at the arrest histories of a national sample of adolescents and young adults over time, found that 30.2 percent of the 23-year-olds who participated reported having been arrested for an offense other than a minor traffic violation.

...

The study did not look at racial or regional differences, but other research has found higher arrest rates for black men and for youths living in poor urban areas.

I have to laugh. Americans love to beat their chest and proclaim their "love of liberty" but they arrest and incarcerate at a rate far beyond almost every other country in the world except for the handful of despot dictatorships. You would think this report would force Americans to look in the mirror. Their myth of "freedom loving" doesn't match up with their eagerness to jail. It is much like the Founding Fathers prating on about "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. while being one of the worse slavery-based societies on the face of the earth.

America's Love Affair with the Rich

2011-12-21T06:48:00.000-08:00

Here is an excellent post by Joshua M. Brown on his blog The Reformed Broker. I've bolded some key bits:

Dear Jamie Dimon,

I hope this note finds you well.

I am writing to profess my utter disbelief at how little you seem to understand the current mood of the nation. In a story at Bloomberg today, you and a handful of fellow banker and billionaire "job creators" were quoted as believing that the horrific sentiment directed toward you from virtually all corners of America had something to do with how much money you had. I'd like to take a moment to disabuse you of this foolishness.

America is different than almost every other place on earth in that its citizenry reveres the wealthy and we are raised to believe that we can all one day join the ranks of the rich. The lack of a caste system or visible rungs of society's ladder is what separates our empire from so many fallen empires throughout history. In a nation bereft of royalty by virtue of its republican birth, the American people have done what any other resourceful people would do - we've created our own royalty and our royalty is the 1%. Not only do we not "hate the rich" as you and other em-bubbled plutocrats have postulated, in point of fact, we love them. We worship our rich to the point of obsession. The highest-rated television shows uniformly feature the unimaginably fabulous families of celebrities not to mention the housewives (real or otherwise) of the rich. We don't care what color they are or what religion they practice or where in the country they live or what channel their show is on - if they're rich, we are watching.

When Derek Jeter was toyed with by the New York Yankees when it came time for him to renew his next hundred million dollar contract, the people empathized with Derek Jeter. Sure, this disagreement essentially took place between one of the wealthiest organizations in the country and one of the wealthiest private citizens - but we rooted for Jeter to get his money. Nobody begrudged him a penny of it or wanted a piece of it or decried the fact that he was luckier than the rest of us. In the American psyche, Jeter was one of the good guys who was deservedly successful. He was one of us and an example of hard work paying off.

Likewise, when Steve Jobs died, he did so with more money than you or any of your "job alliance" buddies - ten times more than most of you, in fact. And upon his death the entire nation went into mourning. We set up makeshift shrines to his brilliance in front of Apple stores from coast to coast. His biography flew off the shelves and people bought Apple products and stock shares in his honor and in his memory. Does that strike you as the action of a populace that hates success?

No, Jamie, it is not that Americans hate successful people or the wealthy. In fact, it is just the opposite. We love the success stories in our midst and it is a distinctly American trait to believe that we can all follow in the footsteps of the elite, even though so few of us ever actually do.

So, no, we don't hate the rich. What we hate are the predators.

What we hate are the people who we view as having found their success as a consequence of the damage their activities have done to our country. What we hate are those who take and give nothing back in the form of innovation, convenience, entertainment or scientific progress. We hate those who've exploited political relationships and stupidity to rake in even more of the nation's wealth while simultaneously driving the potential for success further away from the grasp of everyone else.

Here in New York, we hated watching real estate and financial services elitists drive up the prices of everything from affordable apartments to martinis in midtown with the reckless speculation that would eventually lead to mass layoffs, rampant joblessness and the wreckage of so many retirement dreams. No one ever asked the rest of us if we minded, it just happened. I'm sure people across the country can tell similar stories.

So please, do us all a favor and come to the realization that the loathing you feel from your fellow Americans has nothing to do with your "success" or your "wealth" and it has everything to do with the fact that your wealth and success have come at a cost to the rest of us. No one wants your money or opportunities, what they want is the same chance that their parents had to attain these things for themselves. You are viewed, and rightfully so, as part of the machine that has removed this chance for many - and that is what they hate.

America hates unjustified privilege, it hates an unfair playing field and crony capitalism without the threat of bankruptcy, it hates privatized gains and socialized losses, it hates rule changes that benefit the few at the expense of the many and it hates people who have been bailed out and don't display even the slightest bit of remorse or humbleness in the presence of so much suffering in the aftermath.

Nobody hates your right to make money, Jamie. They hate how you and certain others have made it.

Don't be confused on this score for a moment longer.

If only the American people really took the sentiments of this post to heart. They could break the chains of financial and political abuse they have been under for 30+ years of the "Reagan Revolution".

The Civil War That Won't End

2011-12-20T17:44:00.001-08:00

Here is a bit from a post by Robert Reich looking at the bizarre behaviour of America's Republican party:

Two weeks before the Iowa caucuses, the Republican crackup threatens the future of the Grand Old Party more profoundly than at any time since the GOP’s eclipse in 1932. That’s bad for America.

The crackup isn’t just Romney the smooth versus Gingrich the bomb-thrower.

Not just House Republicans who just scotched the deal to continue payroll tax relief and extended unemployment insurance benefits beyond the end of the year, versus Senate Republicans who voted overwhelmingly for it.

Not just Speaker John Boehner, who keeps making agreements he can’t keep, versus Majority Leader Eric Cantor, who keeps making trouble he can’t control.

And not just venerable Republican senators like Indiana’s Richard Lugar, a giant of foreign policy for more than three decades, versus primary challenger state treasurer Richard Mourdock, who apparently misplaced and then rediscovered $320 million in state tax revenues.

Some describe the underlying conflict as Tea Partiers versus the Republican establishment. But this just begs the question of who the Tea Partiers really are and where they came from.

The underlying conflict lies deep into the nature and structure of the Republican Party. And its roots are very old.

As Michael Lind has noted, today’s Tea Party is less an ideological movement than the latest incarnation of an angry white minority – predominantly Southern, and mainly rural – that has repeatedly attacked American democracy in order to get its way.

It’s no mere coincidence that the states responsible for putting the most Tea Party representatives in the House are all former members of the Confederacy. Of the Tea Party caucus, twelve hail from Texas, seven from Florida, five from Louisiana, and five from Georgia, and three each from South Carolina, Tennessee, and border-state Missouri.

Others are from border states with significant Southern populations and Southern ties. The four Californians in the caucus are from the inland part of the state or Orange County, whose political culture has was shaped by Oklahomans and Southerners who migrated there during the Great Depression.

This isn’t to say all Tea Partiers are white, Southern or rural Republicans – only that these characteristics define the epicenter of Tea Party Land.

The Germans let militarists lead them into war after war that led to defeat until Hitler iced the cake with a war to end all wars for the Germans. Hitler left a scorched earth German. Is the Republican party working hard to achieve the same in the United States?

Corruption in High Places

2011-12-20T14:26:00.001-08:00

Here is a bit from a post by Matt Taibbi in his Rolling Stone blog:

Obama and Geithner: Government, Enron-Style

Strongly recommend this piece at the Huffington Post by Jeff Connaughton, a former aide to Senator Ted Kaufman. Jeff is one of the smartest guys on the Hill and is particularly strong on issues surrounding Wall Street and the regulatory system. In this piece, he takes apart the oft-stated mantra that what Wall Street firms did during and after the crisis was maybe unethical, but not illegal.

He takes particular aim at Barack Obama, who recently tossed that line out on 60 Minutes in what I thought was one of the real low moments of his presidency. Here’s Jeff’s take:
Speaking in Kansas on December 6, [Obama] said, "Too often, we've seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender." Just five days later on 60 Minutes, he said, "Some of the least ethical behavior on Wall Street wasn't illegal." Which is it? Have there been no prosecutions because Wall Street acted legally (albeit unethically)? Or did Wall Street repeatedly violate major anti-fraud laws (and should thus find itself in the dock)?

The President is confusing "legal" with "difficult to prosecute successfully."
The notion that what Wall Street firms did was merely unethical and not illegal is not just mistaken but preposterous: most everyone who works in the financial services industry understands that fraud right now is not just pervasive but epidemic, with many of the biggest banks committing entire departments to the routine commission of fraud and perjury – every single one of the major banks, for instance, devotes significant manpower to robosigning affidavits for foreclosures and credit card judgments, acts which are openly and inarguably criminal.

Banks and hedge funds routinely withhold derogatory information about the instruments they sell, they routinely trade on insider information or ahead of their own clients’ orders, and corrupt accounting is so rampant now that industry analysts have begun to figure in estimated levels of fraud in their examinations of the public disclosures of major financial companies.

Beyond that, as Jeff points out, Obama is simply not telling the truth about the supposedly insufficient penalties available to regulators. Employing the famous "mistakes were made" use of the passive tense, Obama copped out in his December 6 speech by saying that “penalties are too weak." As Jeff points out, what Obama should have said is that "the penalties my own regulators chose to dish out were too weak":
Moreover, the President is misleading us when he says that Wall Street firms violate anti-fraud law because the penalties are too weak. Repeat financial fraudsters don't pay relatively paltry -- and therefore painless -- penalties because of statutory caps on such penalties. Rather, regulatory officials, appointed by Obama, negotiated these comparatively trifling fines. This week, the F.D.I.C. settled a suit against Washington Mutual officials for just $64 million, an amount that will be covered mostly by insurance policies WaMu took out on behalf of executives, who themselves will pay just $400,000. And recently a federal judge rejected the S.E.C.'s latest settlement with Citigroup, an action even the Wall Street Journal called "a rebuke of the cozy relationship between regulators and the regulated that too often leaves justice as an orphan."
What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud. Here’s how Jeff puts it:
In Ron Suskind's book, Confidence Men, he quotes Treasury Secretary Timothy Geithner as saying, "The confidence in the system is so fragile still... a disclosure of a fraud... could result in a run, just like Lehman." The Obama Administration is pushing hard for a 50-state settlement with the major banks for their fraudulent foreclosure practices, even though several state attorneys general have rejected this approach because, in their view, it would shield too much wrongdoing. Regrettably, Obama's top officials and lawyers seem more eager to restore the financial sector to health than establish criminal accountability among the executives who were in charge.
In other words, Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits. It’s worth noting that this kind of behavior – knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank – is, itself, fraud!

