DEMOCRACY….with media like ours who needs enemies?

Posted on January 16, 2025 by John

 

Winning  a battle requires identifying both the threats to your position and the position of your attackers 

When radar was developed in WWII, a huge effort was expended to prevent the Nazi radar from locating Allied bombers and defeating the Nazi radar controlled searchlights and anti aircraft guns.  1in 1942, Joan Curran, the only woman resercher at the British Telecom lab, devised a plan to overload the enemy radar with a huge cloud of false returns by deploying thousands of strips of aluminium,  each of which would reflect a false signal,   First deployed in the joint US/RAF raids on Hamburg in 1943, the results were spectacular.  

The radar controlled guns failed to fire, or shot at empty sky as the searchlights roamed in aimless patterns.  Nearly all the bombers returned home unscathed.  This technique of swamping radar with ‘fake’ data became known as “Chaff”  The problem of a cloud of false information as a misleading tactics is a common one, not only in war, but in government, politics and policy making .The individual selected to be president has mastered the use of chaff to spread dissension and confusion to achieve his goals.  He wants complete control of the media, to the extent that even the most small and petty criticism can be punished

We’ve been here before, where to quote from Supreme Court Justice Black: ”We are asked to hold that … the Executive Branch, the Congress, and the Judiciary can make laws … abridging the freedom of the press in the name of ‘national security.’ … To find that the President has ‘inherent power’ to halt the publication of news … would wipe out the First Amendment and destroy the fundamental liberty and security of the very people the Government hopes to make ‘secure’.”  The case in question, New York Times Co. v. United States (1971)is a critical decision in preserving the Press freedom from prior restraint by the Government

Can we trust that the more than half a century of Supreme Court precedent will hold?  While  all MAGA justices at their confirmation hearings cited that 1973’s Roe v. Wade as “Stare Decisis” or settled legal precedence regarding a woman’s rights to control her own body, we all know what happened. Trump is a past master at creating ‘chaff’ that totally distracts the media from any kind of coherent, informative coverage of an issues. but it often signals to indicate a situation that he might distort by claiming it is some Democrat fault and he will, in short order, fix it.

The media have been buffeted by an inability to handle these voluminous clouds of misinformation chaff that Trump issues, to which his followers add to further obscure the truth. In previous times, The courage of Daniel Ellsberg, who released the Pentagon Papers, and the editors  and staff of both the New York Times and Washington Post, all of whom risked serious jail time, in making the public aware. The documentary, “The most dangerous man in America” fully documents the public deception that led to the tragedy of the Viet Nam war.  

Courage in the current media and Congress?   Perhaps Mr. Bezos would care to comment on when editor, Ben Bhagdikian, would deliver copies of the Pentagon papers in a midnight hand-off under the canopy of Washington’s Mayflower Hotel.  Mike Gravel, a junior senator from Alaska was the recipient of the papers, and read them into the congressional record.thus making them public.  (See Americas Most Dangerous Man video at:1;02;20 on the tape.

Incidentally, I had gotten to talk at some length with Ellsberg at the presentation of the documentary at the film festival in 2010, while we awaitedsecond presentation.  I asked him if he felt the 2010 media would take risks to protect the public from government lying and his answer, a chilling no is even more concerning today, as Zuckerberg gives up fact checking, newspapers give up their endorsement of presidential candidates in race to kiss the hem of the MAGA leader at Mar-a-Lago and shower  him millions for his ‘coronation’ celebration.

The important thing to remember about Trump and chaff is that the purpose is to deceive.

In Operation Taxable the British deployed chaff in controlled patterns before the Normandy invasion to spoof the Germans into believing the main invasion fleet was heading to Calais, and not the Normandy site. All too often, the media is like the guns and lights of enemy defenses, waving aimlessly at the sky or invasion fleets that aren’t there

There are discernible falsehoods and non-sequiturs and impossibilities in Trumps chaff of supposed facts that must be identified and dissected to identify real targets and attacks and make them crystal clear to the public.  Trumps chaff and his explanation of the brilliance of his rambling rants and speeches will be examined further in the next column, working title from Sir Walter Scott:Oh what a tangled web weave when first we practice to deceive

Posted in Science, Uncategorized | 7 Comments

Brazen Bullshit

Posted on November 1, 2024 by John

The actual reasons behind the MAGA ‘replacement theory’

