Math & Art & Science

Here's a nice video that combines humour and math with a little mythical earth history:



I especially enjoy the little bits of realism, like getting eaten by the Pythagasaurus. The problem with nerdy kids is that they don't have a healthy fear of the real world. Their math & science gives them a false sense of power and authority. The nice thing about art is that is can reintroduce these aspiring minds to the fact that math kills, like the Pythagasaurus. A little healthy fear is good for the budding scientist. And only the magic of art can help groom that fear.

Fear in the Financial Markets

Here is a bit from a post by by Barry Ritholtz in his The Big Picture blog that spells out how much fear and uncertainty is running among investors:

The credit crisis blew up a mere 3 years ago; the recency effect has investors fearing a replay of that crisis, only centered on European instead of US banks. Bloomberg observes more than $75B in fund withdrawals have been pulled from U.S. equity funds since the end of April (Fund Withdrawals Top Lehman as $75B Pulled). That is more than the five month withdrawal after the collapse of Lehman Brothers. US stocks have lost $2.1 trillion in market cap May 2011.

...

Hence, our Stew of Negativity is fairly well understood: Start with fears of another 2008 bank crisis; add a new cyclical recession as your two base ingredients of investor’s worries. Season that with the ongoing de-leveraging and the long slow recovery process that typically follows credit crises; add the accompanying housing overhang, merely half way through its rush towards 10 million foreclosures. Salt & Pepper to taste.

Go read the original to get the embedded links.

Human nature is funny. Fear runs highest after the fact. For example, after a terrorist attack you suddenly get police in the streets and people terrified of living their lives. Before the attack, everybody is secure and happy. This is called "closing the barn door after the horses have fled". The danger was before the attack. The safest moments are usually after the attack because that's when security is on high alert. The same is true of the financial markets. Credit is tight right now because banks got burned by their fradulent lending practices before 2008. Before 2008 the joke was that if you could fog a mirror you got a loan. Now, companies that have the business and want to expand, can't get a loan. It is all so hysterically funny. Human nature is so perverse!

America Running Scared and Paying Through the Nose

Here is a bit from an article by Glenn Greenwald in Salon magazine that holds up America's waste of money on "security":

The Los Angeles Times examines the staggering sums of money expended on patently absurd domestic "homeland security" projects: $75 billion per year for things such as a Zodiac boat with side-scan sonar to respond to a potential attack on a lake in tiny Keith County, Nebraska, and hundreds of "9-ton BearCat armored vehicles, complete with turret" to guard against things like an attack on DreamWorks in Los Angeles. All of that -- which is independent of the exponentially greater sums spent on foreign wars, occupations, bombings, and the vast array of weaponry and private contractors to support it all -- is in response to this mammoth, existential, the-single-greatest-challenge-of-our-generation threat:

"The number of people worldwide who are killed by Muslim-type terrorists, Al Qaeda wannabes, is maybe a few hundred outside of war zones. It's basically the same number of people who die drowning in the bathtub each year," said John Mueller, an Ohio State University professor who has written extensively about the balance between threat and expenditures in fighting terrorism.

Last year, McClatchy characterized this threat in similar terms: "undoubtedly more American citizens died overseas from traffic accidents or intestinal illnesses than from terrorism."

...

Despite these increasing economic insecurities -- actually, precisely because of them -- the sprawling domestic Security State continues unabated. The industry journal National Defense Magazine today trumpets: "Homeland Security Market ‘Vibrant’ Despite Budget Concerns."

...

Meanwhile, much of the anti-Terrorism weaponry in the U.S. ends up being deployed for purposes of purely domestic policing. As the LA Times notes: those aforementioned BearCats are "are now deployed by police across the country; the arrests of methamphetamine dealers and bank robbers these days often look much like a tactical assault on insurgents in Baghdad." Drones are used both in the Drug War and to patrol the border. Surveillance measures originally justified as necessary to fight foreign Terrorists are routinely turned far more often inward, and the NSA -- created with a taboo against domestic spying -- now does that regularly.

Exaggerating, manipulating and exploiting the Terrorist threat for profit and power has been the biggest scam of the decade; only Wall Street's ability to make the Government prop it up and profit from the crisis it created at the expense of everyone else can compete for that title. Nothing has altered the mindset of the American citizenry more than a decade's worth of fear-mongering So compelling is fear-based propaganda, so beholden are our government institutions to these private Security State factions, and so unaccountable is the power bestowed by these programs, that even a full decade after the only Terrorist attacks on U.S. soil, its growth continues more or less unabated.

What is truly tragic is that the billions spent of "security" is happening while teachers, police, and firemen are being laid off, libraries closed, parks and recreation facilities closed, and people hunker down in a new Dark Ages secure in the knowledge that billions are being spent to "protect" them from the big bad bogeyman Al Qaeda while their bargain with the Devil has turned America's future into ashes.

The Quality of "Leadership" in US Presidential Candidates

Obama has shown himself to be a poor leader who pleads with the electorate to force him to lead. He has no program. When it comes to big issues he "compromises" himself into advocating and accepting Republican positions.

But the Republicans present an even bigger problem for American voters. The candidates on the right have only a tenuous grasp of reality and live in an ideological fantasy land. Here is a bit from an article in the USA Today newspaper:

GOP presidential hopeful Michele Bachmann said today that Americans "fear the rise of the Soviet Union" during an appearance on a conservative radio talk show.

Earth to Bachmann... the Soviet Union dissolved over 20 years ago into a number of different republics. Russia is the biggest piece with the nuclear weapons, but they aren't aggressively threatening anybody. Their internal economy was shattered in the 1990s and they are still trying to get back to where they were. According to the CIA Factbook, their per capita GDP is only $15,900 with a population of 138 million. The US is $47,200 with 313 million. They are one-seventh the power of the US. Why is she batting at ghosts of the past?

