Clay Shirky on America's Proposed Insane Property Rights

Here is Clay Shirky talking about SOPA and PIPA:

How the US Plans to Nuke the Rest of the World

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



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

From Wikipedia:

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

How to be Successful by Being Consistently Wrong

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

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

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

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

The Movie Industry and Technology Progress
The music and movie business has been consistently wrong in its claims that new platforms and channels would be the end of its businesses. In each case, the new technology produced a new market far larger than the impact it had on the existing market.

• 1920’s – the record business complained about radio. The argument was because radio is free, you can’t compete with free. No one was ever going to buy music again.


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


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


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


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


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


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


• Today it’s the Internet that’s going to put the studios out of business. Sound familiar?

Why was the movie industry consistently wrong? And why do they continue to fight new technology?

There is more. Go read the whole article.

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

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

The "Complexities" of American Law

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

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

Justinian: How does this Fourteenth Amendment read?

Edward Coke: Like this:

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

Section. 2. Representatives shall be apportioned... counting the whole number of persons in each State....

Justinian: So if you have more corporations in your state, you get more representatives in the legislature?

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

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

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

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

Take a Tour Through Airport Security Theatre

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

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

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

...

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

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

...

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

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

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

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

The Civil War That Won't End

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

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

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

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

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

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

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

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

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

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

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

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

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

Dowd on Newt Gingrich

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

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

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

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

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

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

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

Krugman Calls the Depression

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

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

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

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

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

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

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

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

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

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

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

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

...

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

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

...

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

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

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

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

A Rationalist in an Irrational World

Here is poor Paul Krugman taking on his enemies one more time. Sadly, they don't want to listen. Politics in the US is a dialog of the deaf:

Why did I criticize Bush’s deficit-increasing policies, then call for more deficit-increasing policies from Obama?

Part of the answer is the difference in economic conditions. Deficit spending is expansionary when the economy is in a liquidity trap; it does nothing but crowd out other spending when you’re not up against the zero lower bound, and the Fed will just raise rates to offset fiscal expansion.

The other part of the answer is that although the Bushies were happy to use Keynesian arguments to justify their tax cuts, those cuts were all designed to be permanent — that is, they were irresponsible precisely because they weren’t temporary. None of what Obama has done commits that sin: his long-term spending, basically on health reform, is paid for, and everything else, like aid to state and local governments or expansion of unemployment benefits, was both designed to be temporary and has proved temporary in reality.

Ah well — just another day in political Bizzaroworld.

Tim Harford Exposes Screwy Reasoning

Here is an excellent post by the economist Tim Harford. It takes to task the ridiculous right with their simplistic "arguments" about the public sector being parasites on the private sector:

“We will set public sector pay awards at an average of 1 per cent for each of the two years after the pay freeze ends . . . while I accept that a 1 per cent average rise is tough, it is also fair to those who work to pay the taxes that will fund it.”

... the chancellor’s autumn statement

“Did you hear about that 1 per cent pay rise?”

“I did. Tough but fair, if you ask me.”

“Why’s that?”

“Well, we in the private sector have to work to pay for you in the public sector. It’s only fair that you show some restraint.”

“Well, ‘show some restraint’ is not quite the phrase, is it? It’s not as if I’m choosing my own pay. You must be confusing me with the chief executive of a major PLC. No need for me to show any restraint; George Osborne is quite capable of showing restraint on my behalf, thank you very much.”

“Good job he is, too. I’m paying for your salary.”

“Is this the ‘hard-working private sector funds the bloated public sector’ line?”

“Funny you should mention that, I guess it is.”

“I’ve never understood that. I’ll admit that you pay for my salary, but I pay for your salary too.”

“How’s that?”

“You work in sales for a mobile phone company. I work as a teacher.”

“Yes, my taxes pay for your salary.”

“But my mobile phone bill pays for your salary. If the government nationalised Vodafone – stranger things have happened – and privatised the school system, my taxes would be paying for your salary while my employer would be sending you a bill for my teaching of your children. But we’d still be paying each other. This is a modern economy. Everybody pays for everybody else’s salary, except the subsistence farmers and survivalists, who look after themselves.”

“But…”

“Look, communism didn’t collapse because there wasn’t any private sector to pay for the public sector. It collapsed because the incentives were thoroughly screwed up. There’s no logical reason why an economy couldn’t be 100 per cent public sector. You’re making it sound like that’s impossible as a matter of simple arithmetic.”

“Still, communism is hardly an advertisement for the public sector, is it? The private sector creates wealth.”

“No, individual technologists, managers, scientists and entrepreneurs create wealth. Their natural home might well be the private sector but there’s no logical reason why they can’t be employed in the public sector. Tim Berners-Lee invented the World Wide Web while he was working in the public sector.”

“He’s not exactly representative of the public sector.”

“Sure, but Steve Jobs isn’t exactly representative of the private sector either. There are remarkable individuals who do remarkable things, and I’m happy to acknowledge that the private sector is usually the place where those remarkable things have space to grow. But the private sector as a whole is doing something more pedestrian: it’s providing goods and services. And so is the public sector. To suggest that some of these goods and services count as ‘creating wealth’ and others don’t, purely because some are paid for out of taxes and others are paid for in the marketplace, doesn’t make any sense.”