The ‘replacement theory’ that motivated the lethal 2017 Charleston ‘Unite the Right’ march is largely factual. Its causes have nothing to do with those that espoused by the MAGA party. It has been almost two decades since the little 2005 book, On Bullshit, by highly respected Princeton philosopher Harry Frankfurt, became an unlikely best seller. It established the critical distinction between telling lies, telling the truth, or spouting bullshshit, in that the bullshitter is not necessarily lying, but is presenting facts in a way intended to mislead and control.  By examining the dichotomy between the actual reasons behind ‘replacement’ of the less educated young white males of the Charleston riots and the racist misogynistic fears of the MAGA mentality. We  realize that the bullshit is not about replacement,  which in one sense is actually happening but the reasons why and its  causes.  Its not caused by illegal aliens stealing jobs, nor is it caused by declining male testosterone, or the lack of strong man government or the host of other far-right alleged reasons.  Imposing a MAGA/alt. Right ‘solution’ for ‘replacement’ will not turn out well for woman’s rights or the economy

Culture, Education, Economics and the Pill

The simple fact is that as anthropologist Alice Evans puts it, “Over the past 50 years, new technology and cultural narratives have worked in concert to fuel women’s success. With contraceptives enhancing control and media raising ambitions, teenage pregnancy plummeted.”  She makes the point that with control of their fertility, young women could invest  in their education, making them more competitive in filling the need for more educated workers. But the same factors that led to the creation of new jobs worked against the less educated manual workers, as sophisticated manufacturing and advanced robotics took over. Manufacturing employment peaked in 1979 at 19.5 million and declined 35% to 12.8 million by 2017. This level of decline is not new. It mirrors the impact of technology and agribusiness on the farm workforce. In 1930, 41% of the US workforce worked on farms; in 1970, 4%; in 2000, 1%. The less educated end of the labor force bore the brunt of these changes.

B.S. Solutions that create fear and division will make things much worse

Trump claims deporting all illegals is will revitalize the job market for less-educated workers in manufacturing while lowering food prices. Bullshit.  A quick review of USDA stats shows that approximately half the farm workers in the U.S. are undocumented. So even if considerable labor can be found,  an acute labor shortage threatening farmers ability to tend and harvest their crops.   A Kansas State University report shows how expensive it can be to screw up immigration policy, while not fixing the farm-labor market can be.  Lack of farm labor in the State resulted in over 23, 843 unfulfilled positions, causing Kansas an estimated $11.7 billion in additional output across the state between 2000 and 2023. Examination of the agriculture business also exposes Trump’s flawed  tariffs: the Council on Foreign Relations documents that the government had to pay out 93% of the $66 billion in taxes to protect the farmers who lost  billions when China shot back against Trumps tariff war and hit US farm exports,

No Plan, No chance of success so who to blame next?

Trump does not have even a concept of a post-election plan to level up job opportunities, but is focused on preparing some form of January 6-style insurrection, holding rallies designed to foment violence, threatening to release The Proud Boys and convicted Jan 6 rioters if elected. His lack of fact-based planning guarantees he will be unable to deliver on his promise on Make America Great Again.  He will blame on not going far enough in suppressing “the enemy within.” He will resort to increasingly fascist behavior to appease his supporters, and it is hard to see how he will fail to attempt further removal of rights that empower women. He is proud of his role in destroying Roe vs. Wade. Access to contraceptives will be next. The case: Griswold vs. Connecticut, which established rights for access to contraceptives,  the basis for several key court decisions on women’s health and the entire underlying basis for right to privacy.  Both Justice Thomas and Alito are Catholic, and have signaled skepticism of a constitutional right to privacy.

Just Like Germany in the ’30s

Fascist leaders are often obsessed with, among other things, declining masculinity, shrinking family size, and loss of numbers amongst their chosen population. In a 1937 speech blaming declining population on homosexuality, Heinrich Himmler, (who had abandoned Catholicism for the occult) stated: “A people of good race which has too few children has a one-way ticket to the grave.”  He also started the program that would become the Holocaust, along with eugenics program leading to the sterilization of over 400,000 Germans deemed genetically undesirable, He also instituted the Lebensborn program designed to take care of women impregnated by SS troops and the kidnapping of suitably  ‘Aryan’  children for adoption by suitable German Families. Himmler was an avid follower of occultism, dating from the Hapsburg area with notions of popular nationalism plus advocacy for Aryan racism and German world rule.  In her study of the Proud Boys, Professor Margo Kitts of Hawaii PacificUniversity describes how these points have much in common with other white-supremacist groups, including a yearning for some kind of lost golden age, lionizing a supposedly heroic leader  (Trump?) along with revulsion for the dilution of culture and race that inevitably accompanies globalization.

