Quote of the Day

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.

The Story of America

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.

Gell-Mann on Languages

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.

America, Land of the Freely Arrested

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.

Understanding the Great Recession

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:

1. 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.


2. 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.


3. 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.


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


5. 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.


6. 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.

David Graeber's "Debt: The First 5,000 Years"

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.

Mario Savio Lives!

Here is a speech by Robert Reich in honour of Mario Savio and the Berkeley FSM (Free Speech Movement)...



Sadly, Mario Savio is dead, but his words live on. I love this bit:

There's a time when the operation of the machine becomes so odious—makes you so sick at heart—that you can't take part. You can't even passively take part. And you've got to put your bodies upon the gears and upon the wheels, upon the levers, upon all the apparatus, and you've got to make it stop. And you've got to indicate to the people who run it, to the people who own it, that unless you're free, the machine will be prevented from working at all.



What sparked FSM? Students wanted to include "political" tables on the plaza along with the others about fraternities/sororities and other campus groups. Here is a video of the original "Occupy" Berkeley demo:

The struggle for a better world is an eternal fight. It can't be fought and won and forgotten. Sadly it is an on-going struggle. As Thomas Jefferson said of Shay's Rebellion which occurred shortly after the War of Independence:

What signify a few lives lost in a century or two? The tree of liberty must from time to time be refreshed with the blood of patriots and tyrants. It is its natural manure.

Unlike Jefferson, I would propose that the focus of the struggle should be focused on education, voting, and the moral suasion of protest and not bloody revolution. Violence too often goes off the rails. But an organized and motivated social movement has a legacy. It is potent.

The last few minutes of the video make it very, very clear how actions have consequences and the social struggle continues through the ages. Reich recalls his friend Michael Schwerner who died in 1964 during the Freedom Summer when Mario Savio and many hundreds of other activists went into the Deep South to help register blacks to vote and to help bring change to that deeply brutal and ugly racist society. They won that struggle, but it was a bitter one. Robert Reich is evidence of how a thread of struggle knits the ages together. We are inheritors of previous struggles and our present struggle helps endow the future with a better world. It is an endless struggle, but a necessary struggle and a fruitful struggle.

Getting History Right

As Europe pushes austerity and the Republicans push an austerity agenda in the US, Paul Krugman points out a bit of history that is overlooked:

The Brüning Thing

Joe Weisenthal tells us about an analyst willing to risk a Godwin’s Law citation; Dylan Grice of SocGen points out that it was the deflationary policies of 1930-32, not the inflation of 1923, that brought you-know-who to power.

Indeed. When we hear assertions that Germans are deeply hostile to loose money because of their historical memories, I always wonder why those memories are so selective. Why is 1923 seared into collective memory, while the Brüning disaster has apparently gone down the memory hole?

This is important — and there’s not much time to get the record straight.

The political right thought it could "control" Hitler. He seized power and destroyed Germany. That wasn't the plan that the 1% thought it was so deftly "handling" in 1932. Today the ultra-rich and the political right are sewing the seeds for another disaster. Maybe not a new Hitler, but something disastrous. Sadly, most people don't know enough history to recognize the path the world is on. And sadly, most people -- especially the elites and the politians they have bought lock, stock, and barrel -- don't know enough economics to realize how disastrous their austerity (deficit reduction) plans truly are.

Everybody should read the Joe Weisenthal article that Krugman is pointing at.

Higher Education in America

The government has decided that classroom professors are not getting "the message" across to students and have unleashed the police with batons to club and spear peacefully protesting students. This is a very important lesson about "power" in America:



More details from Berkleyside.

The top 0.01% control the politicians, the courts, and the police. So when students don't respect the right of the rich to plunder the middle class and impoverish the poor, then a little "school lesson" is needed with billy clubs to "beat some sense" into students.

Sadly, that is America. Land of the "free to be beaten up". Gone are the days of free speech and the right to assemble. These are they days when you need to buy your political rights just like the billionaires have so successfully done.

Update 2011nov13: Here is a bit from the student newspaper The Daily Californian:

For UC Berkeley graduate student Alex Barnard, the most disempowering moment of Wednesday night was not when he was repeatedly hit with a police baton, cracking one of his ribs. Instead, the most disturbing moment of his experience came afterward, when he says an officer told him he had “no rights.”

According to Barnard, who was arrested along 31 others as part of Wednesday night’s Occupy Cal demonstration, after he was handcuffed with a zip tie and taken into Sproul Hall, a police officer asked him for identifying information. Rather than immediately answering, Barnard said he asked the officer about his rights and when he would be allowed to speak to a lawyer. It was then that the officer told him he had no rights and, after Barnard disputed the statement, said he would be recorded as “uncooperative” on his police forms, according to Barnard.

“You didn’t have a voice,” Barnard said.

The experience described by Barnard and his fellow protesters’ violent treatment at the hands of the police — supported by video footage taken at the demonstration — has led to wide-spread condemnation of the police response. Critics ranging from campus student groups to members of the UC Berkeley faculty and even the national media have spoken out against the police officers’ use of force.

According to a campus-wide email sent by Chancellor Robert Birgeneau and other top campus administrators, the campus Police Review Board will investigate whether police used excessive force given the circumstances.

Go read the original news story to get all the details and the embedded links.

I love it when the official have "an official investigation". It is just a way to bury the item. These students were assaulted by the police. No policeman was arrested for assault. The "investigation" will find "extenuating circumstances" and the whole thing will be buried. That is how the elites make sure that nobody rocks the boat. You have no rights. Sure you have lots of "paper" rights, but money in America owns all the "rights". Until the people change that, the standard of living in the US will continue to decline and the government will continue on its path to banana republic.

Update2011nov14: Here is a bit from a well thought out analysis of the hypocrisy of the UC Berkeley authorities by Aaron Bady on his blog zunguzungu. It also has more video and some detailed comments and specifics. But the key point is this:

I feel a lot of déjà vu in reading about these events. According to the UC administration, who have offered a lot of empty words in support of Occupy Wall Street in past emails, it wasn’t the aims of the protesters they opposed but their tactics. As they go on to elaborate:

This decision is largely governed by practical, not philosophical, considerations. We are not equipped to manage the hygiene, safety, space, and conflict issues that emerge when an encampment takes hold and the more intransigent individuals gain control. Our intention in sending out our message early was to alert everyone that these activities would not be permitted. We regret that, in spite of forewarnings, we encountered a situation where, to uphold our policy, we were required to forcibly remove tents and arrest people.

Allow me to retort: what they really mean is that the University of California is not, in fact, governed by “a philosophy,” but by the reverse: an active refusal to require a philosophy in justifying its choices. That way he can write that “UC Berkeley as an institution shares many of the highest principles associated with the OWS movement,” but also actively work in opposition to people’s attempts to put those principles into practice. This is an arbitrary line in the sand, drawn by an administration that is unflinchingly willing to use whatever means necessary to maintain their ability to draw arbitrary lines. Your philosophy is not wanted here, they are saying; in the name of practical considerations — which they define — you will be governed by government. And so the fact that students are trying to “democratize the regents,” as a popular chant puts it, is exactly the threat. A sentence like this one:

We are not equipped to manage the hygiene, safety, space, and conflict issues that emerge when an encampment takes hold and the more intransigent individuals gain control.

is just another way of saying that when “intransigent” individuals refuse to acknowledge the university’s authority, the administration won’t be able to exercise its authority, so it will therefore need to exercise its authority. This is exactly as tautological and contradictory a line of “reasoning” as it sounds, a rhetorical snake eating its own tail. To maintain hygiene, the students cannot use tents to keep themselves warm; to manage the space, students must be kept out; to address “conflict issues,” students had to be attacked; and to keep the students safe, they will be beaten.