Bachmann's statement is reminiscent of Sarah Palin in 2008 trying to establish her foreign policy credentials by claiming to be able to "see" Russia from Alaska. That's like saying that because you once walked by a bakery you know how to run the business. Nutty.

The problem with the Republican candidates is that they don't understand economics and they are unaware of the current world situation. They live in a bubble isolated from ordinary American lives, so their policies are detrimental to the vast majority of the people. But they are effective because they play on fears: fears of the Soviet past, racial fears, economic uncertainty, and a general fear of a complex modern world that many people don't understand. But to build your social institutions on fear rather than knowledge and hope is to ask for failure and misery.

Americans made a mistake just a decade ago by having their Supreme Court "elect" the dim-witted George Bush as their president. Here they go again being infatuated with a dim bulb as their "bright hope":

The GOP presidential candidate has flubbed some facts in history before, such as when she mistakenly said that the Revolutionary War battles of Lexington and Concord occurred in New Hampshire. This week, she mistakenly wished Elvis Presley a "happy birthday" on the anniversary of his death.

If you fail to have factual knowledge of the world, you don't have the basis for making policy and deciding on action. You might as well put a poodle in the presidency and let her choose by how loud the dog goes "woof!" when presented with "options".

The Big Banks as Financial Terrorist

Here is a report by Max Keiser.

At 14:00 into the video, Keiser interviews Michael Hudson. Hudson is concerns that the EU is being fun by a financial oligarchy that is instituting a "neo-feudalism" in Europe:

Michael Hudson (born in 1939, Chicago, Illinois, USA) is research professor of Economics at University of Missouri, Kansas City (UMKC) and a research associate at the Levy Economics Institute of Bard College. He is also a Wall Street analyst and consultant as well as president of The Institute for the Study of Long-term Economic Trends (ISLET) and a founding member of International Scholars Conference on Ancient Near Eastern Economies (ISCANEE).

I chuckle at 2:00 into the video when he calls "banks as terrorists".

I like the bit at 12:00 into the video when he calls the US a "baboon petting zoo".

Max Keiser is over the top in his show, but there is an element of truth in what he is saying. I fully expect you will get more and more crazy populists and more extreme views the longer the current economic crisis is allowed to drag on.

Selling Fear

Back in the 1960s the war in Vietnam was sold by fear: if we don't stop the commies in Vietnam, next they will take Cambodia, then Thailand, the rest of Southeast Asia, then they will be at America's doorstep at San Diego.

Well... America lost that war, Vietnam went communist, and 30+ years later the two countries make big deals of signing joint treaties and opening up all kinds of trade between the two. They are like old friends falling into each other's arms despite the US killing 2 million plus Vietnamese and the Vietnamese killing 58,000 Americans.

The "rising red tide" fear never came true.

But the political right continues to sell that message in the US. Why? Because it works. The same idiotic "the bogeyman is going to get you and you can't hide under your bed" lie works, and works, and works.

Here is an example:



Notice the clever lie: "Obama's debt limit". Gee... you mean for the past 50 years Obama has been behind the scenes getting the US House of Representatives to pass spending bills that aren't covered by existing taxes? Even baby Obama in diapers was doing this?

The truth is that Obama can't spend a nickle -- no president can -- unless a spending bill originates in the House of Representatives and passes, then passes in the Senate, and then gets the President to sign it. So "Obama's debt" is a big lie. There is no such thing.

It is incredible that the fanatical right appears to be ready to destroy the US economy by defaulting on its legal obligations. But that seems to be what is about to happen. Insane.

And here's another example...



Where was this "Citizens Against Government Waste" when George Bush pushed through two big tax cuts which moved the US from having a fiscal surplus to having a deficit? Where where they when Bush started two wars without raising taxes to pay for them? Where was this "patriotic" organization when Bush pushed Congress to pass the Pharmacare bill without paying for it? All this "we don't have the money" is a big lie. The US didn't have the money 10 years ago. But it was OK to spend like a drunken sailor then because it was a Republican President and a Republican Congress. But now, suddenly, America is broke and has to default on its obligations! That's the kind of "patriotism" that is at the heart of the black-hearted ideologues of the Republican party.

The Enemy of Prosperity

Paul Krugman nails it with this bit from a post in his NY Times blog:

So why is this slump, like most slumps following financial crises, so protracted? Because the usual tools for pumping up demand have reached their limits. Normally we respond to demand-side slumps by cutting short-term nominal interest rates, which the Fed can move through open-market operations. But we now have severely depressed private demand thanks to the housing bust and the overhang of consumer debt, so even a zero rate isn’t low enough.

So what’s the right response? Should we just throw up our hands, and say that having 12 million or so adults who should be working out of work, and roughly $1 trillion per year of output we should be producing not getting produced, is just a fact of life? Or should we be using unconventional policies to deal with an abnormal situation?

The answer seems obvious. We should be using fiscal stimulus; we should be using unconventional monetary policy, including raising the inflation target; we should be pursuing aggressive measures to reduce mortgage debt. Not doing these things means accepting huge waste and hardship.

But, say the serious people, there are risks to doing any of these things. Well, life is full of risks. But it’s simply crazy to put a higher weight on the possibility that the invisible bond vigilantes might manifest themselves, or the inflation monster emerge from its secret cave, over the continuing reality of enormous human and economic damage from doing nothing.

The truth is that we have nothing to fear but fear itself — fear and complacency — the two things we have to fear are — amongst our fears ….

Anyway, seriously, the fatalism that has overtaken economic debate is a terrible thing. It is, indeed, the main enemy of prosperity.