These groups also seem to have an almost homoerotic fantasy, based on maintaining bodily purity to preserve masculinity and increase family size, if those families are of ‘approved’ ethnicity.  This thread runs to Nazi heath programs through JD Vance’s 2021 Ohio Senate campaign,  through the Proud Boys ‘rules’ on masturbation, as cited by Professor Kitts, down to Tucker Carlson.  Declining birth rates are more subtly discussed by JD Vance in his 2021 campaign for the Ohio Senate seat, delighting the pronatalists by calling for larger working-class families, declaring, “I think we have to go to war against the anti-child ideology that exists in our country.”  All too obviously inspired by German propaganda art and films of the ’30s,  Carlson’s documentary, The End of Men, attributes society’s decline to reduced testosterone in American males. He ‘explains’ this while touting a health ‘professional’ who is an expert on ‘brotherapy.’

You really expect us to believe you are not a Nazi?

Anybody who thinks that MAGA and the far-right is not selling  a return to the worst of ’30s attempts to increase the population of pure ‘Aryans,’ and control women, obviously has not read this article, The Pronatalists of Silicon Valley, from the Heritage Foundation. It lists a veritable ‘Who’s Who’ of wealthy techbros funding startups that gather masses of intimate, personal, private, individual information on women’s fertility cycles, all potentially of great value to people like the Texas Attorney General Ken Paxton. He is taking aim at Federal privacy regulations in an attempt to find and prosecute women who had left the state to obtain abortions.

How much do we trust Silicon Valley’s elites to not monetize this data?  To protect the security of this most personal data?  So much of Silicon Valley’s ‘fake it till you make it’ philosophy falls under Professor Frankfurt’s concern of bullshit’s threat to values of basic civilization, that some educated people can develop an arrogant disrespect for the truth.  He also rightly points out that the goal of marketing everything, from products to politicians and policy, depends not on telling the truth, but persuading people to buy the B.S.

We must never give up the fight against the forces that divide us. Winston Churchill ends this essay with his essential words: “But if we fail, then the whole world, including the United States, including all that we have known and cared for, will sink into the abyss of a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted science.”

 

 

 

Posted in Uncategorized | Comments Off on Brazen Bullshit

Capital Sin: Part 1

Posted on July 6, 2014 by John

 Greed and Its Economic Effects:  An Analog Simulation

Can we determine the economic impact of greed? The lasting contribution of Piketty’s masterful book, Capital in the 21st Century, may well be his work and that of his colleagues in the compilation of a meaningful body of international data on inequality such that it can be discussed against a factual background, rather than the theology of free market evangelism and its tenets of faith, such as ‘trickle down economics’ and the supposed self-interested wisdom of ‘homo economicus’. For example, take his World’s Top Income Database and his papers, with Emmanuel Saez of U.C. Berkeley, on optimum taxation, guaranteed to upset the 1%.  The database proved invaluable in developing a very basic analog economic simulation capable of delivering income distributions from defined economic conditions, used in this essay to examine greed vs. enlightened self-interest and the impact on economic performance.

The basic necessities for such a study are two-fold.  First, is there a workable general definition of greed that lends itself to modeling, and, second, can we find a sufficiently robust analog to enable us to conduct experiments? As Reiss points out in his 2011 paper comparing simulations to mathematical models, a simulation enables us to examine complex situations without many of the constraints and assumptions necessary to render an analysis mathematically tractable. He gives the wind tunnel as an example, where it is not necessary to mathematically define the precise conditions of the flow field over a surface to conduct useful experiments that can be used to analyze the real-world performance of a wing.

Equally important, as Phillips accomplished with his famed Moniac hydromechanical analog simulator of the ’50s, a physical analog can makes ‘visible’ the model’s functioning and output.  Here, we show that one can model greed with a physical analog simulation capable of producing income distributions.  As Reiss discusses, such simulations enable us to examine the basis of many fundamental assumptions in a way not possible with strictly mathematical models.  In this case we examine the relationship of greed, enlightened self-interest and income distribution to over-all economic performance, and generate an illuminating comparison of U.S. and Swedish income distribution from 1979- 2007.