The language falls apart at this point, because it’s not “philosophy” that’s driving any of this, but the question of who has the right to speak and be heard about what the university is for. Which is why the next paragraph truly descends into absurdity, the one where you realize you are not dealing with an educator, but with a university Ministry of Truth:

It is unfortunate that some protesters chose to obstruct the police by linking arms and forming a human chain to prevent the police from gaining access to the tents. This is not non-violent civil disobedience. By contrast, some of the protesters chose to be arrested peacefully; they were told to leave their tents, informed that they would be arrested if they did not, and indicated their intention to be arrested. They did not resist arrest or try physically to obstruct the police officers’ efforts to remove the tent. These protesters were acting in the tradition of peaceful civil disobedience, and we honor them.

What he describes — occupying space in a way that nonviolently prevents the police from doing what they want — is actually the very definition of “non-violent civil disobedience.” On the one hand, it is utterly non-violent: linking arms and holding on to each other as the police try to knock you apart is not “violent” but is precisely the opposite. It is the endurance of violence. And second, it is civil disobedience, again, precisely by definition. They were disobeying civil authorities, obeying the authority of their own consciences and solidarity instead

I want to skim past this sentence on to the next part, however which is in some ways the most remarkable part: he argues that the “tradition of peaceful civil disobedience,” which deserves honor, is a tradition of obedience to civil authorities. He says that “we honor” those who do not obstruct the administration’s decisions, and that those who are “acting in the tradition of peaceful civil disobedience” are, it turns out, those who obey authority.

This is not even ideology. This is simply nonsense. UCI professor Rei Terada has a great piece on what the administrator’s language might mean, but for me the important point to make is a much simpler one: they aren’t defending what they did — which would require admitting what they did — but only obfuscating it in language so bad that I can’t decide whether to call it vapid or actively dishonest. “Civil Disobedience” has always been, manifestly and unmistakably, a tradition of disobeying the civil authorities. I feel silly even needing to spell that out. And I feel embarrassed to work as an educator in the employ of anyone who would stand behind such specious stupidity. Linking arms and occupying the space between the police and their objective is a tactic used by just about every example of civil disobedience I can think of. It is, quite frankly the single best and most iconic example of the thing he says it is not. He is chewing up these words until they have become meaningless. Calling this language “Orwellian” is not hyperbole or exaggeration.

If he wants, Chancellor Birgeneau can approve of what the police did on Wednesday. If he wants to believe and argue that it is justifiable to try to break the bodies of students in hope of breaking their spirits, then let him believe it and argue it and then try to justify it. Let him tell us that when students put up tents on Sproul Plaza, the police will beat them until they take those tents down. Let him declare forthrightly that when students stand on grass at the wrong time and place — a time that is subject to the capricious and arbitrary decrees of the police and those who call them in — the administration believes its authority and responsibility is to beat them until they comply.

They have not said this. Birgeneau and his executive administrators are hiding behind meaningless language rather than talk openly and honestly about what everyone who was there or has seen those videos knows to be true: the UC will hurt you if you obstruct them or challenge their authority, even nonviolently. Free speech is a function of free thinking, and on the campus of free speech, Birgeneau should be free to say and think what he pleases, even if what he says is that those who do not obey will be beaten into submission. But let us hear him say that, if that’s what he believes. Let him admit and stand behind the decision he has made.

The Lowly Potato

Here is a bit from an excellent article in the Smithsonian magazine about the potato:

Many researchers believe that the potato’s arrival in northern Europe spelled an end to famine there. (Corn, another American crop, played a similar but smaller role in southern Europe.) More than that, as the historian William H. McNeill has argued, the potato led to empire: “By feeding rapidly growing populations, [it] permitted a handful of European nations to assert dominion over most of the world between 1750 and 1950.” The potato, in other words, fueled the rise of the West.

Equally important, the European and North American adoption of the potato set the template for modern agriculture—the so-called agro-industrial complex. Not only did the Columbian Exchange carry the potato across the Atlantic, it also brought the world’s first intensive fertilizer: Peruvian guano. And when potatoes fell to the attack of another import, the Colorado potato beetle, panicked farmers turned to the first artificial pesticide: a form of arsenic. Competition to produce ever-more-potent arsenic blends launched the modern pesticide industry. In the 1940s and 1950s, improved crops, high-intensity fertilizers and chemical pesticides created the Green Revolution, the explosion of agricultural productivity that transformed farms from Illinois to Indonesia—and set off a political argument about the food supply that grows more intense by the day.

...

Wild potatoes are laced with solanine and tomatine, toxic compounds believed to defend the plants against attacks from dangerous organisms like fungi, bacteria and human beings. Cooking often breaks down such chemical defenses, but solanine and tomatine are unaffected by heat. In the mountains, guanaco and vicuña (wild relatives of the llama) lick clay before eating poisonous plants. The toxins stick—more technically, “adsorb”—to the fine clay particles in the animals’ stomachs, passing through the digestive system without affecting it. Mimicking this process, mountain peoples apparently learned to dunk wild potatoes in a “gravy” made of clay and water. Eventually they bred less-toxic potatoes, though some of the old, poisonous varieties remain, favored for their resistance to frost. Clay dust is still sold in Peruvian and Bolivian markets to accompany them.

...

Continental farmers regarded this alien food with fascinated suspicion; some believed it an aphrodisiac, others a cause of fever or leprosy. The philosopher-critic Denis Diderot took a middle stance in his Encyclopedia (1751-65), Europe’s first general compendium of Enlightenment thought. “No matter how you prepare it, the root is tasteless and starchy,” he wrote. “It cannot be regarded as an enjoyable food, but it provides abundant, reasonably healthy food for men who want nothing but sustenance.” Diderot viewed the potato as “windy.” (It caused gas.) Still, he gave it the thumbs up. “What is windiness,” he asked, “to the strong bodies of peasants and laborers?”

With such halfhearted endorsements, the potato spread slowly. When Prussia was hit by famine in 1744, King Frederick the Great, a potato enthusiast, had to order the peasantry to eat the tubers. In England, 18th-century farmers denounced S. tuberosum as an advance scout for hated Roman Catholicism. “No Potatoes, No Popery!” was an election slogan in 1765. France was especially slow to adopt the spud. Into the fray stepped Antoine-Augustin Parmentier, the potato’s Johnny Appleseed.

Trained as a pharmacist, Parmentier served in the army during the Seven Years’ War and was captured by the Prussians—five times. During his multiple prison stints he ate little but potatoes, a diet that kept him in good health. His surprise at this outcome led Parmentier to become a pioneering nutritional chemist after the war ended, in 1763; he devoted the rest of his life to promulgating S. tuberosum.

Parmentier’s timing was good. After Louis XVI was crowned in 1775, he lifted price controls on grain. Bread prices shot up, sparking what became known as the Flour War: more than 300 civil disturbances in 82 towns. Parmentier tirelessly proclaimed that France would stop fighting over bread if only her citizens would eat potatoes. Meanwhile, he set up one publicity stunt after another: presenting an all-potato dinner to high-society guests (the story goes that Thomas Jefferson, one of the guests, was so delighted he introduced French fries to America); supposedly persuading the king and queen to wear potato blossoms; and planting 40 acres of potatoes at the edge of Paris, knowing that famished commoners would steal them.