I blame Obama. They guy didn't enter Dodge City like FDR with guns blazing saying that he was elected to clean up to crime and corruption. Instead, Obama has quietly entered town and "negotiated" with the Republicans on every issue, and every negotiation has been mostly a capitulation to Republican demands. FDR said "the only thing to fear is fear itself" and he tried every idea his team could come up with whether the idea was good or bad. He wanted action. He wanted to get America moving again. Obama pretended that his stimulus was "adequate" and hasn't had the guts to admit he made a mistake and demanded more. Obama has wimped out.

Another Confirmation of Future Babble

Here's material from a post by Barry Ritholtz on his The Big Picture blog that:

1. Tears Greg Mankiw apart for his inconsistency and false premises for economics


2. Adds another data point to the thesis of the book Future Babble by Dan Gardner regarding the public's desire for certainty over accuracy in prognostication

The following is Ritholtz's post but I encourage you to read the original because it has embedded links that are well worth following:

This week’s Sunday NYT Business section has an interesting column from Greg Mankiw: If You Have The Answers, Tell Me.

Well, Professor Mankiw, you asked. Rather than just give you the answers, I want to start by suggesting you are looking in the wrong places. That wrong place, is the field of economics.

Let’s put aside the fundamental error of classical economics — that Humans are rational, self-interested, profit maximizing creatures. They are clearly not; Humans are actually irrational social animals with flawed cognitive apparatus. Frequently emotional, occasionally self-destructive, often times erratic, humans only rarely exhibit the traits that economics ascribe to them. If the study of economics begins with such a shaky foundation, is it any wonder they get so much wrong?

Back to the questions Prof Mankiw asked about: Let’s see if we can’t give you a shove in the right direction (I have to warn you, I doubt you are going to like the answers):

1) How long will it take for the economy’s wounds to heal?

Most economists seem to focus on the post WWII economic cycles. This is the wrong approach. The most recent contraction was quantitatively different than the typical recession/recovery cycles. To get a better grasp as to what to expect, turn to history and statistical analysis instead of economics.

That is essentially what Reinhart & Rogoff did. In their December 19, 2008 paper, they showed historically, “the aftermath of banking crises is associated with profound declines in output and employment.” They had identified this phenomena 3 years ago, while the collapse was still unfolding. Their book, This Time Is Different: Eight Centuries of Financial Folly, expanded their prior paper on credit-crisis recessions.

2) How long will inflation expectations remain anchored?

Like the premature New York Journal obituary for Mark Twain, reports of inflation expectations have been greatly exaggerated. Human beings cannot forecast their own behaviors, let alone act on their expectations for inflation. Indeed, the only time most people even notice inflation is AFTER prices have skyrocketed — not before. The Recency Effect, the tendency to over-emphasize a single data point of what has just occurred rather than focus on long term series or trends –THAT is what drives behavior.

Friedman’s belief that people were engaging in immediate behavior based upon their momentary consideration of long term inflation reveal he hadn’t a clue as to how actual human beings operated in the real world. No wonder he foolishly believed we could get rid of the FDA — who needed Food inspections anyway? And the marketplace will help determine what Drugs will and should sell.

As Prof Mankiw writes, this “theory is now textbook economics, and is at the heart of Federal Reserve policy.” Which perhaps goes a long way in explaining why the Fed gets so much wrong in terms of recognizing inflation on a timely basis.

3) How long will the bond market trust the United States?

This is the most revealing question, because it reveals some biases that Professor Mankiw labors under.

He writes: “A remarkable feature of current financial markets is their willingness to lend to the federal government on favorable terms.” This must be a change of heart for the professor, given his role as Chairman of the Council of Economic Advisors from 2003-05. He never said much — at least publicly — about this “unsustainable fiscal trajectory” when his boss was busy turning a surplus into a “huge budget deficit.”

From the CBO to the GAO, every honest broker who has analyzed the situation has observed that the Bush tax cuts, the war of choice in Iraq, the prescription drug entitlement were the biggest factors pre-2008 in the runaway budget. Add to that the collapse of revenues brought about by the financial crisis, and you have the makings of a awful balance sheet.