How can we define greed in terms of economic performance? Amartya Sen, in considering the enhancement of individual capabilities as the correct path for economic development, states that “Human beings are the  agents, beneficiaries and adjudicators of progress, but they also happen to be – directly or indirectly – the primary means of all production.” Sen argues for a society that gives the individual the freedom and means to realize their capabilities. In other words such a society, by increasing the value of its human capital, will make the most progress. Thus, in general terms, if greed detracts from the development of a society’s human capital by restricting the beneficiaries of progress to a limited portion of society, it will have a negative effect on economic performance.

Here, we say that greed exists when the value extracted from the means of production by a faction in society is such that it compromises the society’s over-all growth rate to the extent that the actual income said faction would have received is less than they would have received had they truly maximized self-interest. This effect is best shown by this graph from Bartels 2008 Unequal Democracy, comparing growth of income under Democratic and Republican presidents from 1948-2005. It shows that the Democrats tendency to support more egalitarian policies translates into greater real income across all strata of society and thus provides more opportunities for a broad spectrum of the population to achieve its capabilities and thus delivers greater economic growth. Note that the lower percentiles actually do better than the upper percentiles under Democratic administrations, who, in turn do better than the upper percentiles under Republican administrations.

To examine this effect, we us a physical analog simulator, the Cambiant model, inspired by Phillips. His Moniac used the physical analog of interconnected tanks and valves to model stocks and flows in an economy, which Krugman comments on as ‘hydraulic Keynesianism’. He is also a big fan of Bartels, whose graph is reproduced above. However, while Phillips Moniac was successful, by its very nature , the ability to model inertia, friction and turbulence exceeded its capabilities The Cambiant model is a “fluid dynamics Keynesianism” analog simulation using transactional flow over a defined surface that represents the actual structure of an economy. Going beyond the interconnected tanks, valves and graphs of Phillips, the analog used in the simulation has long- and short-term cyclic behaviors, variable damping characteristics, inertial properties and friction and also has a ‘stall’ or collapse regime that simulates a Minsky moment, such as the crash of the sub-prime market and–more importantly in addressing the question of greed—produces a structure of the economy that, amongst other outputs, produces income distribution for a given economic structure under specific operating conditions and control inputs.

It also produces a trajectory for the economy and can be run, to borrow an aeronautical metaphor, as a real-time P-I-L simulation (Pilot/politician/policy maker/pundit-In-the Loop)showing the effects of control inputs, including those that can cause an economy to either maximize economic performance, recover from an upset, or go out of control.  The results are informative: it is possible to ‘stall’ and crash the model. It also shows how easy it is to get into a PIO (dare one say Politically Induced Oscillation) with an out-of-phase fiscal input. This was a circumstance that greatly concerned Phillips regarding stability, as discussed in in his 1954 paper, ‘Stabilization Policy in a Closed Economy’, and subsequent work on the subject for which he borrowed time on an early analog computer used for evaluating aircraft stability.

It is beyond the scope of this highly speculative essay to describe the simulation fully, which in its current stage of development, providing more of a cartoon representation of the economy than a fully quantifiable output, so we will look at a couple of essential elements. The shape of the surface (the structure of the economy), effectively a lifting surface or ‘wing,’ produces growth and cost-of-production coefficients that vary with the flow over the surface, responding to both control inputs and exogenous events. The coefficients are defined by the shape of the surface and also vary proportionately to the velocity of transactions. The growth-coefficient curve slopes upward linearly until it rolls over and stalls. The cost-of-production coefficient is an upward sloping curve, concave to the growth curve. By studying the ratios of the values of the two curves, a polar curve of economic performance can be produced by the analog surface under varying conditions.

From this curve we can identify not only the growth coefficient that produces the highest rate of growth but also the point that produces the steepest angle of growth, albeit at a lower rate of growth, and the point at which the economy will stall. At the point of highest growth rate, the structure of the economy will be operating to the maximum benefit of the over-all population, and any change from that point will make someone worse off. In other words, the point of optimum growth coefficient and resultant income distribution reveals the Pareto Efficient point of functioning of a given economic structure.  However, as we move towards higher growth coefficients beyond optimum, we get an ever-increasing income inequality, approaching the stalling point of the economy, resulting in a significant drop in performance. In the most basic terms, excessive income inequality ends up harming the apparent beneficiaries of the distorted revenue stream, whether they are aware of it or not.