This is exactly the mindset that led Lehman to the abuses of the "Repo 105" accounting trick, in which loans were disguised as revenues in order to prevent the outside world from knowing the dire state of the bank’s balance sheet.

Now Obama and Geithner are engaged in the same sort of activity, only they’re trying to prevent a run not on an individual bank, but the entire American financial services sector. Geithner seems really to believe that if fraud were aggressively policed, and the world made aware of the incredible extent of the illegality in our markets, that international confidence in the American financial sector would plummet and our economy would suffer – and suffer, incidentally, on Barack Obama’s watch.

I was a big fan of Obama in 2008. I had read his books and followed the campaign. I was sucked into deeply believing in his "change you can believe in" and "hope" themes. I'm especially bitter by how he has proven himself to be a liar. He stole the vote because he knowingly promised one thing and did another. He is better than the Republican idiot, but Obama is an abomination and doesn't deserve the presidency. But, sadly, people better vote for him rather than the horse pucky that the Republicans will nominate.

It is criminal that the US political system throws up such crappy candidates... and allows them to lie their into power. There is no "representative" democracy if voters have to take a pig in a poke.

Justice in America

2011-12-19T20:19:00.001-08:00

Here is a bit from a post by Robert Reich in his blog:

— American Airlines uses bankruptcy to ward off debtors and renegotiate labor contracts. Donald Trump’s businesses go bankrupt without impinging on Trump’s own personal fortune. But the law won’t allow you to use personal bankruptcy to renegotiate your home mortgage.

— If you run a giant bank that defrauds millions of small investors of their life savings, the bank might pay a small fine but you won’t go to prison. Not a single top Wall Street executive has been prosecuted for Wall Street’s mega-fraud. But if you sell an ounce of marijuana you could be put away for a long time.

The above is the key issue in the 99% versus 1% fight now going on in the US. There is a "justice" for the poor and a "justice" for the rich. There is a government for the rich and the poor have no voice in government. In fact the US Supreme Court has made it official with its Citizens United case: corporations are "people" with no limits on their political donations, while real living and breathing human beings are limited -- by law! -- in their donations. So the "person" of a corporation is above the law that applies to "mere persons" as represented by the bottom 99%.

Here is the reality of today:

... the four hundred richest Americans, whose total wealth exceeds the combined wealth of the bottom 150 million Americans put together, pay an average of 17 percent of their income in taxes. That’s lower than the tax rates of most day laborers and child-care workers.

Read the whole post.

Egypt in the Throes of Another Revolution

2011-12-18T22:59:00.000-08:00

To defeat cruel leaders and a country with a tiny elite is very hard. You can kill the monster who officially runs things, but quickly a new monster grabs the reins of power and re-imposes the cruel regime. That is exactly what is happening in Egypt.

Here is a bit from an excellent article by Ahdaf Soueif in the UK's Guardian newspaper:

Since Friday the military has openly engaged with civilian protesters in the heart of the capital. The protesters have been peacefully conducting a sit-in in Ministries' Street to signal their rejection of the military's appointment of Kamal Ganzouri as prime minister.

Ganzouri announced that no violence would be used to break up the Cabinet Office sit-in. Moments later the military took on the protesters. For a week Military Police and paratroopers had kidnapped activists from the streets, driven them off in unmarked vehicles, interrogated them and beaten them. On Friday they kidnapped Aboudi – one of the "Ultras" of the Ahli Football Club. They gave him back with his face so beaten and burned that you couldn't see features – and started the street war that's been raging round Ministries' Street for the last three days.

The protesters have thrown rocks at the military. The military has shot protesters, and thrown rocks, Molotov cocktails, china embossed with official parliament insignia, chairs, cupboards, filing-cabinets, glass panes and fireworks. They've dragged people into parliament and into the Cabinet Office and beaten and electrocuted them – my two nieces were beaten like this.

They beat up a newly elected young member of parliament, jeering: "Let parliament protect you, you son of … ". They took a distinguished older lady who's become known for giving food to the protesters and slapped her repeatedly about the face till she had to beg and apologise. They killed 10 people, injured more than 200, and they dragged the unconscious young woman in the blue jeans – with her upper half stripped – through the streets.

The message is: everything you rose up against is here, is worse. Don't put your hopes in the revolution or parliament. We are the regime and we're back.

Third Time is a Charm... maybe

2011-12-18T22:45:00.000-08:00

Here is a bit from a NY Times op-ed piece by Paul Krugman:

Consider the following picture: Recent growth has relied on a huge construction boom fueled by surging real estate prices, and exhibiting all the classic signs of a bubble. There was rapid growth in credit — with much of that growth taking place not through traditional banking but rather through unregulated “shadow banking” neither subject to government supervision nor backed by government guarantees. Now the bubble is bursting — and there are real reasons to fear financial and economic crisis.

Am I describing Japan at the end of the 1980s? Or am I describing America in 2007? I could be. But right now I’m talking about China, which is emerging as another danger spot in a world economy that really, really doesn’t need this right now.

I’ve been reluctant to weigh in on the Chinese situation, in part because it’s so hard to know what’s really happening. All economic statistics are best seen as a peculiarly boring form of science fiction, but China’s numbers are more fictional than most. I’d turn to real China experts for guidance, but no two experts seem to be telling the same story.

Still, even the official data are troubling — and recent news is sufficiently dramatic to ring alarm bells.

The world doesn't need more bad news. But sadly the world is indifferent to humans, their needs, their wants. While Krugman worries about the effect of China on the world, Kim Jong-il has died in Korea creating an unstable mess that could easily spin out of control.

When I was a kid I heard the so-called "Chinese" curse of "may you live in interesting times". All I knew is that I desperately wanted to live in boring times, but sadly my whole life has been lived in the maelstrom of "interesting" events bringing misery and chaos. That is how the world works. Complete indifference to humans needs or wants.

The Case Against Copyright

2011-12-18T07:35:00.000-08:00

Here is a brief summary of why SOPA and similar copyright laws are bad for people and bad for the economy. This is a bit from a post by Dean Baker on his Beat the Press blog:

Standard economic models show that tariffs cost jobs. The reason is that they make consumers pay more money for the protected product. This pulls money away that could be spent in other areas. If the spending took place elsewhere, it would create more jobs than the additional money earned by the protected industry.

The same logic applies to increasingly stringent protections for copyright, except the economic waste and resulting job loss is likely to be much larger. Tariffs rarely raise the price of products by more than 15-20 percent. Copyright can make items very costly that could otherwise be available for free or nearly free. This implies a tariff of several thousand percent or higher.

In addition, there are enormous costs associated with copyright enforcement, with both the public and private sector required to make substantial expenditures to prevent unauthorized copies of copyrighted material from being circulated. This amounts to a waste of resources that could instead go to productive activity.

Copyright and its enforcement can be thought of as being analogous to toll booths, which can be used as a way to finance road construction. If the only way we have to finance road construction is toll booths, then we absolutely need toll booths to pay the road-builders.

However, once we have roads that are financed through other mechanisms (e.g. government funding), then it becomes increasingly difficult to collect money at the tollbooths since people will opt to use the free roads. We could go the route that many in Congress want to take with the Stop Online Piracy Act (SOPA), which effectively amounts to building toll booths that are harder to get around and imposing tough penalties on those who try to take free roads.

This gets more money for the people who build and operate toll booths, but may not do very much to help the people who build roads. Alternatively, we could try to find ways to get more money directly to the road-builders without spending vast sums erecting bigger more expensive toll booths and being more punitive to those who use free roads.

A Summary of America's "Effort" In Iraq

2011-12-17T13:03:00.000-08:00

Here is a bit from an opinion piece in the NY Times by Maureen Dowd that nails down the idiocy of US policy in Iraq:

You’d never know it, given Republicans’ churlish silence and unseemly sniping, but the president and the vice president have stumbled and bumbled their way to an acceptable ending to the war that George W. Bush and Dick Cheney so recklessly started. It was a magnificent miscalculation that Obama warned in 2002 was “a dumb war.”

Funnily enough, Obama has found it easier to wrap up Bush’s foreign policy blunders than his domestic ones.

Vice President Joseph Biden spent so many hundreds of hours hashing things out with Iraqi officials that he knew the names of their grandchildren — just as Bill Clinton could reel off street names during the peace effort in Northern Ireland.

In the painful calculation of what’s “good enough,” as we end our two attenuated wars, the White House sees it this way on Iraq: The baby is born. The gestation period couldn’t be 18 years; eight years was bad enough. The midwife had to leave.

The spectacular error that Bush, Cheney and Donald Rumsfeld made was feeling we needed a post-9/11 demonstration of war to prove our toughness. If they had merely pushed along the Arab Spring, they could have saved a trillion dollars and the lives of 4,500 American troops.

It would have been more of a boon to our national security to finish off the Afghanistan mission and kill Osama bin Laden sooner. Instead, the Bush team let itself get distracted with nation-building in Iraq when our own nation was falling apart, and President Obama ended up surging and withdrawing in Afghanistan at the same time, which made no sense.

Before W. tried to outdo his daddy, we were a country that usually had to take a punch before we went to war. We didn’t unilaterally start wars.