In exalting the potato, Parmentier unwittingly changed it. All of Europe’s potatoes descended from a few tubers sent across the ocean by curious Spaniards. When farmers plant pieces of tuber, rather than seeds, the resultant sprouts are clones. By urging potato cultivation on a massive scale, Parmentier was unknowingly promoting the notion of planting huge areas with clones—a true monoculture.

The effects of this transformation were so striking that any general history of Europe without an entry in its index for S. tuberosum should be ignored. Hunger was a familiar presence in 17th- and 18th-century Europe. Cities were provisioned reasonably well in most years, their granaries carefully monitored, but country people teetered on a precipice. France, the historian Fernand Braudel once calculated, had 40 nationwide famines between 1500 and 1800, more than one per decade. This appalling figure is an underestimate, he wrote, “because it omits the hundreds and hundreds of local famines.” France was not exceptional; England had 17 national and big regional famines between 1523 and 1623. The continent simply could not reliably feed itself.

The potato changed all that. Every year, many farmers left fallow as much as half of their grain land, to rest the soil and fight weeds (which were plowed under in summer). Now smallholders could grow potatoes on the fallow land, controlling weeds by hoeing. Because potatoes were so productive, the effective result, in terms of calories, was to double Europe’s food supply.

It is a fascinating story. Go read the whole thing.

Heresy and Global Warming

Here is a bit from a talk by Matt Ridley at the RSA:

Using these six lessons, I am now going to plunge into an issue on which almost all the experts are not only confident they can predict the future, but absolutely certain their opponents are pseudoscientists. It is an issue on which I am now a heretic. I think the establishment view is infested with pseudoscience. The issue is climate change.

Now before you all rush for the exits, and I know it is traditional to walk out on speakers who do not toe the line on climate at the RSA – I saw it happen to Bjorn Lomborg last year when he gave the Prince Philip lecture – let me be quite clear. I am not a “denier”. I fully accept that carbon dioxide is a greenhouse gas, the climate has been warming and that man is very likely to be at least partly responsible. When a study was published recently saying that 98% of scientists “believe” in global warming, I looked at the questions they had been asked and realized I was in the 98%, too, by that definition, though I never use the word “believe” about myself. Likewise the recent study from Berkeley, which concluded that the land surface of the continents has indeed been warming at about the rate people thought, changed nothing.

So what’s the problem? The problem is that you can accept all the basic tenets of greenhouse physics and still conclude that the threat of a dangerously large warming is so improbable as to be negligible, while the threat of real harm from climate-mitigation policies is already so high as to be worrying, that the cure is proving far worse than the disease is ever likely to be. Or as I put it once, we may be putting a tourniquet round our necks to stop a nosebleed.

I also think the climate debate is a massive distraction from much more urgent environmental problems like invasive species and overfishing.

I was not always such a “lukewarmer”. In the mid 2000s one image in particular played a big role in making me abandon my doubts about dangerous man-made climate change: the hockey stick*. It clearly showed that something unprecedented was happening. I can remember where I first saw it at a conference and how I thought: aha, now there at last is some really clear data showing that today’s temperatures are unprecedented in both magnitude and rate of change – and it has been published in Nature magazine.

Yet it has been utterly debunked by the work of Steve McIntyre and Ross McKitrick. I urge you to read Andrew Montford’s careful and highly readable book The Hockey Stick Illusion*. Here is not the place to go into detail, but briefly the problem is both mathematical and empirical. The graph relies heavily on some flawed data – strip-bark tree rings from bristlecone pines -- and on a particular method of principal component analysis, called short centering, that heavily weights any hockey-stick shaped sample at the expense of any other sample. When I say heavily – I mean 390 times.

This had a big impact on me. This was the moment somebody told me they had made the crop circle the night before.

For, apart from the hockey stick, there is no evidence that climate is changing dangerously or faster than in the past, when it changed naturally.

It was warmer in the Middle ages* and medieval climate change in Greenland was much faster.

Stalagmites*, tree lines and ice cores all confirm that it was significantly warmer 7000 years ago. Evidence from Greenland suggests that the Arctic ocean was probably ice free for part of the late summer at that time.

Sea level* is rising at the unthreatening rate about a foot per century and decelerating.

Greenland is losing ice at the rate of about 150 gigatonnes a year, which is 0.6% per century.

There has been no significant warming in Antarctica*, with the exception of the peninsula.

Methane* has largely stopped increasing.

Tropical storm* intensity and frequency have gone down, not up, in the last 20 years.

Your probability* of dying as a result of a drought, a flood or a storm is 98% lower globally than it was in the 1920s.

Malaria* has retreated not expanded as the world has warmed.

And so on. I’ve looked and looked but I cannot find one piece of data – as opposed to a model – that shows either unprecedented change or change is that is anywhere close to causing real harm.

It is well worth your time reading the whole talk. There is a fine line between pseudoscience and science, and as Ridley points out, many outstanding scientists have simultaneously been on both sides at the same time on different issues.

The problem with fanatics is that they willing change the goal posts and reinterpret everything as support for their viewpoint. Here is Ridley on climate "sensitivity":

Nor is there even any theoretical support for a dangerous future. The central issue is “sensitivity”: the amount of warming that you can expect from a doubling of carbon dioxide levels. On this, there is something close to consensus – at first. It is 1.2 degrees centigrade. Here’s* how the IPCC put it in its latest report.

“In the idealised situation that the climate response to a doubling of atmospheric CO2 consisted of a uniform temperature change only, with no feedbacks operating…the global warming from GCMs would be around 1.2°C.” Paragraph 8.6.2.3.

Now the paragraph goes on to argue that large, net positive feedbacks, mostly from water vapour, are likely to amplify this. But whereas there is good consensus about the 1.2 C, there is absolutely no consensus about the net positive feedback, as the IPCC also admits. Water vapour forms clouds and whether clouds in practice amplify or dampen any greenhouse warming remains in doubt.

So to say there is a consensus about some global warming is true; to say there is a consensus about dangerous global warming is false.

The sensitivity of the climate could be a harmless 1.2C, half of which has already been experienced, or it could be less if feedbacks are negative or it could be more if feedbacks are positive. What does the empirical evidence say? Since 1960 we have had roughly one-third of a doubling, so we must have had almost half of the greenhouse warming expected from a doubling – that’s elementary arithmetic, given that the curve is agreed to be logarithmic. Yet if you believe the surface thermometers* (the red and green lines), we have had about 0.6C of warming in that time, at the rate of less than 0.13C per decade – somewhat less if you believe the satellite thermometers (the blue and purple lines).

So we are on track for 1.2C*. We are on the blue line, not the red line*.

Remember Jim Hansen of NASA told us in 1988 to expect 2-4 degrees in 25 years. We are experiencing about one-tenth of that.

We are below even the zero-emission path expected by the IPCC in 1990*.

To be skeptical of the IPCC claims is to be ostracized as a fanatic, somebody tenaciously holding to a disproved view since "the science is settled". But I fully expect to see the IPCC and the "global warming" crowd defrocked and disgraced before my life is over. In the interim, I expect to be pilloried for my unwillingness to be "reasonable" and "accept the facts". As Ridley points out, it is very, very hard to debunk and defeat pseudoscience.