“Still, Osborne was right: we need to make savings. Public sector workers have to do their bit.”

“That’s a fallacious line of reasoning: it assumes that the public sector workers of yesterday are going to be the same people as the public sector workers of tomorrow, after several years of chipping away at their real incomes. They might not be. I might decide to become a mobile phone salesman instead of an economics teacher.”

“The way this conversation is going I wish you’d made that choice a while ago.”

“The question is where you want the best people. Trimming public sector wages might harm current public sector workers, or it might just persuade them to seek new pastures, to be replaced by over-promoted junior staff – or mobile phone salesmen who were sacked because of a sudden influx of better-qualified people who could do their job. It may well be reasonable for Osborne to squeeze public sector pay, but if he does, private sector workers will suffer consequences too. Sometimes when he says that we’re all in this together, he’s right – if only by accident.”

It is always easy to blame "the other fellow" for our problems. But with some hard reasoning we realize that public & private sector employees are all in the same pot. Their salaries are set by others. All contribute to a better society if they work hard at their jobs. To attack one is to attack all. This is a "divide and rule" strategy of the political right.

Krugman on the Republican Presidential Candidates

Here is a bit from an excellent NY Times op-ed by Paul Krugman that nails the deep flaws in the Republican campaign for the White House:

There are two crucial things you need to understand about the current state of American politics. First, given the still dire economic situation, 2012 should be a year of Republican triumph. Second, the G.O.P. may nonetheless snatch defeat from the jaws of victory — because Herman Cain was not an accident.

Think about what it takes to be a viable Republican candidate today. You have to denounce Big Government and high taxes without alienating the older voters who were the key to G.O.P. victories last year — and who, even as they declare their hatred of government, will balk at any hint of cuts to Social Security and Medicare (death panels!).

And you also have to denounce President Obama, who enacted a Republican-designed health reform and killed Osama bin Laden, as a radical socialist who is undermining American security.

So what kind of politician can meet these basic G.O.P. requirements? There are only two ways to make the cut: to be totally cynical or to be totally clueless.

Mitt Romney embodies the first option. He’s not a stupid man; he knows perfectly well, to take a not incidental example, that the Obama health reform is identical in all important respects to the reform he himself introduced in Massachusetts — but that doesn’t stop him from denouncing the Obama plan as a vast government takeover that is nothing like what he did. He presumably knows how to read a budget, which means that he must know that defense spending has continued to rise under the current administration, but this doesn’t stop him from pledging to reverse Mr. Obama’s “massive defense cuts.”

Mr. Romney’s strategy, in short, is to pretend that he shares the ignorance and misconceptions of the Republican base. He isn’t a stupid man — but he seems to play one on TV.

Unfortunately from his point of view, however, his acting skills leave something to be desired, and his insincerity shines through. So the base still hungers for someone who really, truly believes what every candidate for the party’s nomination must pretend to believe. Yet as I said, the only way to actually believe the modern G.O.P. catechism is to be completely clueless.

And that’s why the Republican primary has taken the form it has, in which a candidate nobody likes and nobody trusts has faced a series of clueless challengers, each of whom has briefly soared before imploding under the pressure of his or her own cluelessness. Think in particular of Rick Perry, a conservative true believer who seemingly had everything it took to clinch the nomination — until he opened his mouth.

It is tragic that America has sunk to the depths of idiocy that it has in its politics. Buffoons run the show. Fanatics and crazies manage the "politics". Insane.

Dowd Nails Newt Gingrich

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

Newt Gingrich’s mind is in love with itself.

It has persuaded itself that it is brilliant when it is merely promiscuous. This is not a serious mind. Gingrich is not, to put it mildly, a systematic thinker.

His mind is a jumble, an amateurish mess lacking impulse control. He plays air guitar with ideas, producing air ideas. He ejaculates concepts, notions and theories that are as inconsistent as his behavior.

He didn’t get whiplash being a serial adulterer while impeaching another serial adulterer, a lobbyist for Freddie Mac while attacking Freddie Mac, a self-professed fiscal conservative with a whopping Tiffany’s credit line, and an anti-Communist Army brat who supported the Vietnam War but dodged it.

...

He warned against political pressures encouraging “Black xenophobia.” What’s xenophobic about Africans wanting their oppressors to go away? It’s like saying abused wives who want their husbands to leave are anti-men.

...

Newt is like the Great White Hunter out on campaign safari, trying to bag a Mitt, an animal with ever-changing stripes. Certainly, the 68-year-old’s haughty suggestions on child labor last week in Iowa smacked of harsh paternalism and exploitation.

He expanded on Dickensian remarks he’d made recently at Harvard, where he said “it is tragic what we do in the poorest neighborhoods, entrapping children in child laws which are truly stupid,” adding that 9-year-olds could work as school janitors.