In her new memoir, Condoleezza Rice has a sentence so stunningly lame it makes you want to scream — or cry. “The fact is,” she writes, “we invaded Iraq because we believed we had run out of other options.”

I’m not a National Security Council adviser, but I can think of about a hundred other options we had with Saddam.

At least Condi admits that one of the inflated and improvised rationales for war wasn’t true: “We did not go to Iraq to bring democracy any more than Roosevelt went to war against Hitler to democratize Germany, though that became American policy once the Nazis were defeated.”

The real tragedy is that in 2008 Americans voted to change policies but got a Bush "lite" in Obama. Obama promised to get out of the war, stop torture, and get out of Guantanamo. Once in office he "surged" in Afghanistan and dragged his feet on all these commitments. He may have stopped torturing prisoners, but he has upped the ante with a lot more drone-based killings. Rather than arrest Osama Bin Laden he sent in a killer elite to "terminate" rather than capture. There is something indescribably sinister in a policy of death rather than justice.

Understanding the Great Recession

2011-12-16T19:09:00.000-08:00

Here is a short summary of a proposed explanation of the current economic collapse. This is a bit from a post by UC Berkeley economist Brad DeLong:

As I understand the Greenwald-Stiglitz hypothesis--about the Great Depression as applied to agriculture and about today as applied to manufacturing--it goes like this:
Rapid technological progress in a very large economic sector (agriculture then, manufacturing now) leads to oversupply and steep declines in the sector's prices. Poorer producers have less income. They come under pressure to cut back their spending. Others--consumers--are now richer because they are paying less for their food (or their manufactures), but their propensity to spend is lower than that of the stressed farmers or ex-manufacturing workers.

Moreover, the oversupply of agricultural commodities (or manufactured goods) means that only an idiot would invest at their normal pace in those sectors. To the shortfall in consumption spending is added a shortfall in investment spending as well.

Thus we have systematic pressures pushing spending down below economy-wide income. These aren't going to go away until the declining sector (agriculture then, manufacturing now) is no longer large enough to be macroeconomically significant.

Macroeconomic balance requires that the economy generate offsetting pressures pushing spending up. What might they be?

For a while, those receiving the income that farmers (or ex-manufacturing workers) have lost and those who use to invest in the declining sectors can lend it to the farmers (or ex-manufacturing workers) so that they can keep up with the Joneses. But lending more and more to poorer and poorer debtors is, like lawn darts, only all fun-and-games until somebody loses an eye.

An alternative possibility is to switch investment away from the farm value-chain complex (or the manufacturing value-chain complex) to something else. But what? Nobody really knows. The future is uncertain. Other investments are clearly riskier then funneling money into the old channels of boosting the capital of the farm value-chain complex (or the manufacturing value-chain complex) had been. Given the extra risks, this pressure can only manifest itself if the cost of capital falls. But here we hit the zero lower bound on interest rates. And we are off to the secular liquidity-trap races. This won't work either.

A very readable presentation of the thesis is in a Vanity Fair article by Nobel prize-winning economist Joseph Stiglitz.

Dowd on Newt Gingrich

2011-12-16T06:47:00.000-08:00

Here is a bit from an opinion piece in the NY Times by Maureen Dowd:

Gingrich agreed in 1995 that we might have to “rethink our Constitution” — something that wouldn’t go over well with originalists.

The man who wishes to be our leader implementing Lean Six Sigma might shy away from Toffler’s main thesis, that we were moving toward a basically leaderless society where information was available to everyone, so everyone could make their own decisions. “Someday,” Toffler wrote, “future historians may look back on voting and the search for majorities as an archaic ritual engaged in by communicational primitives.”

And what about Toffler’s prediction that those (like Gingrich) who resist the end of the nuclear family and the spread of gay parenting, gay rights, women’s rights and abortion access as variegated families set up shop in “electronic cottages” would just add to the pain of inevitable transition to a “de-massified society”?

Torn between the virtual and the virtue-crats, Gingrich this week endorsed the “marriage pledge” of an evangelical group in Iowa opposing same-sex marriage and abortion and vowed fidelity to Callista. Hasn’t he taken that vow and broken it twice before?

Sometimes you go with “Future Shock.” Sometimes you go with present schlock.

It is absolutely pathetic that this wretch from the past is considered by 40% of the Republicans to be the "leader" of the future. I think back to America of the 1960s and wonder how that country has gone so badly off track. In the 1960s the US was rising to challenges with hopeful policies like breaking Jim Crow racism and setting a mission to the moon. Sure, there had been bumpy stretches like McCarthyism in the 1950s and the idiocy of the Vietnam war in the 1960s, but generally the US was a positive force for good in the world. Now it is the last remaining of the two evil empires of the Cold War and it is in fast decline. It is like a muttering senile relative puttering around making of mess of everything. Tragic.

Growing American Inequality

2011-12-15T23:24:00.001-08:00

Here is a bit from an article by MIT economist Daron Acemoglu on the growing inequality in the US:

Inequality is in the news a lot right now. How should we be thinking about it and trying to get our heads around it?

Inequality is one of the things that has changed quite a lot in the United States and other economies over the last three decades or so. A lot of things don’t change radically, but inequality has. Understanding why that has happened and what it implies for our society is important. So it’s a good thing that it’s in the news, it’s an important topic and there is no reason for it to be taboo. Having said that, there is no broad consensus among social scientists about how to talk about inequality, and the average economist probably thinks about it very differently than the average layman. I’m not saying one is right and one is wrong, but the conversation needs to be expanded to bring these different viewpoints to the table.

What’s the economist’s view?

The default position of economists is that inequality reflects the unequal human capital or productive capabilities of different workers. If you start with that premise – that what people earn is commensurate with their contribution to their employer, and also perhaps to society – then greater inequality tells you something about how people’s productivities have evolved over time. This is by no means what every economist believes, but it’s a common view. Economists have cut their teeth on inequality by looking at things like the increase in the college premium over the last 30 years in the US and other economies, as well as the increase in the gap between relatively high earners – the 90th percentile of income distribution – versus the bottom 10th percentile. We’ve seen a big increase in inequality, measured in various ways, and this reflects the fact that the top people, the more educated, high earners have become more skilled. Technology has favoured them, globalisation has favoured them, and inequality has increased for that reason.

So if a CEO is earning $5 million a year, that’s because he deserves that $5 million?

That’s why I put emphasis on the 90th versus the 10th percentile, because once you get to that very high level, the story becomes a little harder to swallow. Economists have, for the most part, not focused on the CEOs for two reasons. This is changing, but one reason is that most of the publicly available data sources don’t have information on CEOs. That’s because there are not that many CEOs, or multimillionaires. So when you take a sample – for example, a 1% sample of all the US households – you’re not going to get many of them. Secondly, data are top coded. You don’t actually see people’s exact earnings. You see that they are at the very top, which might be $250,000, but you don’t see if they’re making $25 million. For that reason, a lot of the labour economics literature has focused on things like, do people with college degrees earn more than high school graduates? Do postgraduates earn more? What has happened to earnings inequality among lawyers or doctors or among production workers?

...

In terms of the actual figures, how bad is inequality in the US and, say, the UK?

Based on the work of Thomas Piketty and Emmanuel Saez, if you look from the 1950s up to the end of the 1970s, the share of total national income in the US earned by the richest 1% was about 10%. If you look at the 2000s, it’s well over 20%. It rose up to nearly 25% and then came down. In the UK it’s at about 15%, up from 7% or so. The trend towards inequality over the last 50 years has been very similar in the Anglo-Saxon economies, though it’s important to say that it’s not just an Anglo-Saxon phenomenon. There are similar trends in many economies, though there are a few that haven’t experienced it to any notable extent.

...

That’s what’s interesting about Occupy Wall Street. Its supporters aren’t just crazy lefties who don’t believe in free markets, but respected economists.

I’m definitely in that camp. I do believe in markets. I passionately believe in the importance of property rights and private property. I think they are absolute sine qua nons for prosperity. But I also believe that these things are very political and the politics shouldn’t be one-sided. Gore Vidal said, “The United States has only one party – the property party. It’s the party of big corporations, the party of money. It has two right wings; one is Democrat and the other is Republican.” If that is true, that’s a real threat to a free market and a fair society. For that reason I think Occupy Wall Street is very important. It’s a grassroots movement that tries to stand up to this tendency of our political system.

Go read the whole article.

The growing inequality is creating class warfare and will lead to the US becoming a banana republic.

The 2012 Fight

2011-12-15T10:22:00.001-08:00

Here is Robert Reich laying out the basis for a real political fight in the 2012 US Presidential campaign:

I'm pessimistic because in 2008 Obama ran on a platform of real change and then gave the US 4 more years of watered down Bush policies of war, tax cuts for the rich, and a focus on deficits. He should have fought for a real stimulus, for public works programs to reduce unemployment, and for mortgage relief. Of the promises he made, he lived up to very few. Instead he surprised the American people with a pro-Wall Street, pro-rich guy, pro-corporation, business-as-usual in Washington. Now he wants people to believe that he has "changed". I don't think so.

But sadly, the other choice is far worse. A crazed right wing nut from the fundamentalist Christian and Libertarian minorities that hunger to set the agenda for the vast majority. That would be letting the inmates run the asylum.

Social Protest

2011-12-15T08:16:00.000-08:00

Here is a good overview of the protests that are shaking the world and a prediction of more to come. The interview is with Gerald Celente.

My favourite phrase:

When the money on the top stops flowing down to the man on the street, the blood starts flowing in the streets.

While I don't agree with his specific "predictions" (he is no better than most other prognosticators), I do think he has the zeitgeist of the time correct: we are in an era of social upheaval because of a failing economic system with the root cause being a growing economic inequality and a growing marginalization of the bottom 50%.