Journalists are fond of saying that the IPCC report is based solely on the peer-reviewed literature. Rajendra Pachauri himself made that claim in 2008, saying*:

“we carry out an assessment of climate change based on peer-reviewed literature, so everything that we look at and take into account in our assessments has to carry [the] credibility of peer-reviewed publications, we don't settle for anything less than that.”

That’s a voodoo claim. The glacier claim was not peer reviewed; nor was the alteration to the sensitivity function Lewis spotted. The journalist Donna Laframboise got volunteers all over the world to help her count the times the IPCC used non-peer reviewed literature. Her conclusion is that*: “Of the 18,531 references in the 2007 Climate Bible we found 5,587 - a full 30% - to be non peer-reviewed.”

Truth will win out. But as Ridley notes:

Yet even to say things like this is to commit heresy. To stand up and say, within a university or within the BBC, that you do not think global warming is dangerous gets you the sort of reaction that standing up in the Vatican and saying you don’t think God is good would get. Believe me, I have tried it.

And this isn't just a quibble of science versus pseudoscience. It is real dollars and cents:

Well here’s why it matters. The alarmists have been handed power over our lives; the heretics have not. Remember Britain’s unilateral climate act is officially expected to cost the hard-pressed UK economy £18.3 billion a year for the next 39 years and achieve an unmeasurably small change in carbon dioxide levels.

At least* sceptics do not cover the hills of Scotland with useless, expensive, duke-subsidising wind turbines whose manufacture causes pollution in Inner Mongolia and which kill rare raptors such as this griffon vulture.

...

At least astrologers have not driven millions of people into real hunger, perhaps killing 192,000 last year according to one conservative estimate, by diverting 5% of the world’s grain crop into motor fuel*.

My personal bête noire is the willingness of these global warming fanatics to condemn the bottom 3 billion to a pauperized future by calling for a halt to economic growth in order to stop what, to me at least, was a phantom problem. These fanatics want to return to the "golden age" of the early 1800s before the growth of fossil fuel. They want to go back to the glorious days of trailing behind horse or ox to plow a field. They days when families huddled in an unheated cottage in the dark because light and fuel were expensive.

There is a bad historical precedent for the current struggle of science vs pseudoscience:

Handing the reins of power to pseudoscience has an unhappy history. Remember eugenics. Around 1910 the vast majority of scientists and other intellectuals agreed that nationalizing reproductive decisions so as to stop poor, disabled and stupid people from having babies was not just a practical but a moral imperative of great urgency.

“There is now no reasonable excuse for refusing to face the fact,” said George Bernard Shaw*, “that nothing but a eugenics religion can save our civilization from the fate that has overtaken all previous civilizations.’’ By the skin of its teeth, mainly because of a brave Liberal MP called Josiah Wedgwood, Britain never handed legal power to the eugenics movement. Germany did.

Or remember Trofim Lysenko*, a pseudoscientific crank with a strange idea that crops could be trained to do what you wanted and that Mendelian genetics was bunk. His ideas became the official scientific religion of the Soviet Union and killed millions; his critics, such as the geneticist Nikolai Vavilov, ended up dead in prison.

Am I going too far in making these comparisons? I don’t think so. James Hansen of NASA says oil firm executives should be tried for crimes against humanity. (Remember this is the man who is in charge of one of the supposedly impartial data sets about global temperatures.) John Beddington, Britain's chief scientific adviser, said this year that just as we are "grossly intolerant of racism", so we should also be "grossly intolerant of pseudoscience", in which he included all forms of climate-change scepticism.

The irony of course is that much of the green movement began as heretical dissent. Greenpeace went from demanding that the orthodox view of genetically modified crops be challenged, and that the Royal Society was not to be trusted, to demanding that heresy on climate change be ignored and the Royal Society could not be wrong.

Talking of Greenpeace, did you know that the collective annual budget of Greenpeace, WWF and Friends of the Earth was more than a billion dollars globally last year? People sometimes ask me what’s the incentive for scientists to exaggerate climate change. But look at the sums of money available to those who do so, from the pressure groups, from governments and from big companies. It was not the sceptics who hired an ex News of the World deputy editor as a spin doctor after climategate, it was the University of East Anglia.

By contrast scientists and most mainstream journalists risk their careers if they take a skeptical line, so dogmatic is the consensus view. It is left to the blogosphere to keep the flame of heresy alive and do the investigative reporting the media has forgotten how to do. In America*, Anthony Watts who crowd-sourced the errors in the siting of thermometers and runs wattsupwiththat.com;

In Canada*, Steve McIntyre, the mathematician who bit by bit exposed the shocking story of the hockey stick and runs climateaudit.org.

Here in Britain,* Andrew Montford, who dissected the shenanigans behind the climategate whitewash enquiries and runs bishop-hill.net.

In Australia*, Joanne Nova, the former television science presenter who has pieced together the enormous sums of money that go to support vested interests in alarm, and runs joannenova.com.au.

The remarkable thing about the heretics I have mentioned is that every single one is doing this in his or her spare time. They work for themselves, they earn a pittance from this work. There is no great fossil-fuel slush fund for sceptics.

As "Deep Throat" in the Watergate scandal advised: "Follow the money."

Go read the full Matt Ridley talk.

Krugman Identifies the Real Radicals

From Paul Krugman's NY Times blog:

The Amnesiac Economy

Mark Thoma sends us to John Cassidy on the absence of really new ideas in this crisis — largely because we didn’t need new ideas, all we needed for the most part was to remember things that we somehow forgot.

This is a theme dear to my heart. The crisis we’re in is not something unprecedented. It’s a close cousin to the Great Depression — milder, but recognizably the same sort of thing. And we understand — or used to understand — how the Depression happened, and what to do in such a situation. Most of what’s required are fairly straightforward translations of existing concepts. For example, we have a pretty good understanding of bank runs; extending that framework to shadow banking requires little more than the understanding that repo and other kinds of short-maturity obligations are, from an economic point of view, more or less equivalent to deposits.

So how is it that policy is so confused and lost?

I’ve been arguing for a while that much of the economics profession has lost its way, recapitulating old errors because it made a point of unlearning what Keynes taught. But it’s not just economists who willfully threw away hard-won insights.

On Monday night we had a panel discussion of the euro crisis at Princeton — me, Chris Sims, Hyun Shin, Markus Brunnermeier. I was struck by some of what Sims had to say. He pointed out that central banks have always had a wider mandate than simply guaranteeing price stability; they’ve always served as lenders of last resort, including having a standby capacity to finance the government in times of need. And there are good, well-understood reasons for this wider mandate. Yet the creators of the euro essentially threw away hard-won wisdom — stuff that Bagehot knew in the 19th century! — to create a stripped-down central bank without the powers or flexibility that history has shown are necessary. What were they thinking?

The result of all this is that the supposedly sober, serious people are actually radicals insisting that we can make the economy work in ways that it has never worked in the past — hence the embrace of magical thinking on expansionary austerity and the power of structural reform. Meanwhile, the irresponsible bearded professors are actually the custodians of traditional wisdom.

And those who are determined to forget the past run a high risk of reliving it — which is why we’re in the state we’re in.

The similarity of the arrogance shown by many "economists" and the EU bank is the same kind of arrogance shown by the neo-cons and Donald Rumsfeld. It is a willful rejection of the past and a claim to "superior" knowledge that is based not on fact and theory but on a willful distortion to fit a preconceived ideology. History is replete with this kind of "radical" taking control and wrecking things while claiming "superior knowledge".