As shown by Bartels, enlightened self-interest should lead the rational ‘homo economicus’ to influence the economy to operate at the point of maximum growth. The simulation shows that this point also produces significant inequality but nothing like current circumstances, which show the economy at close to the maximum angle of growth and well into the region of incipient stall. Therefore, we can define the degree of greed as to how far one is willing to influence the economy to operate ever closer to the point of stall. Even with the ‘rip-your-face-off’ level of greed evident in Wall Street and the sub-prime debacle well into the stalled condition, it is possible for the 1% to be doing very well, relative to everyone else, while the overall economy is sinking like a rock with economic devastation of the lower percentiles of the economy.  At any point to the left of the optimum growth coefficient represents increasing degree of greed at the expense of the entire economy or, as John Stuart Mill put it, “Men not only desire to be rich, but richer than other men.” The means by which the analog represents extraction of income is the shear forces in the boundary layer of the transactional flow, and if those at the leading edge of the economy extract too much momentum, the flow will begin to detach at the the lower earning segments of the economy at the trailing edge, the separation point moving slowly forward, through the middle class until eventually the economy stalls. Simply put, if those at the leading edge of the economy extract more than they generate in productivity, economic performance will suffer.

We can see the effects of the increasing greed on the U.S. economy by comparing its income distribution with Sweden, based on the general assumption that the characteristics of the surface model of an OECD-type economy are reasonably similar. The Cambiant simulator was used to develop income distribution for the U.S. and Sweden. The resulting output was checked against Congressional Budget Office data, and similar data for Sweden. The effects of the Swedish banking crisis of 91-92 are clearly visible, as is the U.S. response to the Volker interventions, which introduced a pronounced, but heavily damped oscillation that subsequently settled down.  The dot.com bust and the subsequent crash of 2008, both of which occurred in a condition where the simulation showed that the level of stability of the economy had been significantly reduced. The optimum growth coefficient is at a model value that occurred in Sweden about 2002-3.  The instability in the U.S. economy is evident as the growth coefficient is increased, and the Swedish economy achieved substantially higher GDP growth for the same period.

In both the dot-com crash and the approach to the crash of 2008, the simulation shows that the upper U.S. percentiles were extremely greedy. The economy not only operated well beyond the optimum growth point but actually exceeded the maximum growth coefficient.  Still attempting to maintain an unsustainable growth rate and level of inequality, it progressed well into a semi-stalled condition in which the economy lost considerable assets. The cost-of-production coefficient also grew dramatically, showing that the increased earnings extracted by upper percentiles were not justified by any similar increase in the efficiency of allocation of capital held predominantly by a top fraction of the top 1%, exactly fitting this essay’s definition of greed.  ( It should be noted that the simulation also displays the the force coefficients on the model, as well as the level of stability, as will be discussed in Part II)

In the spirit of the saying that “It is better to be roughly right than precisely wrong” (from Carveth Read, often mis-attributed to Keynes), the Cambiant model does not rely on the mythical rational agent and clearing markets, etc. Instead it uses its analog integration to show the state of the struggle for control between truly enlightened self-interest and outright greed as to how the economy will be operated. The result of this struggle determines the growth coefficient of the economy and thus its income distribution and trajectory. With all the discussion of Piketty, inequity and his return to a Gilded-age distribution of wealth, the simulation shows that this state is not an equilibrium condition and is increasingly unstable and prone to shocks. This is historically evident in an analysis of the rise and fall of preceding financial empires in Economics: Repeating Rhymes from this blog.

Which brings us back to Sen. In a technological society, encouraging people to achieve their maximum capabilities, thus increasing the value of the human capital in that society is essential to a healthy, competitive economy. One has only to consider the fall of the Spanish empire to see the results of failing to invest in human and technological capital and surrendering instead to the siren song of speculation and financial instruments. Writing in 1600, Gonzalo de Cellorigo, observed, “an extreme concentration of rich and poor and there is no means of adjusting them one to another. Our condition is one in which we have rich who loll at ease, or poor who beg and we lack people of the middling sort, whom neither wealth or poverty prevents from pursuing the rightful form of business enjoined by natural law.”  Holland and England followed the same path and the US escaped only because Roosevelt was a ‘traitor to his class,’ further aided by the economic stimulus from the human disaster of WWII. Now, yet again, we are poised on the brink, in more ways than one.