Physics

2011-12-15T08:09:00.000-08:00

This is a wonderful demonstration of how a simple physical setup following a very simple rule can create marvelously complex action:

For the details of the underlying physics, read this.

Who Rules (and Owns) America

2011-12-15T07:50:00.000-08:00

There is a nice graphic in the article that helps you visualize the unfair concentration of political power.

The graphic is taken from an article by the Sunlight Foundation on political spending in the US:

If you think wealth is concentrated in the United States, just wait till you look at the data on campaign spending.

In the 2010 election cycle, 26,783 individuals (or slightly less than one in ten thousand Americans) each contributed more than $10,000 to federal political campaigns. Combined, these donors spent $774 million. That's 24.3% of the total from individuals to politicians, parties, PACs, and independent expenditure groups. Together, they would fill only two-thirds of the 41,222 seats at Nationals Park the baseball field two miles from the U.S. Capitol. When it comes to politics, they are The One Percent of the One Percent.

A Sunlight Foundation examination of data from the Federal Election Commission and the Center for Responsive Politics reveals a growing dependence of candidates and political parties on the One Percent of the One Percent, resulting in a political system that could be disproportionately influenced by donors in a handful of wealthy enclaves. Our examination also shows that some of the heaviest hitters in the 2010 cycle were ideological givers, suggesting that the influence of the One Percent of the One Percent on federal elections may be one of the obstacles to compromise in Washington.

The One Percent of the One Percent are not average Americans. Overwhelmingly, they are corporate executives, investors, lobbyists, and lawyers. A good number appear to be highly ideological. They give to multiple candidates and to parties and independent issue groups. They tend to cluster in a limited number of metropolitan zip codes, especially in New York, Washington, Chicago, and Los Angeles.

In the 2010 election cycle, the average One Percent of One Percenter spent $28,913, more than the median individual income of $26,364

At the top of this elite group are individuals such as Bob Perry, CEO of Perry Homes, who gave $7.3 million to Karl Rove’s American Crossroads in 2010 and $4.4 million to Swift Vets and POWs for Truth in 2004, and Wayne Hughes, owner and chairman of Public Storage Inc., who gave $3.25 million to American Crossroads in 2010, and Fred Eshelman, CEO of Pharmaceutical Product Development who spent $3 million in 2010 on his own group, RightChange. Sunlight’s Ryan Sibley writes more about the top donors here.

Go read the original to get more details and access the embedded links.

The US Supreme Court has stated that corporations as "persons" and their money speaks a lot louder than the bottom 99.99%. You are "free" in America to have a "voice" but if you can't cough up $30,000 in political campaigns, your voice is lost in the noise. To are effectively mute.

How to Buy and Election

2011-12-14T18:24:00.000-08:00

Here is a bit from an article in Salon.com on the source of campaign finance money in the US:

The hidden infrastructure of the 2012 campaign has already been built.

A handful of so-called Super PACs, enabled to collect unlimited donations by the continued erosion of campaign finance regulations, are expected to rival the official campaign organizations in importance this election. In many cases, these groups are acting essentially as outside arms of the campaigns.

These are America’s best-funded political factions, their war chests filled by some of the richest men (and almost all are men) in the country.

More than 80 percent of giving to Super PACs so far has come from just 58 donors, according to the Center for Responsive Politics analysis of the latest data, which covers the first half of 2011. The Republican groups have raised $17.6 million and the Democratic groups $7.6 million. Those numbers will balloon, with American Crossroads, the main Republican Super PAC, aiming to raise $240 million.)

If you want the names named, go read the whole article.

The US is sliding into "banana republic" status because the politics and the judicial branch have been bought off with the idea that "corporations are people" with "rights" to "speech". The joke is that corporations have no limit on their donations, but real breathing humans do have a limit. And of course, the Supreme Court has decided that the ultra-rich can set up Super-Pacs to allow them to use big dollar amounts to skew elections to favour the ultra-rich.

Ideal Tax Law from the Political Right

2011-12-13T15:07:00.000-08:00

Here is a post by Paul Krugman on his NY Times blog that captures the intent of the political right to makes sure that the middle class carries the burden of taxation:

Gingrich-Helmsley 2012

From the Tax Policy Center, the Gingrich tax plan:

Click to Enlarge
Also, it would add $1.3 trillion to the annual deficit compared with current law.

For those too young to remember, Leona Helmsley famously declared that only the little people pay taxes.

So much for the theory of progressive taxation, i.e. those who are able, pay more while the poor are given a break.

Stiglitz on the Great Recession

2011-12-12T19:08:00.000-08:00

Here is a bit from an article in Vanity Fair by Nobel prizing-winning economist Joseph Stiglitz looking at the similarity between now and the 1930s. It is dismal reading:

The trauma we’re experiencing right now resembles the trauma we experienced 80 years ago, during the Great Depression, and it has been brought on by an analogous set of circumstances. Then, as now, we faced a breakdown of the banking system. But then, as now, the breakdown of the banking system was in part a consequence of deeper problems. Even if we correctly respond to the trauma—the failures of the financial sector—it will take a decade or more to achieve full recovery. Under the best of conditions, we will endure a Long Slump. If we respond incorrectly, as we have been, the Long Slump will last even longer, and the parallel with the Depression will take on a tragic new dimension.

Until now, the Depression was the last time in American history that unemployment exceeded 8 percent four years after the onset of recession. And never in the last 60 years has economic output been barely greater, four years after a recession, than it was before the recession started. The percentage of the civilian population at work has fallen by twice as much as in any post-World War II downturn. Not surprisingly, economists have begun to reflect on the similarities and differences between our Long Slump and the Great Depression. Extracting the right lessons is not easy.

...

The argument has been made that the Fed caused the Depression by tightening money, and if only the Fed back then had increased the money supply—in other words, had done what the Fed has done today—a full-blown Depression would likely have been averted. In economics, it’s difficult to test hypotheses with controlled experiments of the kind the hard sciences can conduct. But the inability of the monetary expansion to counteract this current recession should forever lay to rest the idea that monetary policy was the prime culprit in the 1930s. The problem today, as it was then, is something else. The problem today is the so-called real economy. It’s a problem rooted in the kinds of jobs we have, the kind we need, and the kind we’re losing, and rooted as well in the kind of workers we want and the kind we don’t know what to do with. The real economy has been in a state of wrenching transition for decades, and its dislocations have never been squarely faced. A crisis of the real economy lies behind the Long Slump, just as it lay behind the Great Depression.

For the past several years, Bruce Greenwald and I have been engaged in research on an alternative theory of the Depression—and an alternative analysis of what is ailing the economy today. This explanation sees the financial crisis of the 1930s as a consequence not so much of a financial implosion but of the economy’s underlying weakness. The breakdown of the banking system didn’t culminate until 1933, long after the Depression began and long after unemployment had started to soar. By 1931 unemployment was already around 16 percent, and it reached 23 percent in 1932. Shantytown “Hoovervilles” were springing up everywhere. The underlying cause was a structural change in the real economy: the widespread decline in agricultural prices and incomes, caused by what is ordinarily a “good thing”—greater productivity.

At the beginning of the Depression, more than a fifth of all Americans worked on farms. Between 1929 and 1932, these people saw their incomes cut by somewhere between one-third and two-thirds, compounding problems that farmers had faced for years. Agriculture had been a victim of its own success. In 1900, it took a large portion of the U.S. population to produce enough food for the country as a whole. Then came a revolution in agriculture that would gain pace throughout the century—better seeds, better fertilizer, better farming practices, along with widespread mechanization. Today, 2 percent of Americans produce more food than we can consume.

What this transition meant, however, is that jobs and livelihoods on the farm were being destroyed. Because of accelerating productivity, output was increasing faster than demand, and prices fell sharply. It was this, more than anything else, that led to rapidly declining incomes. Farmers then (like workers now) borrowed heavily to sustain living standards and production. Because neither the farmers nor their bankers anticipated the steepness of the price declines, a credit crunch quickly ensued. Farmers simply couldn’t pay back what they owed. The financial sector was swept into the vortex of declining farm incomes.

The cities weren’t spared—far from it. As rural incomes fell, farmers had less and less money to buy goods produced in factories. Manufacturers had to lay off workers, which further diminished demand for agricultural produce, driving down prices even more. Before long, this vicious circle affected the entire national economy.

The value of assets (such as homes) often declines when incomes do. Farmers got trapped in their declining sector and in their depressed locales. Diminished income and wealth made migration to the cities more difficult; high urban unemployment made migration less attractive. Throughout the 1930s, in spite of the massive drop in farm income, there was little overall out-migration. Meanwhile, the farmers continued to produce, sometimes working even harder to make up for lower prices. Individually, that made sense; collectively, it didn’t, as any increased output kept forcing prices down.

Given the magnitude of the decline in farm income, it’s no wonder that the New Deal itself could not bring the country out of crisis. The programs were too small, and many were soon abandoned. By 1937, F.D.R., giving way to the deficit hawks, had cut back on stimulus efforts—a disastrous error. Meanwhile, hard-pressed states and localities were being forced to let employees go, just as they are now. The banking crisis undoubtedly compounded all these problems, and extended and deepened the downturn. But any analysis of financial disruption has to begin with what started off the chain reaction.

...

The parallels between the story of the origin of the Great Depression and that of our Long Slump are strong. Back then we were moving from agriculture to manufacturing. Today we are moving from manufacturing to a service economy. The decline in manufacturing jobs has been dramatic—from about a third of the workforce 60 years ago to less than a tenth of it today. The pace has quickened markedly during the past decade. There are two reasons for the decline. One is greater productivity—the same dynamic that revolutionized agriculture and forced a majority of American farmers to look for work elsewhere. The other is globalization, which has sent millions of jobs overseas, to low-wage countries or those that have been investing more in infrastructure or technology. (As Greenwald has pointed out, most of the job loss in the 1990s was related to productivity increases, not to globalization.) Whatever the specific cause, the inevitable result is precisely the same as it was 80 years ago: a decline in income and jobs. The millions of jobless former factory workers once employed in cities such as Youngstown and Birmingham and Gary and Detroit are the modern-day equivalent of the Depression’s doomed farmers.