“Really poor children in really poor neighborhoods have no habits of working and have nobody around them who works,” he asserted in an ignorant barrage of stereotypes in Des Moines. “So they literally have no habit of showing up on Monday.”

Has he not heard of the working poor? The problem isn’t that these kids aren’t working; it’s that they don’t have time with their parents, who often toil day and night, at more than one job, and earn next to nothing.

Newt’s the kind of person whom child labor laws were created to curb. He sounds like a benign despot with a colonial subtext: Until I bring you the benefits of civilization, we will regard you as savages.

He’s Belgium. The poor are Congo.

The joke is that Newt passes for an "intellectual" in the Republican party. Tragic.

American Right Wing Politics

Here is a nice summary of the Republican "offerings" for a presidential candidate. This is from Maureen Dowd's op-ed in the NY Times:

Mitt Romney is a phony with gobs of hair gel. Newt Gingrich is a phony with gobs of historical grandiosity.

The 68-year-old has compared himself to Charles de Gaulle. He has noted nonchalantly: “People like me are what stand between us and Auschwitz.” As speaker, he liked to tell reporters he was a World Historical Transformational Figure.

What does it say about the cuckoo G.O.P. primary that Gingrich is the hot new thing? Still, his moment is now. And therein lies the rub.

As one commentator astutely noted, Gingrich is a historian and a futurist who can’t seem to handle the present. He has more exploding cigars in his pocket than the president with whom he had the volatile bromance: Bill Clinton.

But next to Romney, Gingrich seems authentic. Next to Herman Cain, Gingrich seems faithful. Next to Jon Huntsman, Gingrich seems conservative. Next to Michele Bachmann and Rick Perry, Gingrich actually does look like an intellectual. Unlike the governor of Texas, he surely knows the voting age. To paraphrase Raymond Chandler, if brains were elastic, Perry wouldn’t have enough to make suspenders for a parakeet.

...

Romney is a mundane opportunist who reverses himself on core issues. Gingrich is a megalomaniacal opportunist who brazenly indulges in the same sins that he rails about to tear down political rivals.

Republicans have a far greater talent for hypocrisy than easily cowed Democrats do — and no doubt appreciate that in a leader.

Gingrich led the putsch against Democratic Speaker Jim Wright in 1988, bludgeoning him for an ethically sketchy book deal. The following year, as he moved into the House Republican leadership, he himself got in trouble for an ethically sketchy book deal.

Gingrich was part of the House Republican mob trying to impeach Bill Clinton for hiding his affair with a young government staffer, even as Newt himself was hiding his affair with a young government staffer.

Gingrich has excoriated Freddie Mac and Fannie Mae for dragging the country into a financial spiral and now demands that Freddie Mac be broken up. But it turns out that he was on contract with Freddie for six years and paid $1.6 million to $1.8 million (yacht trips and Tiffany’s bling for everyone!) to help the company strategize about how to soften up critical conservatives and stay alive.

At a Republican debate in New Hampshire last month before this lucrative deal became public, Gingrich suggested that Barney Frank and Chris Dodd should be put in jail. “All I’m saying is, everybody in the media who wants to go after the business community ought to start by going after the politicians who were at the heart of the sickness that is weakening this country,” he said.

Another transcendent moment in Gingrich hypocrisy. He risibly rationalized his deal, saying he was giving the mortgage company advice as a prestigious historian rather than a hired gun.

Maureen Dowd is a national treasure. She is like the third umpire in the old joke:

There was an argument between three baseball umpires. The first umpire said "I call 'em as I see 'em". "Ha," said the second umpire, "I call 'em as they are!" "They ain't nothing until I call 'em," said the third umpire.

The "Accepted" Wisdom

Sadly, what passes for wisdom in politics and economics is handled by a class of people who simply don't understand the fundamentals of economics. They've managed to screw things up badly, but they will never admit it. They make their living out of "advising" people, so they continue to advise even when the advice is contradictory and shows the bankruptcy of their ideas.

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

Today, the OECD warns that things are looking vewy, vewy bad:

Decisive policies must be urgently put in place to stop the euro area sovereign debt crisis from spreading and to put weakening global activity back on track, says the OECD’s latest Economic Outlook.

The euro area crisis remains the key risk to the world economy, the Outlook says. Concerns about sovereign debt sustainability are becoming increasingly widespread. If not addressed, recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption. Pressures on bank funding and balance sheets increase the risk of a credit crunch.

Another serious downside risk is that no action would be agreed to offset the large degree of fiscal tightening implied by current law in the United States. This could tip the economy into a recession that monetary policy could do little to counter.

That’s all perfectly sensible. But how did we get here? In large part, by listening to people like … the OECD, which demanded both fiscal austerity and interest rate hikes back in early 2010. And yes, it was the same people now running scared of the consequences of those spending cuts and rate hikes.

Maybe a little soul-searching might be in order?

To be fair, though, it wasn’t just the OECD. Future historians will look back in astonishment at the Great Pivot of 2010, in which all the Very Serious People on both sides of the Atlantic– and, sad to say, in both parties in the United States — decided that in the face of high unemployment, weak growth, and low inflation, what the world really needed was austerity.