Stable societies have traditions and accreditation requirements put in place to prevent these usurpers from taking control and wrecking things. Private business faces a similar problem with psychopaths take high positions. These are individuals with no regard for others an an overweening sense of self that lets them wreck everything about them for their own gratification or sense of self importance.

Krugman Reviews the State of the "Recovery"

From Paul Krugman's NY Times op-ed column in the NY Times:

But it’s worth stepping back to look at the larger picture, namely the abject failure of an economic doctrine — a doctrine that has inflicted huge damage both in Europe and in the United States.

The doctrine in question amounts to the assertion that, in the aftermath of a financial crisis, banks must be bailed out but the general public must pay the price. So a crisis brought on by deregulation becomes a reason to move even further to the right; a time of mass unemployment, instead of spurring public efforts to create jobs, becomes an era of austerity, in which government spending and social programs are slashed.

This doctrine was sold both with claims that there was no alternative — that both bailouts and spending cuts were necessary to satisfy financial markets — and with claims that fiscal austerity would actually create jobs. The idea was that spending cuts would make consumers and businesses more confident. And this confidence would supposedly stimulate private spending, more than offsetting the depressing effects of government cutbacks.

...

But the doctrine has, nonetheless, been extremely influential. Expansionary austerity, in particular, has been championed both by Republicans in Congress and by the European Central Bank, which last year urged all European governments — not just those in fiscal distress — to engage in “fiscal consolidation.”

And when David Cameron became Britain’s prime minster last year, he immediately embarked on a program of spending cuts in the belief that this would actually boost the economy — a decision that was greeted with fawning praise by many American pundits.

Now, however, the results are in, and the picture isn’t pretty. Greece has been pushed by its austerity measures into an ever-deepening slump — and that slump, not lack of effort on the part of the Greek government, was the reason a classified report to European leaders concluded last week that the existing program there was unworkable. Britain’s economy has stalled under the impact of austerity, and confidence from both businesses and consumers has slumped, not soared.

Maybe the most telling thing is what now passes for a success story. A few months ago various pundits began hailing the achievements of Latvia, which in the aftermath of a terrible recession, nonetheless, managed to reduce its budget deficit and convince markets that it was fiscally sound. That was, indeed, impressive, but it came at the cost of 16 percent unemployment and an economy that, while finally growing, is still 18 percent smaller than it was before the crisis.

So bailing out the banks while punishing workers is not, in fact, a recipe for prosperity. But was there any alternative? Well, that’s why I’m in Iceland, attending a conference about the country that did something different.

If you’ve been reading accounts of the financial crisis, or watching film treatments like the excellent “Inside Job,” you know that Iceland was supposed to be the ultimate economic disaster story: its runaway bankers saddled the country with huge debts and seemed to leave the nation in a hopeless position.

But a funny thing happened on the way to economic Armageddon: Iceland’s very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.

It is tragic that all the countries around the world are in the grip of right wing ideology and simply refuse to use the lessons learned in the Great Depression and nicely summarized by John Maynard Keynes: Central government must lean against the wind. During good times have a surplus for a rainy day. During bad times, spend to replace the missing spending by the private sector.

Austerity appeals to the bond holders because it ensures the "soundness" of the money (and even promotes deflation) which gives the holders of cash an even greater share of the wealth. Meanwhile, the debters burden gets more crushing. Normally you would inflate you way out of a depression because you want to encourage those holding cash to either spend it or invest it.

The "policies" of 2008 to now have been to reward the Wall Street miscreants while punishing the innocent. It is an insane policy. It was the George Bush policy and now it is the Barack Obama policy. Shame!

Sylvia Nasar's "Grand Pursuit"

This book is an intellectual history of economics with a focus on a handful of names: Karl Marx, Alfred Marshall, Beatrice Webb, Irving Fisher, Joseph Schumpeter, John Maynard Keynes, Friedrich Hayek, Joan Robinson, Milton Friedman, Paul Samuelson, and Amartya Sen.

As you can see, those choices are idiosyncratic. Most modern economists would not include Marx, Webb, and Robinson since they are off in the dead end of Marxist "economics". But for me they are part of the spice of this book. This isn't a text to teach you economics. It is really more of a history of personalities and circumstances. The stories are delightful. The sketches of economics are thin gruel, so don't come here to understand economic theory. Come to savour history, personalities, and ideas.

What I found delightful is that the book reinforced my prejudices. Economics is not a "science". It is a liberal art with the pretension of science through its mathematicization of its arguments. The formalism doesn't make the models and arguments any more right. They do provide a bit more formal clarity but they also lead to obscurantism with dithering over details and ridiculous "simplifying" assumptions. I had a mathematician as a friend who made this point by arguing about cows by first stating "consider a sphere". Yep... mathematics does some wonderful leaps in simplification to make the mathematics "tractable".

Here are some snippets to give you a feel for the writing style:

Before resuming his journey north to the Scottish highlands, Alfred Marshall, a twenty-four-year-old mathematician and fellow of St. Hohn's College in Cambridge, spent hours walking through factory districts and the surrounding slums "looking into the faces of the poorest people." He was debating whether to make German philosophy or Austrian psychology his life's work. These were his first steps away from metaphysics and the beginning of a dogged pursuit of social reality. He later said that these walks forced him to consider the "justification of existing conditions of society."

In Manchester, Marshall found the smoky brown sky, muddy brown streets, and long piles of warehouses, cavernous mills, and insalubrious tenements -- all within a few hundred yards of glittering shops, gracious parks, and grand hotels -- that novels such as Elizabeth Gaskell's North and South had led him to expect. In the narrow backstreets he encountered sallow, undersized men and stunted, pale factory girls with thin shawls and hair flecked with wisps of cotton. The sight of "so much want" amid "so much wealth" prompted Marshall to ask whether the existence of a proletariat was indeed a "necessity of nature," as he had been taught to believe. "Why not make every man a gentleman?" he asked himself.

...

He took great pains to demolish Socialists' claim that but for oppression by the rich, the poor could live in "absolute luxury." England's annual income totaled about £900 million, he told the women. The wages paid to manual workers amounted to a total of £400 million. Most of the remaining £500 million, Marshall pointed out, represented the wages of workers who did not belong to the so-called working classes: semiskilled and skilled workers, government officials and military, professionals, and managers. In fact, an absolutely equal division of Britain's annual income would provide less than £37 per capita. Reducing poverty required expanding output and increasing efficiency; in other words, economic growth.

One of the points that Nasar makes is that modern societies organized around liberal economic principles has unleashed productivity and wealth. But as I read the above I keep picturing the billionaire tycoons on Wall Street and the masses in the street with their Occupy Wall Street protests. Sure there has been progress, but the economic injustice is still just as bad. The greed and indifference is there which exacerbates the pain. The fact that the billionaires can buy the politicians means that nothing will ever change. The fact that the rich are pushing to cut education and social services while cutting taxes on the rich as their "solution" to the current Lesser Depression is very depressing.