...

Can we actually bring ourselves to do this, in the absence of mobilization for global war? Maybe not. The good news (in a sense) is that the United States has under-invested in infrastructure, technology, and education for decades, so the return on additional investment is high, while the cost of capital is at an unprecedented low. If we borrow today to finance high-return investments, our debt-to-G.D.P. ratio—the usual measure of debt sustainability—will be markedly improved. If we simultaneously increased taxes—for instance, on the top 1 percent of all households, measured by income—our debt sustainability would be improved even more.

The private sector by itself won’t, and can’t, undertake structural transformation of the magnitude needed—even if the Fed were to keep interest rates at zero for years to come. The only way it will happen is through a government stimulus designed not to preserve the old economy but to focus instead on creating a new one. We have to transition out of manufacturing and into services that people want—into productive activities that increase living standards, not those that increase risk and inequality. To that end, there are many high-return investments we can make. Education is a crucial one—a highly educated population is a fundamental driver of economic growth. Support is needed for basic research. Government investment in earlier decades—for instance, to develop the Internet and biotechnology—helped fuel economic growth. Without investment in basic research, what will fuel the next spurt of innovation?

...

Americans in general are coming to understand what has happened. Protesters around the country, galvanized by the Occupy Wall Street movement, already know.

Shocking that greater productivity can cause an economic disaster. It should mean more goodies for everyone. But if you can't organize economic life in a way that everybody gets a fair share and decent opportunity, you are asking for a broken system that collapses around you. The Republicans and Democrats fail to address the fundamental problems of the current situation. Obama, the great hope of 2008, has been a complete bust, a flailing, useless, clueless fool who self-satisfiedly claimed he had done a "just right" stimulus as the economy flat-lined.

These are historic times and they require radical solutions under a leader of vision. Sadly the US has the oddly impassive Obama and the clearly incompetent and clueless Republican presidential candidates as the possible leaders after 2012. This says only one thing: the future will be incredibly bleak. There is a desperate need for a visionary leader with an understanding of economics and instead the US is stuck with buffoons and timid pretenders.

New and Improved "Enhanced Policing" Techniques

2011-12-12T13:10:00.000-08:00

Here is yet another Occupy demonstration where the police get aggressive...

The good news is that the police busy themselves ripping and shredding paper hearts instead of clubbing heads and pepper spraying demonstrators. I guess this is the new and improved "enhanced policing" to deal with outbreaks of democratic protests.

At least these isn't the Bush/Cheney "enhanced" interrogation techniques. There is some hope for the future.

Republican Politics

2011-12-12T12:32:00.000-08:00

I love the scorched earth warfare that has broken out between the Republican presidential contenders. Here is a bit from a post by Robert Reich on his blog:

Remarkably, the frontrunners for the Republican nomination for president seem to agree. At least, that’s the clear implication from what they’ve said today.

During a morning appearance on Fox News, Mitt Romney said Newt Gingrich should return the $1.6 million in payments he received from mortgage financial giant Freddy Mac.

Gingrich has tried to defend himself by saying Freddy paid him as a “historian,” but anyone with half a brain knows Freddy wasn’t interested in history. It coughed up the money because they wanted Newt to influence his former House colleagues, so they wouldn’t take steps to reduce Freddy’s financial risk or reach.

In effect, Romney is taking a swipe not only at Gingrich but at the well-oiled revolving door linking financial giants to former congressional leaders, Treasury officials, and their staffs. That revolving door is one of the reasons the Street and its auxiliaries (like Fannie and Freddie) took the risks that caused the financial crisis, and have still never paid the price.

What’s Gingrich’s response? He said this morning ”if Governor Romney would like to give back all the money he’s earned from bankrupting companies and laying off employees over his years at Bain than I would be glad to then listen to him.”

Newt is criticizing not only Romney but also the pump and dump practices of Wall Street that have caused hundreds of thousands of Americans to lose their jobs, put countless companies in jeopardy, and earned a fortune for private-equity managers and others.

If this goes on much longer, the Mitt and Newt Show will get a slot on MSNBC.

Hopefully this trench warfare between the behemoths will let the rank-and-file Republicans come to realize that they have been sold a bill of goods by their leaders, that their conservative "principles" are no more than a sellout to ultra-rich interests and have nothing to do with classic conservative politics. I can respect true conservatism, but I utterly loathe the deceitful misrepresentation of "principle" by all the political leaders of the current Republican party.

Failure at the Top and Failing to Admit It

2011-12-12T09:03:00.000-08:00

Paul Krugman nails the incompetence of the political right with its continued misdiagnosis of the economy and the ever continuing attempt to administer noxious nostrums to "fix" the economy. From his NY Times blog:

Hmm. I was looking at the Thomson Reuters/Jefferies commodity price index, which has been trending down since the spring:

Click to Enlarge
And I found myself thinking about the hearing last February in which Paul Ryan accused Ben Bernanke of debasing the currency, using rising commodity prices to argue that dangerous inflation lurked just around the corner.

So, will Ryan demand more expansionary policies from the Fed given the sharp fall in commodity prices this year?

Truly, it is amazing how our political landscape continues to be dominated by people who have been wrong about everything for years.

There will never be an admission from the political right that they are wrong. Just as the political right plotted and maneuvered during the 1930s to "fix" the ailing Germany politics and economics, the present day right is painting us into a corner. Read Krugman's NY Times op-ed to understand the implications of these failings.

Speaking the Truth

2011-12-12T08:53:00.000-08:00

Here is a post by Dean Baker on his Beat The Press blog:

President Obama Wants Credit for Avoiding a Great Depression: Where Is the Ridicule?

In its top of the hour news segment NPR reported that President Obama hoped that voters would give him credit for avoiding a second Great Depression. If this is an accurate representation of what President Obama said then it should have devoted a segment to economists ridiculing the president for trying to set an unbelievably low bar for measuring the success of his economic policy.

The first Great Depression was the result of a decade of inadequate policy responses. The massive spending associated with World War II that eventually got us out of the Great Depression could have been undertaken a decade sooner, if there had been political will.

There was nothing about the financial crisis at the beginning of President Obama's term that could have condemned the country to decade of double-digit unemployment. This only could have happened if Congress failed to respond adequately to a financial collapse.

The above should be supplemented by reading Paul Krugman's comments on the fate of democracy given the current depression.

Understanding the Bank Bailouts

2011-12-12T06:36:00.000-08:00

Here is one of the best explanations of how to understand the real effects of the bank bailouts, a post by Steve Randy Waldman on the blog The Big Picture:

Yes, Virginia, the banks really were bailed out.