I’m actually having trouble writing about all this; it’s just too depressing.

For the bottom 99% when you make a serious error, you pay through loss of job or serious jail time. For the elite, a serious error is simply ignored and you continue to blather with your pithy statements of false platitudes. You are secure because you "own" you position in society. You don't have to work for it.

If You have a Rocketry Hobby, You are a "Terrorist"

Here is an article in The Toronto Star along with an hour long interview with the police of Byron Sonne, a person arrested in 2010 for "plotting" against the G20 meeting in Toronto. He has been held in jail for 329 days because (a) he had been spotted taking a picture of the fence constructed around the G20 site from which they got a warrant and raided his house and (b) found "explosives" which are in fact propellant for the rockets.

He belongs to the Canadian Association of Rocketry. Having a hobby of shooting rockets has become the "foundation" of the case for arresting him as a "terrorist".

If you watch the video, you should find it absolutely incredible that the cops have held this guy in jail. He is obviously innocent:



I find it really sleazy how this cop pretends to be empathic with Byron. It is pretty clear to me that this guy is manipulating Byron.

To give you an idea of the "quality" of the police work going behind holding this guy for over a year in jail is shown by this bit in the article:

Giggles arose from the body of the court when Bui asked Sonne about a mysterious powder.

“And this white substance in the fridge?”

“That is almond flour,” Sonne replies.

Sonne’s judge-alone trial is expected to begin in earnest sometime next week.

It is incredible that the legal system in Canada lets the police hold people when the policing is obviously that incompetent!

Here is a bit from Maclean's magazine, one of the premier news magazines in Canada:

Byron Sonne is a shlemiel and a shlemazl. He is clumsy and unlucky. But he is not a terrorist.

Driven by curiosity, hubris, and a genuine desire for social justice, Sonne poked and prodded the $1.2 billion “security apparatus” of the 2010 G20 summit in Toronto. He wanted to know if it was in fact just “security theater”–an expensive display of pomp and barbed wire that would never thwart an actual terrorist. Simultaneously, he wanted to know if it was too effective, if the heightened atmosphere around the summit meant that police were forgetting people’s rights. And he wanted us to know too, so he documented everything he did.

Sonne, who goes by TorontoGoat on Twitter, offered himself as a sacrificial lamb–a hapless animal who pooped on the cops via the Internet. His experiment was scattershot–he uploaded incendiary political texts of every nature to test if he was being surveilled. He flexed his freedom of speech by calling police “bacon” on Twitter. He tweeted about how the $9.4 million security fence could easily be climbed, but did not exactly say that it should be. All of this would likely have gone unnoticed if @torontogoat hadn’t clomped around the fence perimeter, shooting video. Taking pictures is not a crime, so the cops, unable to charge him with anything, threatened to take him in for jaywalking as an excuse to see his I.D. He complied with this “ruse,” as the authorities themselves have since described it, and that’s what brought the full force of law enforcement down on his head. When the cops finally googled Sonne, they went to town on him. He was surveilled, searched, arrested, questioned for 12 hours without a lawyer, and thrown in jail. Sonne spent 11 months locked up, awaiting bail. During that time his wife (also arrested, charges since dropped) left him.

So there’s your shlemiel–Byron the clumsy. As for the unlucky shlemazl, let’s consider the most serious charges Sonne faces during his trial, which continues today: four counts of “possessing explosive materials.” During their search of his Forest Hill home, police found chemicals that can be used to make explosives. That’s not so unusual–most of us have chemicals in our homes that can be used to make explosives. But actually whipping them up into something volatile may get you into serious trouble. It’s hard to imagine a good reason to do so, unless you’re trying to make some homebrew rocket fuel.

Sonne’s hobby? Model rocketry.

And from Maclean's, some questions about the police "case" against Byron Sonne:

Details of the courtroom proceedings in Sonne’s case are subject to a publication ban. As such, coverage of his case has been limited. Toronto Life published a cover story giving many details of Sonne’s life and activities leading up to his arrest. But once the ban is lifted, the real questions won’t be about what Sonne did—they’ll be about how the police and the Crown have behaved in this extraordinary case.

Here are some I’ll be asking:

-Why was Sonne, who has no prior criminal record, twice denied bail and held for over 10 months?

-Was he considered a flight risk or a danger to anyone?

-If so, what’s different now?

-Before his arrest, did the police trick Sonne into handing over his I.D. by threatening him with a jaywalking charge?

-Why was Sonne’s (now-estranged) wife also arrested and charged?

-Did the weapons charges (since dropped) refer solely to Sonne’s homemade potato gun?

-If so—really?

-Do the explosives charges refer solely to legal substances Sonne bought for gardening and toy rockets?

-If so—really?

-Why was Sonne hit with the obscure charge (since dropped) of ”intimidating justice system officials,” which is meant to prevent accused criminals from stalking or threatening judges, lawyers and jurors?