Sylvia Nasar's story points out that the same humbug and foot-dragging that blocked a real solution to the Great Depression was very, very similar to the humbug and foot-dragging of today:

Despite his financial straits, damaged reputation, and advancing age, the sixty-five-year-old Fisher seemed more energized than depressed by the economic calamity. In 1932 he published an extraordinary number of scientific papers and newspaper pieces. He bombarded the Hoover administration and the Federal Reserve with advice and organized other economists to do the same. His chief objective was to convince President Hoover to take the United States off the gold standard, if not de jure then de facto by having the Federal Reserve do nothing to prevent the foreign exchange value of the dollar from falling. He met with the bankers at the Federal Reserve to urge them to adopt an aggressive program to buy bonds from the banks and the public in order to pump money into the banking system. To his frustration, the "Federal Reserve men thought it would be 'safer' if they waited!" as he later complained. "That waiting, in my opinion, cost the country the major part of the depression."

In January 1932, Fisher attended a second meeting of monetary experts at the University of Chicago. This time, he organized a telegram urging the president to permit the federal budget deficit to rise, pump reserves into the crippled banking system, slash tariffs, and cancel inter-allied debts. Thirty-two prominent economists from Chicago, Wisconsin, and Harvard universities signed the statement, in which Fisher pointed out that Sweden, Japan, and Britain were recovering after going off gold the previous year. The signatories reflected the extent to which Fisher and Keynes's view of the crisis with its emphasis on its global nature, monetary causes, forecasts of its future course, and the need for concerted monetary intervention had gained adherents. On the other hand, theirs was still a minority view.

Sadly, today Obama ignores neo-Keynesian solutions. He shows himself to be uneducated about economics and has surrounded himself with the same fanatical deregulation libertarian economists who created this Lesser Depression. There has been absolutely no progress in economic "science" in 80 years. The same humbug and "morality play" rationalizing goes on to protect bondholders at the expense of the 25 million unemployed, the 10 million who are losing their homes, the youth who have given up on education because it is too expensive, and those nearing retirement who are desperate because their savings are exhausted. It is a social disaster, but Obama is acting like a modern Hoover and the 2012 Republican presidential candidates would make Hoover look like a bleeding-heart liberal. Tragic.

Sylvia Nasar traces out Keynes' thinking:

As the Great Depression dragged on, Keynes's faith in the effectiveness of monetary policy ebbed further. By the time A Treatise on Money appeared, he was beginning to pose a theory of the causes of unemployment. Cambridge undergraduates were his first audience. The nub of the new theory was that, as he put it in an article published in the American Economic Review in December 1933, "circumstances can arise, and have recently arisen, when neither control of the short-rate of interest nor control of the long-rate will be effective, with the result that direct stimulation of investment by government is a necessary means."

In a severe depression, prices fell even faster than interest rates. So reductions in nominal rates did not prevent real rates from climbing. Once nominal rates fell to zero, there was nothing further that the central bank could do to make borrowing cheaper or to ease debt burdens and thus to end the depression -- with incalculable political consequences, what Keynes called The Liquidity Trap. As he had once observed, "The inability of the interest rate to fall has brought down empires." Once monetary policy was rendered ineffectual, the only option for shoring up demand was getting money into the hands of those who could spend it.

...

As Herbert Stein, the economist, pointed out, Keynes asked a very different question from the one posed by Hayek and Schumpeter. In explaining depressions, in terms of the preceding booms, the Austrians were trying to figure out how the economy had gotten there. Keynes was less interested in the genesis of slumps than in the more basic puzzle of how high unemployment and slack capacity could persist for long in a free market economy with unrestricted competition.

...

Thus what made the General Theory so radical was Keynes' proof that it was possible for a free market economy to settle into states in which workers and machines remained idle for prolonged periods of time -- that there were depressions that, unlike the garden-variety ones, were not brief and didn't end of their own accord as a result of falling prices and interest rates, or, at an extreme, that free market economies tended naturally to stagnate even when there were idle workers and machines available. In such depressions, unfreezing credit flows through monetary policy didn't provide a sufficient stimulus, because even zero-percent interest rates could not tempt businesses to borrow while prices were falling and there was [no] reason to think that demand would recover. The only way to revive business confidence and get the private sector spending again was by cutting taxes and letting businesses and individuals keep more of their income so that they could spend it. Or, better yet, having the government spend more money directly, since that would guarantee that 100 percent of it would be spent rather than saved. If the private sector couldn't or wouldn't spend, then the government had to do it. For Keynes, the government had to be prepared to act as the spender of last resort, just as the central bank acted as the lender of last resort.

This is the same intellectual landscape that has policy makers hung up today. Bernanke and the Federal Reserve have been too timid in using monetary policy and now the only tool left is fiscal stimulus, but you have right wing nuts screaming about "inflation!" and "debt!". Obama is too timid to properly stimulate the economy and instead falls into the trap of Hoover and FDR in 1937 of worrying about deficits and debts. They ignore the ruined lives and the lost production that can never be retrieved while the country stays mired in a depression. The arguments of 80 years ago are lost to policy makers today because they are illiterate about history and economics. Oh, and they are blinded by their ideology, an ideology bought and paid for by the billionaire ultra-rich who are quite happy to leave the system just as it is, a system that has let them exploit it for billions in personal gain. This is a tragedy for the bottom 99%. The top 1% are laughing, but the bottom 1% are paying in ruined lives... and they will also pay through taxes to cover the lost monies and even provide the billionaire bonuses for the frauds and cheats who created the mess. Sorrows heaped on woes, and smothered with injustice.

This is a good read and it is highly relevant. This book will give you useful background to understand the economic arguments of today and the tragedy that today is a maddening repeat of the 1930s.

A History Lesson

Here is an excellent post by Robert Reich on his blog:

The Rise of the Regressive Right and the Reawakening of America

A fundamental war has been waged in this nation since its founding, between progressive forces pushing us forward and regressive forces pulling us backward.

We are going to battle once again.

Progressives believe in openness, equal opportunity, and tolerance. Progressives assume we’re all in it together: We all benefit from public investments in schools and health care and infrastructure. And we all do better with strong safety nets, reasonable constraints on Wall Street and big business, and a truly progressive tax system. Progressives worry when the rich and privileged become powerful enough to undermine democracy.

Regressives take the opposite positions.

Eric Cantor, Paul Ryan, Rick Perry, Michele Bachmann and the other tribunes of today’s Republican right aren’t really conservatives. Their goal isn’t to conserve what we have. It’s to take us backwards.

They’d like to return to the 1920s — before Social Security, unemployment insurance, labor laws, the minimum wage, Medicare and Medicaid, worker safety laws, the Environmental Protection Act, the Glass-Steagall Act, the Securities and Exchange Act, and the Voting Rights Act.

In the 1920s Wall Street was unfettered, the rich grew far richer and everyone else went deep into debt, and the nation closed its doors to immigrants.

Rather than conserve the economy, these regressives want to resurrect the classical economics of the 1920s — the view that economic downturns are best addressed by doing nothing until the “rot” is purged out of the system (as Andrew Mellon, Herbert Hoover’s Treasury Secretary, so decorously put it).

In truth, if they had their way we’d be back in the late nineteenth century — before the federal income tax, antitrust laws, the pure food and drug act, and the Federal Reserve. A time when robber barons — railroad, financial, and oil titans — ran the country. A time of wrenching squalor for the many and mind-numbing wealth for the few.

Listen carefully to today’s Republican right and you hear the same Social Darwinism Americans were fed more than a century ago to justify the brazen inequality of the Gilded Age: Survival of the fittest. Don’t help the poor or unemployed or anyone who’s fallen on bad times, they say, because this only encourages laziness. America will be strong only if we reward the rich and punish the needy.