by Guest Author

Steve Randy Waldman writes the blog interfluidity. His take is usually away from the mainstream, and always interesting.

~~~

I find it really depressing that I have to write this. But it seems I have to write it.

Substantially all of the TARP funds advanced to banks have been paid back, with interest and sometimes even with a profit from sales of warrants. Most of the (much larger) extraordinary liquidity facilities advanced by the Fed have also been wound down without credit losses. So there really was no bailout, right? The banks took loans and paid them back.

Bullshit.

Suppose you buy fire insurance from Inflammable Insurance. You pay $1000 for a year of insurance. There is no fire, so you make no claim. Next year, you find a different provider offering a better price, and you switch.

Soon after your relationship has ended, you discover that Inflammable failed to pay any claims at all during the year you were insured, because all customer premiums were diverted to the Cayman Islands and then spent on kiddy porn and Pez. Were you defrauded? Do you have any cause for complaint? After all, ex post your cash flows turned out to be the same as if you had been dealt with fairly.

Of course you have been defrauded. You did not get what you had paid for. You had paid for Inflammable to bear risk on your behalf. It did not do so. The money you paid was simply stolen.

In financial markets, risk-bearing is the ultimate commodity. It is what financial market participants buy and sell. As a financial speculator, I spend exorbitant amounts of money buying out-of-the-money options to limit my downside risk. The vast majority of those options expire worthless, just like the vast majority of fire insurance policies end with no claims paid. If only someone would give me all those options for free, or sell them to me for half the market price, or reimburse the cost of the options that I never end up using, I would be rich. Seriously, given the years I’ve been in this game, I’d be pretty set if I had my option premiums back. It doesn’t seem fair at all that I am confined to a modest middle-class life because I had to buy all this insurance I never used.

Cash is not king in financial markets. Risk is. The government bailed out major banks by assuming the downside risk of major banks when those risks were very large, for minimal compensation. In particular, the government 1) offered regulatory forbearance and tolerated generous valuations; 2) lent to financial institutions at or near risk-free interest rates against sketchy collateral (directly or via guarantee); 3) purchased preferred shares at modest dividend rates under TARP; 4) publicly certified the banks with stress tests and stated “no new Lehmans”. By these actions, the state assumed substantially all of the downside risk of the banking system. The market value of this risk-assumption by the government was more than the entire value of the major banks to their “private shareholders”. On commercial terms, the government paid for and ought to have owned several large banks lock, stock, and barrel. Instead, officials carefully engineered deals to avoid ownership and control.

But still. Everything worked out, right? It turns out that banks didn’t need to use the government’s giant insurance policy. It was just a panic after all!

Bullshit.

Suppose my kid’s meth habit got the best of him. He’s needs to come up with $100K quick or his dealer’s gonna whack him. But he’s a good kid, really! Coulda happened to anyone. So I “lend” him the money, even though he has no visible means of support and the sketchiest loan sharks in town wouldn’t give him the time of day. Now I believe in bootstraps and hard work, individualism and self-reliance. So I tell my son. “Son, you are going to pay me back every penny of that loan. You are going to work it off. I have arranged with one of my golf buddies, a guy who owes me a favor or three, a job that pays $200K a year. You’d better show up every day at 9 a.m. and sit behind that desk, and get me back my money!” And he does! After a year, he’s made me whole. What a good kid.

No bail out, right? He paid me back every penny! Worked it off!

Bullshit. The opportunity I provided him, the $200K job that he would not otherwise received without my intercession was a huge grant. On the open market, if I were to accept bribes from the highest bidder to wangle the job from my friend, that opportunity would be worth more than the $100K advanced. I paid my son’s loan with my own money. I just obscured the cash flows, so my son and I can pretend and sustain our mutual self-regard and our righteous disdain for the moochers and the hippies and the riff-raff.

After assuming the banking system’s downside risk, the US government engineered a wide variety of favorable circumstances that helped banks “earn” their way back to quasi-health. The government provided famous and obvious transfers like paying unwinding AIG swaps at 100¢ on the dollar. It forced short-term yields to zero and created an environment in which medium-term interest rates would be capped for several years, granting banks a near-risk-free arbitrage for a while. It emitted trillions in excess reserves on which it continues to pay interest. It forewent investigations and prosecutions that by law it should actively pursue, and settled what enforcement it could not avoid for token fees. Then there are the things conspiracy theorists and cranks like me suspect but cannot prove: that the government and the Fed have been less than aggressive in minimizing their costs when they or entities they controls (AIG, Fannie, Freddie) transact with large banks, that they have left money on the table where doing so could be hidden in arcane accounts or justified as ordinary transaction expenses and trading losses. Large banks have enjoyed some rather extraordinary results for allegedly efficient markets, quarters with large trading profits and no or very few losing days. Government housing policy is pretty overtly subject to a constraint that interventions must not provoke loss realizations for banks carrying bad loans at inflated values, or interfere with servicing revenues. (If you think I am overconspiratorial, I’m still waiting for an innocent explanation of this, from 1991.)

Pulling back from a shell game whose details are, by design, labyrinthine, check out the big picture. Since the beginning of the 3rd quarter of 2008 (Lehman quarter), US debt held by the public increased by 84%, from $5.28T to $9.75T (as of the end of Q2 2011). Depending on where you start, the growth rate of publicly held US debt prior to Q3 2008 had been ~8% per year (starting in 1970 or 1980) or ~4.5% (starting in 1990 or 2000). The growth rate since Q3-2008 has been 22.6% per year. The United States has issued between $3T and $4T more debt than would have been predicted by any reasonable estimate prior to the financial crisis. So far.

Hyman Minsky famously described crisis stabilization as a two-step process: First, the state/central-bank steps in as lender of last resort to halt the panic. Then the state must underwrite a program of massive deficit spending in order to “validate” — Minsky’s word — the fragile capital structures and the “innovative” business practices that proliferate during periods of tranquility.

Translating into current buzzwords, when the trouble begins there is a solvency crisis. It is converted into a liquidity crisis ex post by a firehose of net spending by the state. The current crisis has followed Minsky’s script perfectly. Banks’ ability to “pay back” bailouts has depended upon continued regulatory forbearance, tacit expectations of support if shit hits the fan again, and massive government debt issuance which resuscitated assets that would otherwise be worthless.

But who has lost anything from the bailouts? Wasn’t it a win-win? This all sounds very abstract. Where are the transfers?

If the government borrowed or printed a trillion dollars and gave the money to me, would there be any losers? If you don’t think there has been a wealth transfer, if you don’t think ordinary people have lost, please call your Congressperson and ask her to cut me a trillion dollar check. In some abstract sense, this policy of giving me money would push government debt higher. But that is so very vague a cost! I promise I’d do great things with a trillion dollars. My ideas are so much cooler than Goldman Sachs’, despite all the wholesome commercials they are running.

During the run-up to the financial crisis, bank managers, shareholders, and creditors paid themselves hundreds of billions of dollars in dividends, buybacks, bonuses and interest. Had the state intervened less generously, a substantial fraction of those payouts might have been recovered (albeit from different cohorts of stakeholders, as many recipients of past payouts had already taken their money and ran). The market cap of the 19 TARP banks that received more than a billion dollars in assistance is about 550B dollars today (even after several of those banks’ share prices have collapsed over fears of Eurocontagion). The uninsured debt of those banks is and was a large multiple of their market caps. Had the government resolved the weakest of those banks, writing off equity and haircutting creditors, had it insisted on retaining upside commensurate with the fraction of risk it was bearing on behalf of stronger banks, the taxpayer savings would have run from hundreds of billions to a trillion dollars. We can get into all kinds of arguments over what would have been practical and legal. Regardless of whether the government could or could not have abstained from making the transfers that it made, it did make huge transfers. Bank stakeholders retain hundreds of billions of dollars against taxpayer losses of the same, relative to any scenario in which the government received remotely adequate compensation first for the risk it assumed, and then for quietly moving Heaven and Earth to obscure and (partially) neutralize that risk.

The banks were bailed out. Big time.

When Obama initially took power and said that he wasn't going to "look back" and only "look forward", i.e. not pursue criminal charges against the Bush administration (or Wall Street). I was happy to go along because I thought Obama would have the guts and drive to set the economy right and help out the suffering populace. But over the past 3 years I've watched as Obama has done half measures, failed to do the substantive hard work to help the broad population while shielding the wrong doers, I've lost patience. Obama is a huge disappointment. He has failed the American people. It is time to get tough on the criminals in the Bush administration and on Wall Street. A thorough house cleaning is needed. Real change must come to America!

Krugman Calls the Depression

2011-12-12T05:11:00.001-08:00

Here is a bit from an excellent op-ed by Paul Krugman in the NY Times:

It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege.

On that last point, I am not being alarmist. On the political as on the economic front it’s important not to fall into the “not as bad as” trap. High unemployment isn’t O.K. just because it hasn’t hit 1933 levels; ominous political trends shouldn’t be dismissed just because there’s no Hitler in sight.

Let’s talk, in particular, about what’s happening in Europe — not because all is well with America, but because the gravity of European political developments isn’t widely understood.

Go read the whole article. It will give you a picture of Europe that you are not getting from the mainstream media.

The 1930s should be an object lesson for those who think they can write off 10% or 20% of the population during a financial downturn. Letting the government turn its back and refuse to aid these people and, worse, to refuse to stimulate the economy into a robust recovery condemns that country to a rise of right wing demagogues.

Krugman is sending out a clarion call for a change of course by democracies to save themselves from their own funeral:

Nobody familiar with Europe’s history can look at this resurgence of hostility without feeling a shiver. Yet there may be worse things happening.

Right-wing populists are on the rise from Austria, where the Freedom Party (whose leader used to have neo-Nazi connections) runs neck-and-neck in the polls with established parties, to Finland, where the anti-immigrant True Finns party had a strong electoral showing last April. And these are rich countries whose economies have held up fairly well. Matters look even more ominous in the poorer nations of Central and Eastern Europe.

Last month the European Bank for Reconstruction and Development documented a sharp drop in public support for democracy in the “new E.U.” countries, the nations that joined the European Union after the fall of the Berlin Wall. Not surprisingly, the loss of faith in democracy has been greatest in the countries that suffered the deepest economic slumps.

And in at least one nation, Hungary, democratic institutions are being undermined as we speak.

One of Hungary’s major parties, Jobbik, is a nightmare out of the 1930s: it’s anti-Roma (Gypsy), it’s anti-Semitic, and it even had a paramilitary arm. But the immediate threat comes from Fidesz, the governing center-right party.