-Did it refer to Sonne’s online description of police on bicycles as “bacon on wheels”?

-If so—really?

-If it turns out that Sonne was simply a provocateur and geek who never posed a threat to anyone, at what point did the police and Crown learn this?

-If they knew this all along, why did they continue to imprison and prosecute him?

-And if so, who will answer for the loss of his freedom, the destruction of his career, and the dissolution of his marriage?

Byron Sonne may well turn out to be a guy who taunted and teased a starving, unchained guard dog to see how it would react. Maybe a guy like that is a fool, maybe he is brave—maybe he’s both. Maybe it’s not important.

The real questions are about the dog: why was it starving for meat? Why was it unchained? Thanks to Sonne, we may soon find out.

If you want a sense of how "guilty" Byron was of being a "mad bomber", consider this pointed comment in an article by Denise Balkissoon in OpenFile:

We're happy to tell you that this week, when speaking about the search-and-seizure in Sonne's home, Byrne referenced the computer security consultant's interest in science. One of the police officers on the stand, Alvin Maniquis, spoke about authorizing his team to take books on physics and chemistry.

"Essentially," said Byrne,"[Sonne]'s got a home lab, related books and documentation. He's got chemistry equipment....admittedly, they had not been put together."

So, now you know: three days before the start of the G20 summit, when arrested for possessing explosives meant to disrupt that summit, Sonne hadn't set up his beakers and bunsen burners.

That's all for now.

Yep... the police have "caught" a mad bomber with intent to blow up half of Toronto, but 3 days before the event, this "bomber" hasn't yet put any chemicals together. Funny. It would require an almost industrial scale operation to generate the hundreds (if not thousands!) of pounds of high explosives needed to seriously disrupt a G20 conference. But here is a "bomber" who hasn't mixed any chemicals and has nothing stockpiled. There is no proof that he ever tried to mix up an explosive batch. So the government's case is that he "had the books and come equipment and some chemicals". Well... under those stringent requirements the RCMP should have arrested every professor in all the universities and colleges in Canada in early 2010. They certainly had books, and equipment, and materials.

This is a completely daft case where the police have a vendetta against a guy who decided to beard the police by showing up the billion dollars of Canadian citizens money had not bought any real security but instead funded a lot of "security theatre" and a lot of booty for politicians to build stuff in this constituencies during this time period and stamp it as "security". From Wikipedia:

Members of Parliament Olivia Chow and Mark Holland labelled the initially claimed budget of $1.1-billion for hosting the summits as "obscene" and "insane" while others argued that the money could have been used for long-pending municipal projects in Canada, such as Toronto's Transit City. The security cost for the two summits was believed to be more expensive than the combined security costs of the 2010 Winter Olympics and Paralympics in Vancouver and Whistler, British Columbia, which were $878 million. However, according to final calculations from the House of Commons of Canada as of October 2010, the exact cost for holding both summits was $857,901,850.31, making it less expensive than the security costs for the 2010 Winter Olympics.

If the RCMP wanted to go after some criminals, they should have arrested Prime Minister Harper, his cabinet, and most of his caucus. They have robbed Canadians of nearly $1 billion in order to put on a big wing-ding party for big-wigs. Meanwhile, there is unemployment, poverty, and underdevelopment in Canada. That money would have been better spent feeding the hungry, providing free education for pre-schooler and college kids, and day care for working parents. Instead, it was criminally wasted. And a pook patsy like Byron Sonne has been absolutely crucified as a "criminal". His only "crime" was his ignorance about the depth of corruption and mean-heartedness in the politicians and the police, and the cold-heartedness and suspicious minds of old farts sitting as judges and acting a Crown prosecutors.

The European Crisis

Here is a post by Paul Krugman on his NY Times blog. It is the latest in many attempts by him to get the European authorities to be sensible and do what economics requires rather than follow their emotions or "morality play" with counter-productive policies. Sadly, the Europeans are not listening:

Death By Hawkery

What the world needed in this global deleveraging crisis was deficit spending and higher inflation targets. What it got was fiscal austerity and obsessive concern with inflation risks that weren’t real. Hence the catastrophe now unfolding.

Judging from recent comments, many readers missed my earlier analyses on these issues — I’m still getting the “You idiot, debt got us into this mess, how can debt get us out?” type of comment. So let me re-repost my discussion of this whole issue in full, followed by a couple of brief notes on the European situation.

The original post:

Sam, Janet, and Fiscal Policy

One of the common arguments against fiscal policy in the current situation – one that sounds sensible – is that debt is the problem, so how can debt be the solution? Households borrowed too much; now you want the government to borrow even more?

What’s wrong with that argument? It assumes, implicitly, that debt is debt – that it doesn’t matter who owes the money. Yet that can’t be right; if it were, we wouldn’t have a problem in the first place. After all, to a first approximation debt is money we owe to ourselves – yes, the US has debt to China etc., but that’s not at the heart of the problem. Ignoring the foreign component, or looking at the world as a whole, the overall level of debt makes no difference to aggregate net worth – one person’s liability is another person’s asset.