The regressive right has slowly consolidated power over the last three decades as income and wealth have concentrated at the top. In the late 1970s the richest 1 percent of Americans received 9 percent of total income and held 18 percent of the nation’s wealth; by 2007, they had more than 23 percent of total income and 35 percent of America’s wealth. CEOs of the 1970s were paid 40 times the average worker’s wage; now CEOs receive 300 times the typical workers’ wage.

This concentration of income and wealth has generated the political heft to deregulate Wall Street and halve top tax rates. It has bankrolled the so-called Tea Party movement, and captured the House of Representatives and many state governments. Through a sequence of presidential appointments it has also overtaken the Supreme Court.

Scalia, Alito, Thomas, and Roberts (and, all too often, Kennedy) claim they’re conservative jurists. But they’re judicial activists bent on overturning seventy-five years of jurisprudence by resurrecting states’ rights, treating the 2nd Amendment as if America still relied on local militias, narrowing the Commerce Clause, and calling money speech and corporations people.

Yet the great arc of American history reveals an unmistakable pattern. Whenever privilege and power conspire to pull us backward, the nation eventually rallies and moves forward. Sometimes it takes an economic shock like the bursting of a giant speculative bubble; sometimes we just reach a tipping point where the frustrations of average Americans turn into action.

Look at the Progressive reforms between 1900 and 1916; the New Deal of the 1930s; the Civil Rights struggle of the 1950s and 1960s; the widening opportunities for women, minorities, people with disabilities, and gays; and the environmental reforms of the 1970s.

In each of these eras, regressive forces reignited the progressive ideals on which America is built. The result was fundamental reform.

Perhaps this is what’s beginning to happen again across America.

Now... if only the great majority of Americans would read the above. And hopefully they have enough common sense and enough historical knowledge to understand the truth of what Reich is saying. Sadly I worry that too many Americans live in a ghetto of like-minded fanatics unwilling to expose themselves to the wider world and new ideas. I worry that too many have been taught so many lies and are so hidebound because of their fanatical religious indoctrination that they are simply not open to the truth. Instead of simple process of putting America back onto the path of progress and improvement, this may require a utterly vicious "culture war" to retrieve minds lost to fanaticism and hate.

Sadly, I don't hold much hope for a "reawakening". I watched in the 1960s as people fought very, very hard to achieve civil rights, to stop a mindless war in Vietnam, to give rights to women and homosexuals. None of those battles was really won. Mostly the fanatics of that time died out. Nobody ever conceded defeat. There was no "enlightenment". In fact, the leaders of the political right in the US today would still fight the old battles of the "culture war". They are completely unreconstructed fanatics. That battle is now 50 years old. So the outlook for the US is pretty grim.

Michael Wallis' "David Crockett: The Lion of the West"

This was a fun read. The author is roughly my age and got bit by the same Disney-inspired Davy Crockett bug as me. He wrote this book to set the history straight. It is certainly less wildly romantic and adventurous than the Disney version. What I found saddest was that David Crockett fell into the same trap of poor money management and debt as his father. Crockett was a fun guy who certainly pulled his own weight, but he neglected his family and he had "big ideas" that led him astray. He couldn't settle down and prosper. For him the "main chance" was always to move to a new valley and start fresh with a big new dream. But rather than farm or run one of his small industries, he could disappear into the woods and hunt. That was his passion. And it was his downfall.

This book puts you right into the grubbiness of life in the early 19th century. It will knock the romanticism out of you. At age 13 Crockett ran away from home fearing a beating for skipping school. The hair raising adventures make for fun reading but they reinforce the harsh conditions of life back then. People today that grumble about "modern industrial society" need to be shipped off to the early 1800s to "taste" the real life of a pre-industrial economy.

This book removed the romanticism of Crockett's death at the Alamo. He was in Texas mainly to run away from his frustrations with a failed political career. He foolishly signed on to the Texas "cause" and promptly died in a hopeless seige of the Alamo. This was the result of his siding with the anti-Andrew Jackson faction among the revolting Texans. It was a completely avoidable death but he stuck with it and didn't complain, a sad end to a rough life.

I loved the bits that let you get a real taste of the early 1800s. I have relatives from that area and the kind of crazy Scots-Irish personality traits that Wallis draws reminds me of my relatives. It is funny how deep culture runs. Even today, the anti-science, fundamentalist religion of the deep South traces back to the immigrants to this area. They behaved stupidly then. They behave stupidly today. Poverty is endemic because they discount education and they end up short-sighted in their goals. The book touches very lightly on the slavery of the time and it doesn't go into much depth to explain the cruelty and double-dealing of the American invaders dealing with the native Indians. It is a tragic tale.

The book won't "teach" you anything. But it gives you an excellent insight into a corner of history and the nature of Americans then and now. I certainly enjoyed the book.

Some in Big Finance are Sympathetic of "Occupy Wall Street"

From an article in Business Week:

Jim Chanos, founder of $6 billion hedge fund Kynikos Associates, and Bill Gross, who runs the world’s biggest bond fund, joined top asset managers in voicing understanding for anti-Wall Street protests as they spread to Manhattan’s Upper East Side, home to the city’s financiers.

Chanos said New Yorkers don’t appreciate the impact government bank bailouts have had on other U.S. citizens. Gross, who works at Pacific Investment Management Co., said that wage earners are fighting back after three decades of class warfare against them.

“New York is so finance-centric that people here underappreciate the reaction of the rest of the country,” Chanos, who was born in Milwaukee, said yesterday in an interview in New York. “People are angry, they feel the game is rigged, that they didn’t get their fair shake.”

The French revolution went from being isolated populist uprisings to a full scale revolution when the middle class used the ocassion of the King's calling of an Estates-General to join into the revolt and turn it from petty violence into a social change deposing the corrupt "advisors" around the King. Over time that spread to overthrowing the corrupt aristocracy which showed its class warfare colours by plotting with aristocracy outside France to invade France and restore the King. As Mark Twain said "History does not repeat itself, but it does rhyme".

There is no telling where public sentiment will run as the truth seeps out:

“Class warfare by the 99%? Of course, they’re fighting back after 30 years of being shot at,” Gross said on a Twitter post.

Fink, whose firm has $3.7 trillion under management, said last week he understands the concerns of protesters speaking out against financial companies in New York and other cities.

“These are not lazy people sitting around looking for something to do,” Fink, 58, said on Oct 5 during an event in Toronto. “We have people losing hope and they’re going into the street, whether it’s justified or not.”

Fink received $23.8 million in compensation for 2010, a 50 percent increase from the previous year.

Joe Dear, 60, chief investment officer of the $218 billion California Public Employees’ Retirement System, said yesterday in a CNBC interview that people are “waking up” to the fact that “the game appears to be rigged.”

“The financial system gets bailed out, executives’ salaries stay high and the incomes of people who work for a living, paycheck to paycheck, continue to decline,” he said.

Buffett, chairman of Berkshire Hathaway Inc., said in August that the nation’s richest people have been “coddled long enough by a billionaire-friendly Congress” and called for higher taxes for the “mega-rich” in the U.S.

Buffett, the world’s third-richest man, according to Forbes Magazine, told Charlie Rose in New York during a Sept. 30 interview on PBS that class warfare is going on, “and my class isn’t just winning, I mean we’re killing them.”

The classic response of dictators and oligarchies under attack is either to immediately use violent repression or to attempt to buy off popular sentiment with halfway measures. It isn't clear which way the US will go.