...

Kim Lane Scheppele, who is the director of Princeton’s Law and Public Affairs program — and has been following the Hungarian situation closely — tells me that Fidesz is relying on overlapping measures to suppress opposition. A proposed election law creates gerrymandered districts designed to make it almost impossible for other parties to form a government; judicial independence has been compromised, and the courts packed with party loyalists; state-run media have been converted into party organs, and there’s a crackdown on independent media; and a proposed constitutional addendum would effectively criminalize the leading leftist party.

Taken together, all this amounts to the re-establishment of authoritarian rule, under a paper-thin veneer of democracy, in the heart of Europe. And it’s a sample of what may happen much more widely if this depression continues.

...

The European Union missed the chance to head off the power grab at the start — in part because the new Constitution was rammed through while Hungary held the Union’s rotating presidency. It will be much harder to reverse the slide now. Yet Europe’s leaders had better try, or risk losing everything they stand for.

And they also need to rethink their failing economic policies. If they don’t, there will be more backsliding on democracy — and the breakup of the euro may be the least of their worries.

I thought political leaders were "too smart" to let another depression occur. I was wrong. I didn't even consider that the democracies would reprise the horror of the 1930s and allow fascist dictatorships to rise yet again. But it looks like I was far too naive. The idiocy of political leaders plumbs a depth that I stupidly just couldn't believe was possible. Incredible!

For a peek at Krugman's premonitions about the United States, read this.

The Mechanics of Class Warfare

2011-12-11T15:23:00.001-08:00

First, a bit of humour:

“Give a man a gun and he can rob a bank. Give a man a bank and he can rob the world.”

Next, here is a bit from an article on how right wing political "consultant" Frank Luntz is advising his clients with techniques to deflect the Occupy Wall Street crowd's message of the 99% versus the 1%:

... here’s how Luntz’s 10-strategy playbook should be annotated for the Super Rich who are the real powers behind Luntz’s political clients.

We began with what Yahoo News reporter Chris Moody heard Luntz tell the 29 governors about how to “fight back by changing the way they discuss the movement.” My re-edits shift the focus to the real problem, the growing economic class war between the Super Rich and the 99%. Hopefully to improve the dialogue. Listen:

1. Capitalism is a bad word, don’t say it

Luntz admits: “I’m trying to get that word removed and we’re replacing it with either ‘economic freedom’ or ‘free market’.” He admits the public “prefers capitalism to socialism, but they think capitalism is immoral.” But don’t mention “capitalism?” Impossible: Capitalism is in the genes of these conservative governors. Has been since Adam Smith, the “Wealth of Nations” and 1776.

Deny capitalism exists? They’ll sound hypocritical to both occupiers and their base.

2. Taxing the rich is bad. Say government’s taking from the rich

Clever, say “taking” not “taxing.” This word play will backfire: Luntz admits “If you talk about raising taxes on the rich,” polls show most voters want to tax millionaires. So shift the focus: Say government’s “taking the money from hard-working Americans?”

Luntz is too clever with his Words That Work. He’s also ignoring the fact that billionaires like Buffett, the new Patriotic Millionaires and others see a need for new tax revenues to feed the recovery.

3. Never say middle class: Call them hard-working taxpayers

Luntz admits that most Americans know the governors are not defending the middle class. He also knows polls show most Americans don’t trust the Republicans to fight for the middle class. But the advantage shifts when the buzzwords become “defending hard-working taxpayers.”

Warning: New buzzwords without new policies will ring hollow to many occupiers who are unemployed, lost benefits, lack job prospects or can’t find a new job for their training.

4. Stop talking about jobs, instead talk about careers

Luntz apparently has a very low opinion of the intelligence of occupiers. Folks, the word jobs just is not going away because of our 16% rate of underemployment. And yet Luntz asked his audience: “Everyone in this room talks about jobs,” but who wants a job? Raise your hands, he asked. “Few hands went up.”

But then “he asked ‘who wants a career?’ Almost every hand was raised. So why are we talking about jobs?” I wonder how many of the 99% laughed at that cruel joke. It really is “the economy stupid.” We really need jobs.

5. Never say government spending, it’s government waste

Luntz’s polling apparently tells him that most Americans are not against government spending, on them. But call it government waste, because that “makes people angry.”

6. Compromise is bad. Never admit you’re willing to compromise

The “no-new-taxes” pledge is a must for these 29 governors. Luntz warns: “If you talk about ‘compromise,’ they’ll say you’re selling out.” Your base “doesn’t want you to ‘compromise … replace it with ‘cooperation.’ It means the same thing. But cooperation means you stick to your principles but still get the job done. Compromise says that you’re selling out those principles.”

Unfortunately, the public, especially the 99%, see past the jargon into today’s economic reality, and an “unprincipled” failure to “cooperate.”

7. Tell occupiers, ‘I get it, you’re angry, we’ll fix it.’ Sound sincere

Luntz definitely has chutzpa: “Here are three words for you all: ‘I get it.’ … ‘I get that you’re angry. I get that you’ve seen inequality. I get that you want to fix the system.’” Then, he instructed, “offer Republican solutions to the problem.” What, more solutions? Better ones? Different from the solutions the 99-percenters believe are the problem?

Warning: America’s problem is not about politics. Not Republican political solutions. Nor Democrat. Too self-destructive. No, this is not about politics. This is a class war, a new American Revolution. Luntz’s sweet talk won’t convince governors. Nor their base. Nor the OWS who’ve been conned too often. So please get it. The 99% will smell the insincerity.

8. Entrepreneur or innovator are bad words, say job creator

From a purely behavioral economic standpoint this one is guaranteed to have unintended consequences and backfire. America’s global competitive thrust is driven by innovators and entrepreneurs. Imagine telling Silicon Valley they’re now just “small-business owners” and “job creators.” That’s guaranteed to make them wonder if these 29 states actually support America’s desperately needed “innovation” and “entrepreneurship.”

9. Never ask anyone to sacrifice, especially not millionaires

Luntz admits that “there isn’t an American today … who doesn’t think they’ve already sacrificed. If you tell them you want them to ‘sacrifice,’ they’re going to be pretty angry at you.” Solution? Luntz says “talk about how ‘we’re all in this together.’ We either succeed together or we fail together.”

Afterwards? Once back home in their states, see who still gets the tax breaks … who’s forced to make concessions … who’s still “sacrificing” in a world of politicians who signed that “no-new-taxes-for-the-rich” pledge.

10. Blame Washington, and never take responsibility

No, Luntz does not get the OWS movement yet. These guys are natural enemies. Governors are also in a class war with occupiers. Yet Luntz tells them to tell the 99-Percenters: “You shouldn’t be occupying Wall Street, you should be occupying Washington … occupy the White House because it’s the policies over the past few years that have created this problem.”

Warning, the 99% have long memories, they recall the Bush years, the massive war spending. They remember the 2008 meltdown. They see Wall Street greed unabated, their spending hundreds of millions fighting reforms. They know this is not about politics.

America is in a class war, the Super Rich versus the 99%. And the occupiers are not going away, vanishing into the cold winter nights. They’re already planning their version of an Arab Spring in 2012.

Finally, a little bonus … never, never say bonus!

Luntz also warned his state governors not to use the word bonus if they give staffers any extra money this holiday season. Why? The rest of America is sacrificing. “If you give out a bonus at a time of financial hardship, you’re going to make people angry.” Reframe your bonuses, call them “pay for performance.”

Yes, Luntz remains one of the greatest behavioral economists ever. He could rewire, debug and reprogram individual and collective brains with just a few verbal flip-flops.

Here is the Wikipedia background on Frank Luntz.

Sadly rhetoric can sway. Demagogues use words to bend people to their will. Without an awareness of the cynical lies used to manipulate people, democracy can be crushed. Think 1933 with the ascension of Hitler, the crushing of democracy, and the unleashing of the horrors of the Nazis.

If you don't believe, then seeing is believing. Here is a picture of the rising Jobbik party in Hungary (more info here in a Der Spiegel article):

Click to Enlarge
The maxim of George Santayana still applies:

Those who cannot remember the past are condemned to repeat it.

Similarly, those who fail to understand demagogues and "political spin" are condemned to destroy democracy.

Financial Magic

2011-12-11T09:28:00.000-08:00

Magic can work. Here is a bit from Paul Krugman on the strategy of "inflating your way to prosperity". From his NY Times blog:

One thing I often see in comments is people attributing to me, or to others, the notion that you can inflate your way to prosperity — which is presented as self-evidently absurd.

Well, if you think that it’s self-evidently absurd, you’ve been listening to the wrong people.

Nobody thinks that an economy operating somewhere near full employment can inflate its way to higher output. But under depression conditions — which is what we have now — inflation is very much a positive thing.

Here’s a quick example from Eichengreen and Sachs showing changes in the gold value of currencies 1929-35 versus changes in industrial production; the devaluation of currencies against gold was closely related to the changes in their overall price level:

Click to Enlarge
Yep, countries were able to inflate their way to prosperity. And you get an immediate failing grade if you start ranting about Zimbabwe or Weimar.

If you have ever seen a magician do sleight of hand, it looks impossible. But the magic works. He does a real illusion by manipulating weaknesses in our psychology. To ignore the power of placebos or magic by being an economic "fundamentalist" is as nutty as being a religious fundamentalist. In the real world you should seize and use whatever real effects that are out there. Even if they are "magic" and depend on strange attributes of humans and their psychological make-up.

Dowd on Obama vs. Gingrich

2011-12-11T07:53:00.000-08:00

Here is Maureen Dowd in a NY Times op-ed giving her usual lyrical treatment of the two main contenders to run America:

A match between Gingrich and Obama would be fascinating: two men who grew up without their hot-tempered, hard-drinking fathers, vying to be the nation’s patriarch.

The Drama Queen versus No Drama Obama. The apocalyptic prophet versus the ambiguous president.

One hot, one cold. One struggles to stop setting fires as the other struggles to get fiery. One who’s always veering out of control, one who’s too tightly controlled. One reining it in, one letting it rip. One tamping down his pugilistic side, the other ramping it up. One channeling Ronald Reagan to seem more genial; the other channeling Harry Truman to have more spine.

One pretending to be a populist when he can’t drag himself out of Tiffany’s; the other pretending to be a populist when he’d like to be at Davos with Jamie Dimon.

Obama is a foul-weather populist and Gingrich is a fair-weather normal guy. Neither is a convincing populist for the 99 percent who crave one, but it would be fun to watch the Hand Grenade take on Cool Hand Luke.

Whereas Obama usually faded away on stage during his primary debates in 2008, Gingrich revived a fading campaign this fall with his confident debate performances against pitiful foes.

Where Gingrich is vesuvian, Obama is spartan. Gingrich spewed a lot of ideas but often lacked the discipline to see them through. Obama has plenty of discipline, but some plans come a cropper because he gives away too much too early to the other side and delegates too much to Congress.

Like Obama, Gingrich loves to give seminars. But Gingrich, unlike Obama, has a talent for the visceral. Often, however, his rhetoric goes off a cliff.

It is tragic that America will be given a choice between two incompetents. There is need for real leadership with a grand vision to pull America out of the muck of the Great Recession. But these two clowns aren't even worthy to kiss the feet of the leader that America needs. Tragic!