Ironically, this is the one question Prof Mankiw asked that COULD be solved by economics. I do not know why he chose to ignore the answer. Perhaps it might be because he did not care for the answer economics gave.

~~~

One last comment: Prof Mankiw noted that “It is easier to attract with certainties than with equivocation.” Do not overlook a key underlying issue: The causal factor here is that the public wants certitude, regardless of how erroneous. Study after study has revealed that a “Frequently wrong, never in doubt” commentator is much preferred by the majority of viewers/readers over an intelligent commentator honestly discussing the unknowable future in terms of what is unknown and unknowable.

Probabilistic nuance versus strongly confident (but wrong)? The public chooses the latter almost every time.

You can see this not only in the ratings for various shows, but in the public’s investing performance. Its about as good as their favorite pundits are.

Which is to say, not very . . .

Economics with its beautiful math building models from its ludicrous simplifying assumptions has completely failed. As Paul Krugman, Brad DeLong and others point out: you are better off reading the century old literature of economics than to read contemporary publications.

Sadly Obama listened to those seriously compromised by their involvement with the "excesses" of the previous decades (Summers, Geithner, Bernanke) and was unable or unwilling to learn the lessons of history: recovery from a credit crisis is much, much harder than recovering from a Fed-caused economic slowdown. Many millions of people are paying the price for this mistake.

Now... let's look at how good Barry Ritholtz is as a prognosticator. I would claim he isn't a "frequently wrong, never in doubt" commentator. I find he pretty honest. But he does show he has learned the art of prognostication. He will never give you a target and a date. He will give you one or the other, but not both. You can pin a prediction down if they give both...

The Debt & Deficit Story

Here's a nice post by Dean Baker setting the record straight in the midst of all the hysteria about the US's debt and deficit:

Steven Pearlstein did his part for the Wall Street crusade to get people to surrender their Social Security and Medicare. He warned readers that if we don't follow the Wall Street deficit reduction agenda, the dollar could enter a free fall.I would say that this is one of the silliest things the paper has ever published, but this is the Washington Post that we are talking about.

Anyhow, let's put on our thinking caps and try to envisions what Pearlstein's scare story would look like. Currently, the euro is equal to around 1.45 dollars, there are approximately 6.5 yuan to a dollar and around 80 yen. Suppose we don't follow the Wall Streeters wishes. Will the dollar fall to 3 to a euro, will it only be worth 3.5 yuan and 40 yen?

Does anyone think this story is plausible? We supposedly have been begging China to raise the value of its currency by 20 percent, is China's leadership suddenly going to sit back and let the yuan rise by 100 percent? What happens to China's export market in this story? The same is case for our other trading partners. Europe will lose its export market in the U.S. and suddenly U.S. made goods would be hyper-competitive in its domestic market. Japan, Canada and everyone else would face the same situation.

These countries will not allow their economies to be destroyed by the loss of the U.S. export market and a surge of imports from the United States. They will undoubtedly take steps to stop and reverse any free fall of the dollar, if we did begin to see it.

In other words Pearlstein and the others are peddling total nonsense when they try to push this scare story. The bottom line is that they want to cut benefits to the middle class. They don't have a good story to sell a policy that will be harmful to large segments of the population, especially when the Peter Petersons of the world are making out like bandits. So they make stuff up.

As every economist knows the story of our deficit in the short-term is the downturn created by the collapse of the housing bubble. The deficit is propping up the economy following the loss of $1.2 trillion in private sector demand.

The deficit story in the long-term is health care. Our health care system is out of control. Fixing health care would end the deficit problem, but this would reduce the income of the insurance industry, the pharmaceutical industy and other powerful interest groups. So, the Washington Post would rather just see people go without health care. Hey, someone's got to pay.

To get the embedded links, go read the original post.

The reality is that if the US government didn't sustain a deficit right now, the Great Recession would be the Great Depression II. But nobody in the debate is willing to admit to that. Instead, they scare up the bogeyman to ensure that deep-pocketed interest groups come out of this mess with their pockets full while most Americans have their pockets picked, yet again, by those with the politician's ears.

Here is a post by the economist Mark Thoma that lays bare the truth about corrupted politics:

Jon Faust of Johns Hopkins Center for Financial Economics:

Reject Greenspan’s Bleak Vision, by Jon Faust: Alan Greenspan recently argued in the FT that the Dodd Frank Act fails to meet the test of our times. In defense of this view, Greenspan paints a disturbing view of the modern world as a financial dystopia in which humans are at the mercy of a financial machine they have built but can no longer hope to manage. Greenspan argues,

The problem is that regulators, and for that matter everyone else, can never get more than a glimpse at the internal workings of the simplest of modern financial systems. ... With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.

... Greenspan’s bleak vision, like Orwell’s before him, may prove correct. My view is that the financial crisis was not a sad by-product of modernity but rather a new episode in a very old story: systems that allow risk taking and innovation are inherently subject to periodic crises. We can surely avoid another crisis by outlawing all risk taking. The alternative is to strive provide a stable backdrop in which productive risk taking can flourish. The history of progress financial progress has, arguably, been one of generally increasing stability -- in economies where development has been allowed to occur -- supported by an evolving system of market and political institutions, laws and regulations.

Greenspan is right that the Dodd Frank Act, like every hasty response to upheaval, is grossly imperfect. The Patriot Act comes to mind. The Federal Reserve Act of 1913 was itself a crisis response and was substantially modified over more than 20 years before reaching the form we recognize today.

We should continue the job of reform and not surrender to Greenspan’s dystopian vision.

Greenspan is yesterday's news, and the substance of what he says won't have much impact on policy. But what he is arguing is notable because it represents a common point of view that Dodd-Frank will do little except reduce economic growth and, to the extent possible, it should be reversed.

And the financial industry is taking advantage of this. While our attention is diverted to other matters, e.g. protecting social insurance from the latest onslaught from the right, the financial industry is quietly -- and in many cases successfully -- pushing to ease the restrictions in Dodd-Frank (you can track changes to Dodd-Frank here). Too many people still believe that anything that's good for the bottom line in the financial sector is good for America despite recent evidence to the contrary.