An Insight into Steve Jobs

Here is Steve Jobs talking about his life at a Stanford graduation ceremony in 2005:



Steve Jobs was an interesting character.

Personally, I find the bit at 11:50 into this video to be the most interesting. His claim that "death is very likely the single best invention of life" is a little hard to take since I'm now nearing that age where the Grim Reaper is hanging around my door... waiting... I fully understand the "it clears out the old to make way for the new" but I'm a little resentful that I've lived my life backwards. When I was young and knew nothing I threw away my life. Now that I'm old and "wise" I don't have the future possibilities that are worthy of that wisdom. Oh well...

I remember trying to convince the principal of the high school in which I was teaching math to buy one of the original Apple personal computers in 1978 to give the kids on some "hands on" math experience with programming and algorithms. But the principal thought an electronic scoreboard for the basketball team was more important than a computer. So I quit teaching. I had learned a "lesson" in life: educational institutions are not really about "education".

Wisdom from the Great Depression

Here are words from Mariner Eccles, appointed Chairman of the Federal Reserve by FDR. His words then are applicable today:

It is utterly impossible, as this country has demonstrated again and again, for the rich to save as much as they have been trying to save, and save anything that is worth saving. They can save idle factories and useless railroad coaches; they can save empty office buildings and closed banks; they can save paper evidences of foreign loans; but as a class they can not save anything that is worth saving, above and beyond the amount that is made profitable by the increase of consumer buying. It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.

The right wing Republican nuts of today are as hidebound and foolish as the right wing Republican nuts of the 1930s. In both cases they scream bloody murder about "class war" and want to protect the excessive incomes of the rich. But the rich have squeeze society to the point where the spending of the bottom 90% can't keep the economy afloat. Mariner Eccles made that point 80 years ago and it needs to be made again today.

Here is the wisdom that must be re-learned:

Before effective action can be taken to stop the devastating effects of the depression, it must be recognised that the breakdown of our present economic system is due to the failure of our political and financial leadership to intelligently deal with the money problem. In the real world there is no cause nor reason for the unemployment with its resultant dsestitution and suffering of fully one-third of our entire population. We have all and more of the material wealth which we had at the peak of our prosperity in the year 1929. Our people need and want everything which our abundant facilities and resources are able to provide for them. The problem of production has been solved, and we need no further capital accumulation for the present, which could only be utilised in further increasing our productive facilities or extending further foreign credits. We have a complete economic plant able to supply a superabundance of not only all the necessities of our people, but the comforts and luxuries as well. Our problem, then, becomes one purely of distribution. This can only be brought about by providing purchasing power sufficiently adequate to enable the people to obtain the consumption goods which we, as a nation, are able to produce. The economic system can serve no other purpose and expect to survive.

Obama has in power for nearly 3 years and still hasn't learned this lesson. Throw out Obama! The Democrats need a new leader. Somebody who understands that the purpose of government is to help people have hope ("change you can believe in") and a better, more prosperous future. Obama has failed to deliver. A new guy needs to be put forward in the hopes that they have the guts, the courage, the cojones, the intelligence, and the leadership to make the changes needed to bring about a better tomorrow.

A Little History Lesson

Here is the opening of an interesting essay by writer William Hogeland in his blog Hysteriography:

Given some of my key subjects, I can’t help but be interested in the “occupy” movement that, at the moment, has a few hundred protesters more or less living in Zuccotti Park near the New York Stock Exchange in lower Manhattan, and is apparently starting to engage in similar protests in other cities. You can’t find out much about this action via “mainstream media,” and even much of the left media, such as it is, has been critical in some cases, and outright dismissive in others, regarding the movement’s evident formlessness and absence of specific goals.

That absence is pretty much undeniable. Still, in Salon, Glenn Greenwald has shrewdly criticized liberal-Democrat scorn for Occupy Wall Street. On the other hand, Mother Jones criticizes the movement on bases other than those that Greenwald attacks. . . .

But I write about the deep, founding roots of rowdy, American populist protest and insurrection, often visionary and even utopian, yet informed and practical too, specifically over money, credit, and the purpose and nature of public and private finance. And despite my pop-narrative books on the subject, and despite my articles here, and in such place as Newdeal20.org (articles picked up by AlterNet, Huffington, Salon, Naked Capitalism, and others), key indicators of my relative impact (like royalty statements!) give me a sneaking suspicion that most people still don’t connect the American founding period with a rugged drive on the part of ordinary people for equal access to the tools of economic development and against the hegemony of the high-finance, inside-government elites who signed the Declaration and framed the Constitution and made us a nation.

Sometimes people even ascribe democratic ideas to the famous upscale American Revolutionaries, who to a man actually hated democracy and popular finance. Paine, the exception, was ultimately rebuked and scorned by all of the others.

The difficulty in dealing with our founding battle for democratic economics arises in part because the movement was not against England but against the very American banking and trading elites who dominated the resistance to England. That complicates our founding myth, possibly unpleasantly. Also, it was a generally losing battle. With ratification of the Constitution, Hamiltonian finance triumphed, and people looking to Jefferson and Madison for finance and economic alternatives to Hamilton are barking up the wrong tree, since what those men knew, or even really cared, about finance could be written on a dime. (Anyway, in pushing for creating a nation, Madison supported Hamiltonian finance down the line. Their differences came later.) When Occupy Wall Street protesters say “It’s We the People!” they’re actually referring to a preamble, intending no hint of economic democracy, to a document that was framed specifically to push down democratic finance and concentrate American wealth for national purposes. Not very edifying, but there it is.

The Tea Party, meanwhile, has taken up founding economic issues from a right-wing point of view, associating itself with the upper-middle-class Boston patriots (often mistaken for populist democrats) who led a movement against overrreaching British trade acts in the 1760′s and were important to the impulse toward American independence. I’ve written fairly extensively about where and how I think the Tea Party goes wrong on the history of the founding period. But at least they’re framing their objections to current policy, and framing the historical roots of their ideas, not mainly in cultural but in economic terms.

Like it or not, though, it is Occupy Wall Street that has the most in common, ideologically, not with those Boston merchants and their supporters but with the less well-known, less comfortably acknowledged people who, throughout the founding period, cogently proposed and vigorously agitated for an entirely different approach to finance and monetary policy than that carried forward by the famous founders. Amid horrible depressions and foreclosure crises, from the 1750′s through the 1790′s, ordinary people closed debt courts, rescued debt prisoners, waylaid process servers, boycotted foreclosure actions, etc. (More on that here and here.) They were legally barred from voting and holding office, since they didn’t have enough property, so they used their power of intimidation to pressure their legislatures for debt relief and popular monetary policies. Their few leaders in legit politics included the visionary preacher Herman Husband, the weaver William Findley, and the farmer Robert Whitehill.

Go read the whole essay. It has quite a number of embedded links worth following. Learn some history, get some insights, find out about a side of America you didn't know because it didn't make it into the "official" history books.

The interesting fact about protests and demonstrations is that they have a life of their own. They are like wars. You start by thinking you will have a "limited engagement" and that it will all be over soon, but facts on the ground change quickly and people discover that "in for a penny, in for a pound"... "in for an inch, in for a mile"... and the famous Franklin summary "we will all hang together or we will all hang separately". Things do tend to mushroom. Social change can start in the most obscure ways. Think of an obscure Tunisian street vendor and then envision the whole Middle East aflame.