It follows that the level of debt matters only if the distribution of net worth matters, if highly indebted players face different constraints from players with low debt. And this means that all debt isn’t created equal – which is why borrowing by some actors now can help cure problems created by excess borrowing by other actors in the past.

To see my point, imagine first a world in which there are only two kinds of people: Spendthrift Sams and Judicious Janets. (Sam and Janet who? If you’d grown up in my place and time, you’d know the answer: Sam and Janet evening / You will see a stranger … But actually, I’m thinking of the two kinds of agent in the Kiyotaki-Moore model.)

In this world, we’ll assume that no real investment is possible, so that loans are made only to finance consumption in excess of income. Specifically, in the past the Sams have borrowed from the Janets to pay for consumption. But now something has happened – say, the collapse of a land bubble – that has forced the Sams to stop borrowing, and indeed to pay down their debt.

For the Sams to do this, of course, the Janets must be prepared to dissave, to run down their assets. What would give them an incentive to do this? The answer is a fall in interest rates. So the normal way the economy would cope with the balance sheet problems of the Sams is through a period of low rates.

But – you probably guessed where I’m going – what if even a zero rate isn’t low enough; that is, low enough to induce enough dissaving on the part of the Janets to match the savings of the Sams? Then we have a problem. I haven’t specified the underlying macroeconomic model, but it seems safe to say that we’d be looking at a depressed real economy and deflationary pressures. And this will be destructive; not only will output be below potential, but depressed incomes and deflation will make it harder for the Sams to pay down their debt.

What can be done? One answer is inflation, if you can get it, which will do two things: it will make it possible to have a negative real interest rate, and it will in itself erode the debt of the Sams. Yes, that will in a way be rewarding their past excesses – but economics is not a morality play.

Oh, and just to go back for a moment to my point about debt not being all the same: yes, inflation erodes the assets of the Janets at the same time, and by the same amount, as it erodes the debt of the Sams. But the Sams are balance-sheet constrained, while the Janets aren’t, so this is a net positive for aggregate demand.

But what if inflation can’t or won’t be delivered?

Well, suppose a third character can come in: Government Gus. Suppose that he can borrow for a while, using the borrowed money to buy useful things like rail tunnels under the Hudson. The true social cost of these things will be very low, because he’ll be putting resources that would otherwise be unemployed to work. And he’ll also make it easier for the Sams to pay down their debt; if he keeps it up long enough, he can bring them to the point where they’re no longer so severely balance-sheet constrained, and further deficit spending is no longer required to achieve full employment.

Yes, private debt will in part have been replaced by public debt – but the point is that debt will have been shifted away from severely balance-sheet-constrained players, so that the economy’s problems will have been reduced even if the overall level of debt hasn’t fallen.

The bottom line, then, is that the plausible-sounding argument that debt can’t cure debt is just wrong. On the contrary, it can – and the alternative is a prolonged period of economic weakness that actually makes the debt problem harder to resolve.

European twists

The European mess is pretty well described by the story above, with the Sams mainly in the periphery and the Janets in the core; what we’re getting is forced austerity in the periphery with no offsetting expansion in the core, and now everyone is shocked, shocked that the whole continent seems headed for recession.

In Europe’s case, however, higher inflation is even more crucial than for the United States — because Europe also needs a large adjustment of relative prices that will be very hard if not impossible to achieve with low overall inflation.

So as of this morning, the 5-year German breakeven — an implicit forecast of inflation — is only 0.9%.

This is not going to work.

Sadly the American authorities are facing a similar deflationary situation and are just now embarking on the same idiocy as the Europeans: austerity. It will fail in the US just like it is failing in Europe. It is the standard "prescription" of the political right, but it is profoundly ignorant of economic reality and what is required. People will suffer and pay a very dear price for the idiocy of politicians. It is a lost decade just like the Japanese have suffered through. Tragic.

... and here is more despair by Krugman at the idiocy of the politicians (and the "serious people" in positions of authority like the Bank of England, the Federal Reserve, and the European Central Bank):

Death By Accounting Identity

Martin Wolf has a somewhat despairing-sounding column this morning, in effect pleading with the Cameron government to admit that the laws of arithmetic must apply. Good luck with that.

Martin writes,

If the private sector is seeking to run down its debts, it is hard for the government to do so, too, because everybody cannot spend less than their income. That is the “paradox of thrift”. No, it is not a novel idea.

Ah, but for the past two years leaders in the Eurozone, Britain, and the US Republican party have subscribed to the following plan:

1. Slash government spending

2. ??????

3. Prosperity!

For a while ???? was framed in terms of the doctrine of expansionary austerity: slash spending and the confidence fairy would make private-sector spending rise. At this point, however, few still believe in this doctrine. Also, in the euro area it was hard to see how things would work even if the confidence fairy made an appearance; how was that supposed to resolve the large payments imbalances between the core and the periphery?

But even as the intellectual foundations, such as they were, for the austerity plan have been demolished, the plan itself remains unchanged.