I don't think we'll ever be able to completely prevent crises, but we can reduce the damage that a crisis can do, and we can make crises rarer than they've been recently. However, that requires doing things that the financial industry does not like. With both parties dependent upon financial industry money to fund their reelection campaigns, and with so much of this under the public's radar, it's not at all clear that Congress will take the steps that need to be taken, or even hold the line on the regulations that are already in place.

Go read the original post to get the embedded links.

Putting Things into Perspective

Funny how bankers (and columists who get their cues from bankers) can get carried away by their fears. Here is a post by Dean Baker in his blog Beat the Press showing "sympathy" for Dana Milbank's fears:

We have almost 25 million people unemployed, under-employed or who have given up looking for work altogether and he is worried about the "$14 trillion debt crisis." Yeah, this is the crisis that has pushed the interest rate on 10-year Treasury bonds all the way up to 3.4 percent. Pretty scary.

This fear of inflation is like a fear that you will drown in your bathtub. Yes it can happen. But most sensible people would be more concerned that you've pulled the plugged in radio over into the tub and and are trying to tune in a channel. The most pressing fear is that you will electrocute yourself (destroy the lives of 25 million). Once you have that danger under control, you can start working on the scenarios that have you drowning in the bathtub.

But if you are ultra rich and live off your bonds and don't care about the 25 million "little people", then the only fear you have is of drowning in a bathtub. There is no other danger.

Oh... and while we are at it. Here is Dean Baker having fun at Mark McKinnon's expense:

The hottest sport these days in Washington is seeing how many incorrect or misleading statements about Social Security you can get in one column. All the major media outlets are fully on board, anxious to convey any misinformation that reflects badly on the program. And there are plenty of deep-pocketed funders like Wall Street investment banker Peter Peterson who are happy to finance the effort. Hence we are seeing a plethora of pieces decrying the high-living seniors who are getting fat on their Social Security checks.

The latest contestent to enter the fray is Republican political strategist Mark McKinnon with a column in the Daily Beast. Let's play along.

Mckinnon starts by warning that the United States could end up like Greece or Portugal, abandoned by the credit markets and forced to beg international organizations to buy our debt. Very nice -- this one always gets lot of points with political pundits. Of course it is not true. The United States has its own currency, that means it can never be like Greece or Portugal.

Next we are told that life expectancy has increased by 15 years since 1935 when the program was established. This is true, but mostly irrelevant. Most of this increase was due to a reduction in infant mortality. That means more retirees, but also more workers. Some of the increase was due to the fact that more people live to the point where they retiree. Only a small portion of the increase has been attributable to people living longer after they retire. And much of this gain has been eaten by the increase in the normal retirement age from 65 to 67 that is already in current law.

It is also important to note that in recent decades that most of the increase in life expectancy has gone to those at the top with the bottom half of wage earners seeing very little improvement in life expectancy. The increase in the normal retirement age to 70 proposed by McKinnon would actually leave lower income workers who start collecting benefits at this age with fewer years of retirement. It is also important to note that these workers are the ones most likely to be have physically demanding jobs where working later into life may be difficult.

McKinnon then tells us that, "those hard-earned dollars you pay into Social Security today are paid out to somebody else tomorrow." Yeah, this pretty much true, but has nothing to do with the time of day. If you buy a bond from General Electric they are likely to spend the money. I suppose we can expect Mr. McKinnon to express outrage that GE spent the money it borrowed, but that is the way a modern economy works. People pay their taxes to Social Security, some goes to pay current benefits and some goes to buy government bonds, what exactly is the problem?

He then tells us that Social Security is short of cash. I suppose that this can be true in the same way that Bill Gates may occasionally be short of cash if he or his servants have not paid a visit to the ATM machine recently. Social Security holds more than $2.6 trillion of government bonds in its trust fund. McKinnon seems to think that there is some big problem with using this money for paying Social Security benefits. Of course this is why it is there.

McKinnon also envisions that we can fix Social Security for all time and complains that the 1983 fix only kept the program fully funded for 54 years. Actually, as long as we have a democracy we cannot fix Social Security for all time. In 40, 50, or 60 years the people alive at the time will structure Social Security in the way that they think makes the most sense. Odds are that they will not care a great deal about what the Congress thought was a good retirement system in 2011, just as we don't care too much about what people thought Social Security should look like back in 1951.

Finally, it is worth noting that the even the worst horror story highlighted by McKinnon probably wouldn't be too scary to anyone who understood the numbers. Even if we did nothing for the next 26 years and the Social Security spending and cost numbers followed exactly their projected path, the shortfall projected for the late 2030s would be less than 1.3 percent of GDP. By comparison, the increase in annual defense spending from 2000 to 2010 was 1.6 percentage points of GDP. While this sum is far from trivial, it certainly did not wreck the economy. In short, even this disaster story hardly looks like much of a disaster.

There are a number of embedded links in the above that let you follow up on Dean Baker's claims. Go read the original post to get those links.

The above is classic Dean Baker. He loves to go after the press and big shots who make wrong-headed claims. The problem is. The press is so controlled by big money that the voices of the wrong-headed dominate and prevail. So when a guy like Baker comes along to point out that the emperor has no clothes, most people fail to believe him. They've been told for years that those "in the know" and who are "especially virtuous" can see how elegant the emperor's clothes truly are. In short, everybody "knows" that Social Security is bankrupting the country and benefits have to be taken away from the poor to save the poor country. Repeat a lie long enough, and everybody "knows" it has to be true.

Why is there World Hunger?

Superstitious, anti-science thinking is the simple answer. Here's a bit from a UK Guardian newspaper article:

Food prices worldwide were up by a whopping 25% in 2010, according to the UN's Food and Agriculture Organisation, and February marked the eighth consecutive month of rising global food prices. Within the past two months, food riots helped to trigger the ousting of ruling regimes in Tunisia and Egypt. (It is noteworthy that food prices increased 17% last year in Egypt, and the price of wheat, a critical staple there, soared by more than 50%.) For poor countries that are net importers of food, even small increases in food prices can be catastrophic, and recent bumps have been anything but small.