Christmas Spirit

2011-12-11T07:42:00.000-08:00

No better way to celebrate the selling season than a little bit of Christmas caroling...

Rational Thinking

2011-12-10T11:23:00.001-08:00

Here is an example of using bayesian reasoning to wriggle between the extremes of ignoring a possible problem and giving oneself over to despair. This is from Tim Harford's blog in which he has allowed "Sophy" to post:

You’re a woman in her early fifties. You’re invited to a breast cancer screening unit, and you go along hoping for the all-clear. After all, 99 per cent of women your age do not have breast cancer. But … the scan is positive. The screening process catches 85 per cent of cancers. There is a chance of a false alarm, though: for 10 per cent of healthy women, the screening process wrongly points to cancer. What are the chances that you have breast cancer?

Over 50,000 British women face this awful question each year. I first encountered it – in a less alarming context – as an undergraduate economist. And I was in the audience recently when David Spiegelhalter used it as an example in his Simonyi Lecture, “Working Out the Odds (With the Help of the Reverend Bayes)”. The numbers approximately reflect the odds faced by women who go for breast cancer screening. And the answer – courtesy of the Reverend Bayes in question, who died 250 years ago – is surprising.

Bayes was concerned with how we should understand the notion of “probability”, and how we should update our beliefs in light of new information.

A Bayesian perspective on the apparently grim screening result tells us that things are not as bad as they seem. The two key pieces of information point in different directions. On the one hand, the positive scan substantially worsens the odds that you have cancer. But on the other, the odds are worsening from an extremely favourable starting point: 99 to 1 against. Even after the positive scan, you still probably don’t have cancer.

Imagine 1,000 women in your situation: 990 do not have cancer, which means we can expect 99 false positives, far more than the 10 women who do have cancer. This is why any apparent sign of cancer should be followed up with further tests in the hope of avoiding unnecessary treatments. The chance that you have cancer is 9 per cent – up dramatically from 1 per cent, but with plenty of room for optimism.

None of this proves screening is pointless. It can save lives, but it raises dilemmas. The UK’s breast cancer screening programme is currently under review. A systematic analysis published by the Cochrane Collaboration found that for every woman who had her life extended by early detection and treatment, there would be 10 courses of unnecessary treatment in healthy women, and more than 200 women would experience distress as the result of a false positive.

Bayesian reasoning has implications far beyond cancer screening, and we are not natural Bayesians. Daniel Kahneman, a psychologist who won the Nobel memorial prize in economics, discusses the issue in a new book, Thinking, Fast and Slow. I recently had the opportunity to quiz him in front of an audience at the Royal Institution in London. Kahneman argues that we often ignore baseline information unless it can somehow be made emotionally salient. New information – “possible cancer” – tends to monopolise our attention.

Another example: if somebody reads the Financial Times, should you conclude that they are more likely to be a quantitative analyst in an investment bank, or a public sector worker? Before you leap to conclusions, remember that there are six million public sector workers in the country. Base rates matter.

Sometimes there is no objective base rate and we must use our own judgment instead. I think homeopathy is absurd on theoretical grounds; others find it intrinsically plausible. Bayesian analysis tells us how to combine those prior beliefs – or prejudices – with whatever new evidence may come along.

Whenever you receive a piece of news that challenges your expectations, it’s tempting either to conclude that everything has changed – or that nothing has. Bayes taught us that there’s a rational path between those two extremes.

The value of mathematics, or logic, and rational thinking is that it gives you tools to work through the muddle of real life. Even models can be useful to provide a guide in a murky area. But the trick is to always realize that these tools are idealizations. The actual world isn't mathematical, logical, rational, or capturable in a model.

A Rationalist in an Irrational World

2011-12-10T11:12:00.001-08:00

Here is poor Paul Krugman taking on his enemies one more time. Sadly, they don't want to listen. Politics in the US is a dialog of the deaf:

Why did I criticize Bush’s deficit-increasing policies, then call for more deficit-increasing policies from Obama?

Part of the answer is the difference in economic conditions. Deficit spending is expansionary when the economy is in a liquidity trap; it does nothing but crowd out other spending when you’re not up against the zero lower bound, and the Fed will just raise rates to offset fiscal expansion.

The other part of the answer is that although the Bushies were happy to use Keynesian arguments to justify their tax cuts, those cuts were all designed to be permanent — that is, they were irresponsible precisely because they weren’t temporary. None of what Obama has done commits that sin: his long-term spending, basically on health reform, is paid for, and everything else, like aid to state and local governments or expansion of unemployment benefits, was both designed to be temporary and has proved temporary in reality.

Ah well — just another day in political Bizzaroworld.

ECRI on the US Economy

2011-12-09T09:32:00.000-08:00

ECRI seems to be the best prognosticator of the economy. This interview of Lakshman Achuthan reveals a serious concern about the direction of the US economy:

Krugman Takes the Gloves Off

2011-12-09T06:46:00.000-08:00

Here is the opening bit of Paul Krugman's latest NY Times op-ed. It is well worth reading the whole thing.

Almost a quarter of a century has passed since the release of the movie “Wall Street,” and the film seems more relevant than ever. The self-righteous screeds of financial tycoons denouncing President Obama all read like variations on Gordon Gekko’s famous “greed is good” speech, while the complaints of Occupy Wall Street sound just like what Gekko says in private: “I create nothing. I own,” he declares at one point; at another, he asks his protégé, “Now you’re not naïve enough to think we’re living in a democracy, are you, buddy?”

Yet, with the benefit of hindsight, we can see that the movie went a little off at the end. It closes with Gekko getting his comeuppance, and justice served thanks to the diligence of the Securities and Exchange Commission. In reality, the financial industry just kept getting more and more powerful, and the regulators were neutered.

And, according to the prediction market Intrade, there’s a 45 percent chance that a real-life Gordon Gekko will be the next Republican presidential nominee.

I am not, of course, the first person to notice the similarity between Mitt Romney’s business career and the fictional exploits of Oliver Stone’s antihero. In fact, the labor-backed group Americans United for Change is using “Romney-Gekko” as the basis for an ad campaign. But there’s an issue here that runs deeper than potshots against Mr. Romney.

It is pathetic that the voting public in the US hasn't seen through the scam of a Republican party running on "family values" when in fact the only value it upholds is Wall Street's "greed is good".

The Great Recession Continues

2011-12-08T12:55:00.000-08:00

Here is a bit from the Federal Reserve's Flow of Funds Summary Statistics for the Third Quarter 2011:

Household net worth—the difference between the value of assets and liabilities—was $57.4 trillion at the end of the third quarter, about $2.4 trillion less than at the end of the previous quarter.

This is nearly 4 years after the start of the current recession and 3 years after it "ended" and the news continues to be dreadful. Obama never took seriously the need to reflate the economy and get things moving. Worse, he was confronted by Republican politicians more interested in "gamesmanship" than in rescuing the economy. Tragic.

Dotty Art

2011-12-07T14:10:00.000-08:00

This guy puts Pointillists to shame. He's in a whole league by himself in his devotion to the dots:

David Graeber's "Debt: The First 5,000 Years"

2011-12-07T12:30:00.001-08:00

This is an excellent speculative historical review of how debt, money, slavery, coinage, and government arose. It is chock-a-block full of obscure but interesting facts. The analysis is fresh and thought-provoking. I'm not in a position to assess the scientific validity of his reconstruction of ancient societies, but it rings true to me.

If you want a new perspective on how economic forces shape us and our societies, this is a "must read" book.

Here is just a tidbit from his chapter on the Axial Age (800 BC to 600 AD):

This is the key to Seaford's argument about materialism and Greek philosophy. A coin was a piece of metal, but by giving it a particular shape, stamped with words and images, the civic community agreed to make it something more. But this power was not unlimited. Bronze coins could not be used forever; if one debased the coinage, inflation would eventually set in. It was as if there was a tension there, between the will of the community and the physical nature of the object itself. Greek thinkers were suddenly confronted with a profoundly new type of object, one of extraordinary importance -- as evidenced by the fact that so many men were willing to risk their lives to get their hands on it -- but whose nature was a profound enigma.

Consider this word, "materialism." What does it mean to adopt a "materialist" philosophy? What is "material," anyway? Normally, we speak of "materials" when we refer to objects that we wish to make into something else. A tree is a living thing. It only becomes "wood" when we begin to think about all the other things you could carve out of it. And of course you can carve a piece of wood into almost anything. The same is true of clay, or glass, or metal. They're solid and real and tangible, but also abstractions, because they have the potential to turn into almost anything else -- or, not precisely that; one can't turn a piece of wood into a lion or an owl, but one can turn it into an image of a lion or an owl -- it can take on almost any conceivable form. So already in any materialist philosophy, we are dealing with an opposition between form and content, substance and shape; a clash between the idea, sign, emblem, or model in the creator's mind, and the physical qualities of the materials on which it is to be stamped, built, or imposed, from which it will be brought into reality. With coins this rises to an even more abstract level because that emblem can no longer be conceived as the model in one person's head, but is rather the mark of a collective agreement. The images stamped on Greek coins (Miletus' lion, Athen's owl) were typically the emblems of the city's god, but they were also a kind of collective promise, by which citizens assured one another that not only would the coin be acceptable in payment of public debts, but in a larger sense, that everyone would accept them, for any debts, and thus, that they could be used to acquire anything anyone wanted.

The problem is that this collective power is not unlimited. It only really applies within the city. The farther you go outside, into places dominated by violence, slavery, and war -- the sort of place where even philosophers taking a cruise might end up on the auction block -- the more it turns into a mere lump of precious metal.

The war between Spirit and Flesh, then between the nobile Idea and ugly Reality, the rational intellect versus stubborn corporeal drives and desires that resist it, even the idea that peace and community are not things that emerge spontaneously but that need to be stamped onto our baser material natures like a divine insignia stamped into base metal -- all those ideas that came to haunt the religious and philosophical traditions of the Axial Age, and that have continued to surprise people like Boesoou ever since -- can already be seen as inscribed in the nature of this new form of money.

It would be foolish to argue that all Axial Age philosophy was simply a meditation on the nature of coinage, but I think Seaford is right to argue that this is a critical starting place: one of the reasons that the pre-Socratic philosophers began to frame their questions in the peculiar way they did, asking (for instance): What are Ideas? re they merely collective conventions? Do they exist, as Plato insisted, in some divine domain beyond material existence? Or do they exist in our minds? Or do our minds themselves ultimately partake of that divine immaterial domain? And if they do, what does this say about our relation to our bodies?

I heartily recommend that you read this book.