I never thought I would live such an era of unrelieved idiocy. But knowing a little history, I was foolish to think I could avoid it. In my young adulthood I watched the US condemn an entire generation of young men to a meaningless and unwinnable war in Vietnam simply because no president had the courage to admit that the war was a mistake and end it. In my early childhood I watch as nutty right wing politicians tore the US to pieces in a mad witch hunt of "communists". I saw sleazy people like Nixon build a career on this evil enterprise. In my working years I watched as people fell in love with the rich and flocked to watch Lifestyles of the Rich and Famous. These sad fools didn't realize they were idolizing the social parasites who were busy from 1980 until today sucking the life blood out of society so they could live a life of mad indulgence while the bottom 99% saw their lives stagnate, saw the economy enter a depression caused by fraud and criminality by the greed of bankers, and saw a hopeful new president be elected and fail to act because he too was madly in love with the rich and unable and unwilling to help the bottom 99%. My life has been lived in an unremitting horror story of cruelty, greed, fear, and ignorance. That is the history of humanity for the last 10,000 years. Tragic.

Anti-Science is Alive and Well

People prefer to "believe". They don't like slow and painful study and rational thinking, calculation, experimentation, theory building aka "science". That requires 20 years of education and only really dedicated and really smart people can access the edges of science these days. That sidelines the masses and they don't like that one bit.

So people believe in magic. They believe in "spirit" and "soul" and the "power of positive thinking". They believe in "holistic medicine". They have their religions.

I worked in a high tech company and was appalled to discover that even people with PhDs in science believed in such madness as "homeopathy". These were smart people, well educated people who had worked hard to understand technology and science and yet they gave in to magical thinking.

Here's what magical thinking will "achieve". From Yahoo! News:

Five share $340,000 in holistic healer case that left woman a quadriplegic

The Canadian Press – Fri, 11 Nov, 2011

RICHMOND, B.C. - Five B.C. residents, including a woman nearly killed by arsenic poisoning and left a quadriplegic, are sharing more than $340,000 as a result of a settlement involving a self-proclaimed holistic healer.

Money from the settlement came from property seized from the defendant and sold under the B.C. government's civil forfeiture legislation.

The government says the defendant, Selena Tsui, was not charged in the case after the Crown concluded there was no substantial likelihood of conviction on any criminal charges.

The government says between 2000 and 2004, Tsui told at least a dozen people she was qualified to diagnose and treat diseases, including mental conditions, when in fact she had no formal training.

One of her clients, identified only as E.L., began taking a concoction she believed contained mushrooms and herbs, but had extreme arsenic levels, and she suffered respiratory and renal failure, cardiac arrest and paralysis.

She was taken to hospital, put on life support and given a five per cent chance of survival, but her life was eventually saved.

The real world is complicated. It isn't a simple morality story. It isn't something that "a good heart" and a "strong will" can conquer. It requires hard work, sophisticated technology, advanced math, and a long education in a specialist area of science. But people love quacks with no training yet who have an "aura" about them, or can "channel spirits", or have a commanding presence and claim a direct line to "God".

Right now, Europe and the United States are in the hands of quacks. Serious economists know that austerity budgets only prolong a depression. A Keynesian approach is needed. But Obama and the European leaders would rather call in the witch doctor to shake bones over the economy and prattle some debt reduction "confidence building" mumbo jumbo rather than rely on the math, the models, and the sophisticated economic theories (the ones prior to the Chicago school and "freshwater" economists turned into lunatics and ran economics off the rails).

It is tragic living in a world where some plague is raging and the scientists and the doctors have the technology to manipulate DNA to create a vaccine to cure it, but the "authorities" (political, religious, civic, etc.) all cry out for "prayer" and "abstinence" and "a submission to God's will" or some "alternative medicine" rather than to science to cure the plague.

We live in a dark time. Carl Sagan wrote a book in 1995 before he died in which he worried about this modern anti-science trend. The book was called The Demon-Haunted World. We live in that magical thinking, irrational, and anti-science world. Millions die every year because of this stupidity. That is what people who want "quick solutions" have created by preferring magical thinking to the difficult path of rationalism and science. Tragic.

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!

Saving Your Honour by Committing Suicide

The Europeans have painted themselves into a corner. They have created a European bank that has no tools to deal with the current mess. Worse, the elite of Europe refuse to admit the mess they are in. They refuse to think creatively about a solution. It is as if the crew over a sinking ship is fighting for control of the pilot's wheel. But steering isn't the problem. The ship has a big hole and is taking water and now quickly sinking. But the crew is too busy trying to "take charge" of the situation of "piloting" to bother with "sinking".

Here are key bits from a NY Times op-ed by Paul Krugman:

If it weren’t so tragic, the current European crisis would be funny, in a gallows-humor sort of way. For as one rescue plan after another falls flat, Europe’s Very Serious People — who are, if such a thing is possible, even more pompous and self-regarding than their American counterparts — just keep looking more and more ridiculous.

...