There are several causes of rising prices. First, large-scale disasters have precipitated localised crop failures, some of which have had broad ripple effects – for example, Russia's ban on grain exports through at least the end of this calendar year resulted from fires and drought. Second, deadly strains of an evolving wheat pathogen (a rust) named Ug99 are increasingly threatening yields in the major wheat-growing areas of southern and eastern Africa, the central Asian Republics, the Caucasus, the Indian subcontinent, South America, Australia and North America. Third, rising incomes in emerging markets like China and India have increased the ability of an expanding middle class to shift from a grain-based diet to one that contains more meat.

And fourth, against this backdrop of lessened supply and heightened demand, private investment in R&D on innovative practices and technologies has been discouraged by arbitrary and unscientific national and international regulatory barriers – against, in particular, new varieties of plants produced with modern genetic engineering (aka recombinant DNA technology or genetic modification, or GM). Genetic engineering offers plant breeders the tools to make crops do spectacular new things. In more than two dozen countries, farmers are using genetically engineered crop varieties to produce higher yields, with lower inputs and reduced impact on the environment.

And this:

In fact, the United States and Europe are diverting vast and increasing amounts of land and agricultural production into making ethanol. The United States is approaching the diversion of 40% of the corn harvest for fuel and the EU has a goal of 10% biofuel use by 2020. The implications are worrisome. On 9 February, the US department of agriculture reported that the ethanol industry's projected orders for 2011 rose 8.4%, to 13.01bn bushels, leaving the United States with about 675m bushels of corn left at the end of the year. That is the lowest surplus level since 1996.

So, what do we know? Bad weather and a virulent new plant pathogen. The weather will change. And science can help develop resistent strains to deal with the new pathogen.

Rising incomes is not a problem. It makes it tough for the world's poor, but rising incomes also gives them hopes that they too will earn more and eat better some day.

Anti-GM quackery is a real problem. This is anti-science at its worst. Mumbo jumbo about what is "natural" and how it goes "against God's will to move genes from one species to another" is nutty. And the lies these fanatics tell! They claim that new breeding programs based on GM need special scrutiny is the same nonsense as the belief that the tomato was a "poisonous food" back in 1590.

Worst of all are the doom-and-gloom crowd so worried about "global warming" that they are willing to sacrifice the poorest billion people so that the "global warming" crowd can tool around in their SUV's using ethanol. That's right. The "global warming" crowd burns food so they can enjoy their yuppie lifestyle and continue to spread malicious rumours about "global warming" while letting a billion or so people starve to death. Talk about misplaced values and skewed ethics! And these hypocrites dare to preach to the rest of the world and spread their vile propaganda, a lie about climate that isn't going to kill anybody. But they are willing to condemn a billion to painful starvation. Hypocrites!

A Riddle, Wrapped in a Mystery, Inside an Enigma

Wired magazine has a fascinating article by Noah Shachtman on the anthrax killer in the autumn of 2001:

On August 18, 2008—after almost seven years, nearly 10,000 interviews, and millions of dollars spent developing a whole new form of microbial forensics—some of the FBI’s top brass filed into a dimly lit, flag-lined room in the bureau’s Washington, DC, headquarters. They were there to lay out the evidence proving who was responsible for the anthrax attacks that had terrified the nation in the fall of 2001.

It had been the most expensive, and arguably the toughest, case in FBI history, the assembled reporters were told. But the facts showed that Army biodefense researcher Bruce Ivins was the person responsible for killing five people and sickening 17 others in those frightening weeks after 9/11. It was Ivins, they were now certain, who had mailed the anthrax-filled letters that exposed as many as 30,000 people to the lethal spores.

It is a fascinating story, and a very unsatisfying story because they really aren't that sure they caught the killer. Read the article. Fascinating stuff.

Putting Risk into Perspective

Here's a nice visual along with some text to put the risk of nuclear power into perspective:

Death Rate Per Watt Produced

Posted on March 22, 2011 by Michael Froomkin

Seth Godin has the dramatic chart.


The little tiny box is “nuclear.”

I knew this, and the chart still is effective. And my kids were at first very skeptical last week when I tried to tell them that so far coal had killed far more people than nuclear power. (Of course the very worst case scenario for a nuclear plant is much worse than the very worst case scenario for any coal-fired plant; but the very worst case scenario for coal plants aggregated is…global warming.)

In the news today German has "speeded up" the closure of its nuclear reactors. Lemmings to the sea!

If you want to be ruled by fear, then worry about the heat death of the universe, worry about the coming transformation of the sun into a red giant which will swallow earth in its fiery maw, worry about an asteroid bringing life to an end, worry that yet another virulent bug will jump the species barrier and spread a billion plus deaths around the earth... There is so much to fear and so little time left in an average person's life to savour the delightful frisson of fear!

Thoughts on The Limits to Growth and Doom & Gloomsters

I was teaching a high school social studies class in the mid-1970s and we had materials on the "oil crisis". Most of the material was gloomy and predicted that oil would soon run out and that it would be so expensive that the only choice was to cut down our expectations of the future. This was completely in tune with the Club of Rome which published an infamous book called The Limits to Growth. I passed on the sad news to the students because that was the teaching material I had. I hadn't yet realized that doomsters have always been around and they are constantly thinking up new worries that get lots of attention (and big bucks) for them.

The end of oil, the so-called Hubbert's peak oil theory, has been trotted out over the years to sell more gloom and doom. Only when my father pointed out to me that when in was in high school in the early 1930s he was being told that there was only 20 years of oil left did it ding on me... it will always be the case that we will soon run out of any given resource because governments don't go out and find resources, they rely on resource companies to tell them what kind of reserves they know about. And it doesn't pay a resource company to go and find resources that won't be used within a reasonable period of time. So there will always be a problem of "running out of resources in about 20 years".

I've grown much more cynical over time. And I've been convinced by the arguments of Julian Simon and his book The Ultimate Resource. Humanity has always been running out of resources, but we will always find ways around the problem. Sure if you multiplied the current population 5 fold we would be at each other's throats fighting over food. But the Zero Population Growth people who wanted forcible sterilzation and predicted tens of millions if not hundreds of millions would stave in the 1980s were proved wrong by the Green Revolution. Norman Borlaug has been the greatest humanitarian the world has ever seen. He didn't sell "limits to growth" or "population explosion" or "global warming". Nope. He rolled his sleeves up and did research to expand the food supply. Of course the doom & gloom crowd has labeled all this "frankenfood" and spend their effort trying to convince people to not eat the food!

The doom & gloom crowd never look for a silver lining in a cloud. They take a paradise an worry themselves silly trying to find flaws in it, turn up potentially, hypothetically possible future problems with paradise.

As for running out of oil. We haven't hit "peak oil" yet as it continues to be slid out into the indefinite future. I'm sure it will happen some day. But in the meantime, we have a sufeit of riches. Here's a news story about how recent technological advances mean we now have 250 years supply of natural gas!

Supplies of natural gas could last more than 250 years if Asian and European economies follow the U.S. unconventional reserves, the IEA said.

The abundance of shale gas and other forms of so-called unconventional gas discovered in the United States prompted a global rush to explore for the new resource.

The International Energy Agency said Australia is taking the lead in the push toward unconventional gas, though China, India and Indonesia are close behind. European companies are taking preliminary steps to unlock unconventional gas as are other regions.

"Production of 'unconventional' gas in the U.S. has rocketed in the past few years, going beyond even the most optimistic forecasts," said Anne-Sophie Corbeau, a gas analyst at the IEA. "It is no wonder that its success has sparked such international interest."

Shale gas production in the United States is booming and the IEA estimates that unconventional gas makes up around 12 percent of the global supply.

Global supplies of natural gas could last for another 130 years at current consumption rates. That time frame could double with unconventional gas, the IEA said.

I guess the doom & gloom crowd can run around wailing and gnashing their teeth telling us that there is "only" 250 years supply so we need to cut back consumption now because it will all run out far too soon! They will find some way to use this to tell us we can't live a happy life. They will find a way to tell us that this means we have to abandon industrial society and go back to walking behind ox carts. They will only be happy when we get back to the "truly good old days" when 95% of th population was illiterate, most were starving, and pretty well everybody died in the early 40s. Yep... those "good old days"!

The reality is that technology changes the landscape under our feet. Here is a nice graph from a BP study "BP Energy Outlook 2030" that shows how various countries have shifted in the dependence on energy for GDP growth:

Click to Enlarge

And, as you can see, this report predicts that US dependence of imported oil & gas will fall:

Click to Enlarge

Sizing up Your Fears

Here is a nice interactive website that lets you see how much press some doomsday fear got versus the actual deaths by clicking a button to switch between the two views. Very intersting. Give it a try.

Religious Tolerance

All the fake outrage in the US over a mosque "at Ground Zero" is disgusting. Here's a clip from Keith Olbermann to give some context and some rationality:



Instead of confrontation, maybe accomodation is the answer. Here's the Canadian approach.

I think the Canadian approach will have the more positive consequences in the long run. But Canada doesn't have the political fanatics manipulating the media that the poor American unfortunately has to put up with.

Taking "Excess Risks"

Nope... this isn't about Wall Street banks. This is about a worry by Stephen Hawking. From a Times article:

THE aliens are out there and Earth had better watch out, at least according to Stephen Hawking. He has suggested that extraterrestrials are almost certain to exist — but that instead of seeking them out, humanity should be doing all it that can to avoid any contact.

...

Hawking’s logic on aliens is, for him, unusually simple. The universe, he points out, has 100 billion galaxies, each containing hundreds of millions of stars. In such a big place, Earth is unlikely to be the only planet where life has evolved.

“To my mathematical brain, the numbers alone make thinking about aliens perfectly rational,” he said. “The real challenge is to work out what aliens might actually be like.”

The answer, he suggests, is that most of it will be the equivalent of microbes or simple animals — the sort of life that has dominated Earth for most of its history.

...

Such scenes are speculative, but Hawking uses them to lead on to a serious point: that a few life forms could be intelligent and pose a threat. Hawking believes that contact with such a species could be devastating for humanity.

...

He concludes that trying to make contact with alien races is “a little too risky”. He said: “If aliens ever visit us, I think the outcome would be much as when Christopher Columbus first landed in America, which didn’t turn out very well for the Native Americans.”

I'm not going to lose any sleep over this latest "the sky is falling!" doomsday scenario. I've learned over the years that it is a big waste of time to take them seriously.

Am I being foolish? I don't think so. One of the reasons we have governments is to plan for us and look out for our welfare. If there are real risks that rise about the "goosebumps in the night" scare story around an open fire, then I expect the government to undertake steps to deal with the risk without mobilizing fear. In a really dangerous situation the last thing you want is for people to panic or be frozen by fear. So fearmongering is the last thing you want for really serious "big risks".

Consequently, if any government think tank seriously thought that we needed to fear "alerting aliens" then they would have quietly gone about issuing the necessary regulations to reduce our "electromagnetic footprint". They would have done this without setting off panic. The fact that they haven't says to me that the consensus among experts is that Hawking is off his rocker on this one.

Since SETI has done a fair amount of searching with no success, I would say the odds of "advanced" alien life in our galaxy is pretty low. If some exists in another galaxy, then given science as we know it, they could never reach us. Even advanced life in our own galaxy would be hard pressed to "come visit". The distances are, well, astronomical! At best we might hope to hold long distance conversations with hundreds and thousands of years between our sending and their receiving, and the equivalent delay in getting their response back to us. In my mind that isn't a "conversation".

Nope... there isn't any real chance that aliens will be dropping by for a chat. We are going to have to amuse ourselves for as long as we exist, and I would suggest that isn't going to be that long. Evolution teaches us that species are malleable. I wouldn't give high hopes for seeing a human like us in 2 million years on earth. In fact, given the way technology is going, I wouldn't even give you much of a chance that a recognizable human will be around 2 or 3 hundred years from now. That means the only "alien" in our future will be our own progeny!

Technophobia

Here's a bit from an interesting article in Slate by Vaughan Bell relating the history of fears about new technology and its pernicious effects:

Similar concerns arose in the 18thcentury, when newspapers became more common. The French statesman Malesherbes railed against the fashion for getting news from the printed page, arguing that it socially isolated readers and detracted from the spiritually uplifting group practice of getting news from the pulpit. A hundred years later, as literacy became essential and schools were widely introduced, the curmudgeons turned against education for being unnatural and a risk to mental health. An 1883 article in the weekly medical journal the Sanitarian argued that schools "exhaust the children's brains and nervous systems with complex and multiple studies, and ruin their bodies by protracted imprisonment." Meanwhile,excessive study was considered a leading cause of madness by the medical community.