Think about countries like Britain, Japan and the United States, which have large debts and deficits yet remain able to borrow at low interest rates. What’s their secret? The answer, in large part, is that they retain their own currencies, and investors know that in a pinch they could finance their deficits by printing more of those currencies. If the European Central Bank were to similarly stand behind European debts, the crisis would ease dramatically.

Wouldn’t that cause inflation? Probably not: whatever the likes of Ron Paul may believe, money creation isn’t inflationary in a depressed economy. Furthermore, Europe actually needs modestly higher overall inflation: too low an overall inflation rate would condemn southern Europe to years of grinding deflation, virtually guaranteeing both continued high unemployment and a string of defaults.

But such action, we keep being told, is off the table. The statutes under which the central bank was established supposedly prohibit this kind of thing, although one suspects that clever lawyers could find a way to make it happen. The broader problem, however, is that the whole euro system was designed to fight the last economic war. It’s a Maginot Line built to prevent a replay of the 1970s, which is worse than useless when the real danger is a replay of the 1930s.

And this turn of events is, as I said, tragic.

The story of postwar Europe is deeply inspiring. Out of the ruins of war, Europeans built a system of peace and democracy, constructing along the way societies that, while imperfect — what society isn’t? — are arguably the most decent in human history.

Yet that achievement is under threat because the European elite, in its arrogance, locked the Continent into a monetary system that recreated the rigidities of the gold standard, and — like the gold standard in the 1930s — has turned into a deadly trap.

Now maybe European leaders will come up with a truly credible rescue plan. I hope so, but I don’t expect it.

The bitter truth is that it’s looking more and more as if the euro system is doomed. And the even more bitter truth is that given the way that system has been performing, Europe might be better off if it collapses sooner rather than later.

This is the kind of blindness you get from ideology. An ideologue doesn't look outside to see if it is sunny. He consults his horoscope because he "knows" that the horoscope captures everything essential about his future. You can't convince the fool that the horoscope was written days or weeks ago, that an astrologer has no knowledge of the future, and that the easiest way to check the weather is to look out the window. Europe is going down and it will take the whole world just like the US took the world down when it refused to rescue the Lehman investment house in September 2008. What an incredibly stupid world.

I foolishly thought that humanity was slowly getting "smarter" as we got wealthier and better educated. I failed to realize that if you can't fix the idiocy of ideology, then the craziness of people who "know" things because their ideology tells them it is so will destroy the world. I've always puzzled how powerful civilization in the past could commit suicide. I now realize it comes about by the elite of those societies getting deeply committed to their ideology and refuse to peek out the window to see whether the sun is shining or not. Incredible!

Sadly nobody will win this prize:

“Lord Wolfson, a prominent eurosceptic . . . is offering £250,000 to the person who comes up with the best plan for winding up the euro in an orderly way. The Wolfson Economics Prize . . . will be the second-largest cash prize for an academic economics after the Nobel Prize.” – Financial Times, October 19

Why? Because the ideologues in Europe refuse to accept that there is a problem with the euro, with deficits, and with the European bank. Sure they will admit to "problems" but not enough to actually address the oncoming catastrophe. This big prize won't be won because you can't "solve" a problem when the problem is stupid people blind to their own stupidy and refusing to even listen to the voice of reason!

Putting Your Own Head into the Hangman's Noose

The crazy right wing in the US has many schemes to make life more miserable for the poor and ease "the burden" on the rich.

Here's a bit by Robert Reich on the idiotic economic austerity plan of the political right:

Can we just put ideology aside for a moment and be clear about the facts? Consumer spending (70 percent of the economy) is flat or dropping because consumers are losing their jobs and wages, and don’t have the dough. And businesses aren’t hiring because they don’t have enough customers.

The only way out of this vicious cycle is for the government – the spender of last resort – to boost the economy. The regressives are all calling for the opposite.

But even without these hare-brained Republican plans, we’re heading in their direction anyway. Unless Republicans agree to a budget deal before the end of the year (don’t hold your breath), the temporary payroll tax cuts and extended unemployment benefits we have now will end.

The result will be the most stringent fiscal tightening of any large economy in the world.

Together with ongoing cuts at the state and local government level, the scale of this fiscal contraction would be almost unprecedented.

It will come at a time when 25 million are Americans looking for full-time work, median incomes are dropping, home foreclosures rising, and a record 37 percent of American families with young children are in poverty.

To call this economic lunacy is to understate the point.

And if you think 2011 is bad, you ain’t seen nothin’ yet.

Even if you’re a deficit hawk this is nuts. Instead of reducing the ratio of debt to the size of the overall economy, this strategy increases the ratio because it causes the economy to shrink.

Call it the austerity death trap.

Under these circumstances, the harder a country works to cut its debt, the worse the ratio becomes — because the economy shrinks even faster.

Here's the only effective way to solve the problem:

At the start of the Clinton administration the annual budget deficit was almost $300 billion. But rather than take a meat-axe to spending, we pushed for growth, as did the Fed. The expansion of the 1990s made it easy to get the budget under control. By 2000 we had a $226 billion surplus.

You grow out of a depression. You don't use austerity to dig the hole even deeper!