When radio arrived, we discovered yet another scourge of the young: The wireless was accused of distracting children from reading and diminishing performance in school, both of which were now considered to be appropriate and wholesome. In 1936, the music magazine the Gramophone reported that children had "developed the habit of dividing attention between the humdrum preparation of their school assignments and the compelling excitement of the loudspeaker" and described how the radio programs were disturbing the balance of their excitable minds. The television caused widespread concern as well: Media historian Ellen Wartella has noted how "opponents voiced concerns about how television might hurt radio, conversation, reading, and the patterns of family living and result in the further vulgarization of American culture."

By the end of the 20th century, personal computers had entered our homes, the Internet was a global phenomenon, and almost identical worries were widely broadcast through chilling headlines: CNN reported that "Email 'hurts IQ more than pot'," the Telegraph that "Twitter and Facebook could harm moral values" and the "Facebook and MySpace generation 'cannot form relationships'," and the Daily Mail ran a piece on "How using Facebook could raise your risk of cancer." Not a single shred of evidence underlies these stories, but they make headlines across the world because they echo our recurrent fears about new technology.

These fears have also appeared in feature articles for more serious publications: Nicolas Carr's influential article "Is Google Making Us Stupid?" for the Atlanticsuggested the Internet was sapping our attention and stunting our reasoning; the Times of London article "Warning: brain overload" said digital technology is damaging our ability to empathize; and a piece in the New York Times titled "The Lure of Data: Is It Addictive?" raised the question of whether technology could be causing attention deficit disorder. All of these pieces have one thing in common—they mention not one study on how digital technology is affecting the mind and brain. They tell anecdotes about people who believe they can no longer concentrate, talk to scientists doing peripherally related work, and that's it.

...

The writer Douglas Adams observed how technology that existed when we were born seems normal, anything that is developed before we turn 35 is exciting, and whatever comes after that is treated with suspicion. This is not to say all media technologies are harmless, and there is an important debate to be had about how new developments affect our bodies and minds. But history has shown that we rarely consider these effects in anything except the most superficial terms because our suspicions get the better of us. In retrospect, the debates about whether schooling dulls the brain or whether newspapers damage the fabric of society seem peculiar, but our children will undoubtedly feel the same about the technology scares we entertain now. It won't be long until they start the cycle anew.

Read the original article to get all the embedded links and get the bits I left out.

The lessons to be learned:

• There is nothing new under the sun. (This is an operating premise of mine to help keep me from being swept up in some new mania. It is good as a first approximation of truth.)


• Be suspicious of dramatic new claims, e.g. scientists discover corn syrup 'linked to pancreatic cancer', scientists discover corn is a 'miracle food' with critical nutrients, scientists discover stunning weight loss on a 'corn only' diet, new research shows that 'having corn more than four times a week' is linked with heart disease, etc. These are usually statistically meaningless "results" and they weren't conducted using a double-bind methodology to prevent research beliefs from contaminating the results.


• If something is too bad to believe, don't believe it. This is the reverse of the old maxim: if something is too good to believe, don't believe it. In short, there is wisdom in old 'folk wisdom'.


• Be leery of any "research" which is data free. A real experiment uses enough data to be statistically significant and it frames the experiment in a way that allows alternative hypotheses to be tested. And, most importantly, it is published with data that quantifies the effect and identifies the extent and limits of the effect.


• Anecdotes are just that: stories. Stories are for bedtime. They aren't science. Science requires the scientific methodology, appropriate theory to frame the question, rigorous experiment, publishing of results, review by peers, and the full disclosure of the details of the experiment. (Translation: you aren't going to find 'real science' in a media report.)

Debate as a Shouting Match

In an article in the Washington Post, Dean Baker points out the key reason why the health care "debate" has sunk to a shouting match rather than a discussion of issues. The following is a snippet and I've bolded the key bit:

The lunacy was most clearly in evidence in former Gov. Sarah Palin's claim that President Obama's plan would force her to stand in front of a "death panel" to argue for the life of her baby with Down Syndrome. This "death panel" is a complete invention by Governor Palin. There is no twist or turn or contorted permutation of President Obama's plan that would prevent Ms. Palin from providing as much health care as she wants to her baby.

It would have made as much sense to claim that the transportation bill will deny medical care to her baby. After all, if the roads in front of her home are not properly maintained, and her baby has a medical emergency, then the transportation bill would have effectively sentenced her baby to death because she won't be able to get medical attention in a timely manner.

The reason that Governor Palin thought she could make up stories about President Obama's death panels is that the media have treated all sorts of other absurd inventions about his health care plan with respect.

The Republican right is not interested in debating or discussing. They want to use fear as a stick to club the Democrats and as a tool to herd the foolish into the fold in preparation for the next election.

A responsible press would stop treating this as a "debate" and focus on the fear tactics and the propaganda ploy used the Republicans. They would help people understand how they are being manipulated. Instead, the media pretends that this is a genuine grassroots protest movement worried about an issue and ready to come out as the "loyal opposition". Nothing could be further from the truth.

Those in the know call it "astroturf" and not grass roots. There is no "debate" since this is purely a destructive act, not an attempt to engage in a dialog to shape legislation. For the press to fail to point this out is a disservice to their readers/viewers. But, as we know, media is owned by extremely wealthy people and they still love the Bush era which the rich got super rich while the bottom 90% treaded water.

Go read the whole article, there is much detail that you won't get elsewhere:

Using Governor Palin's story, there may be mothers who are less wealthy than her who will be able to care for a baby with Down Syndrome or other serious affliction as a result of President Obama's plan. These mothers might not otherwise have this option because they could not afford the health care. It is easy to see how President Obama's plan can lead to life compared with the current situation. It's virtually impossible to see how it leads to death.

The media have allowed the politicians to turn life into death and night into day when it comes to the health care debate because they decided that anything said against President Obama's plan should be treated with respect, no matter how absurd it might be.