It seems that, especially after Piketty’s ‘Capital’, everyone is making Churchillian pronouncements about our economic future. Why should amateurs from the ‘pond-water’ school of economics (as opposed to the citadels of freshwater and saltwater economics) forgo making predictions, provided they are at least logical? Specifically, Sweden has a housing bubble and seems to be entering a degree of inequality where the model shows that the stability of the economy is greatly reduced and economic forces required to produce dramatic changes are very low. Thus, on a larger scale: This time things may well be different, given the interconnected nature of the global economy, which is about to be stressed, shaken up and rearranged by global warming (the scientists are right) in ways beyond comprehension. Will we fatally squander our resources in protecting the wealth of the oligarchs, as the sea laps at their hyper-expensive, gated and guarded real-estate in London, New York and elsewhere? Or will we collectively move beyond the struggle to Churchill’s “broad sunlit uplands”? The beaches may already be lost, and it will take our best use of human capital to prevail.

Part 2 will show more detailed output of the model for the US and Sweden with the values produced by the force coefficients, plotted against GDP.  These  show that, starting in the early 80’s virtually all of the increase in productivity has been to the benefit of the leading edge of the economy, with no resultant increase in rate of economic growth.  It will also discuss whether economic forces are the main driving forces, or if, as Bartels claims, the current inequalities are ” not simply the result of economic forces, but the product of broad-reaching policy choices in a political system dominated by partisan ideologies and the interests of the wealthy.”  

Posted in Finance/Government, Uncategorized | 1 Comment

Cloudy, with a Chance of Default

Posted on January 2, 2013 by John

 Timely forecasts can be essential to safety

Global finance has more in common with weather prediction than many economists might admit. If they studied the history of weather forecasting, they might be a little humbler in their statements about business cycles and equilibrium.

After all, until the ’60s, weather forecasters thought that more data, more computational power and better models would improve long-range forecasting so that a thankful public could plan weddings and picnics far in advance, free from meteorological harm.

Then MIT mathematician and meteorologist Edward Lorenz ruined everything when he noted that his models, run from the same starting point, would produce widely divergent results. Probing the underlying mathematics, Lorenz discovered Chaos Theory, one of the most important scientific developments of our time.

Until then, meteorology had progressed rapidly, based on understanding physical systems. Descartes founded modern meteorology with his 1637 publication of ‘Les Meteores’ but lacked the basic data to develop his theory. As measurements and understanding evolved—Galileo and his thermometer, his student Toricelli with the barometer—and the realization that temperature and pressure varied with altitude, more attempts were made at forecasting, with little success.

Modern meteorology awaited early-20th century developments and the fundamental observation by Norwegian mathematician Vilhelm Bjerkness, who defined the properties of air masses, weather fronts and atmospheric waves. He stated that all future weather patterns stem from their initial form, acted upon by physics via known mechanical and thermal laws. If only the financial ‘weather’ parameters were so well defined.

Meteorologists then felt that they simply needed to feed sufficient data into the correct models. They could not do so until, in April 1950, John von Neumann, of physics and game-theory fame, worked with meteorologist Jules Charney, created the first successful computerized weather prediction. Soon the computerized models were more accurate than their human counterparts.

Despite these advantages, the ability to predict the weather precisely more than a week or so ahead has not happened. Meteorology has made great strides in understanding the weather, such as storm tracks for hurricanes, and overall understanding of drought, extreme weather and climate-change patterns. But, as Lorenz’ discovery shows, the ability to predict weather at a specific location more than a week or so ahead is barred by the chaos intrinsic to global weather. Why should the even more complex, dynamic and non-linear world financial system, mainly governed by human perceptions rather than physical laws, be any less chaotic?

Comparing the development of meteorology and climate science with economics, weather researchers began to recognize that, as the American Institute of Physics put it: “Before they could understand how climates change, scientists would have to understand the basic principles for how any complicated system can change. Early studies, using highly simplified models, could see nothing but simple and predictable behavior, either stable or cyclical. But in the 1950s, work with slightly more complex physical and computer models hinted that even quite simple systems could lurch in unexpected ways. During the 1960s, computer experts working on weather prediction realized that such surprises were common in systems with realistic feedbacks.”

Attempts to reduce climate physics to a couple of hundred lines of equations were set aside in the development of ever more sophisticated simulations, analyzed and modified against their ability to reproduce historic weather conditions, such as ice ages and aerosols from volcanoes such as the 1991 Mt. Pinatubo eruption. Only after decades of modeling of global warming, international cooperation across a wide variety of disciplines including oceanographers and paleobiologists, and numerous model changes to incorporate an increasing range of factors such as aerosols and ocean temperatures, could the editor of Science Magazine announce, in 2001: “Consensus as strong as the one that has developed around this topic is rare in the history of science.”

AWH Phillips, of Phillips Curve and Moniac hydromechanical simulator fame, proposed that a similar effort might be made in the study of economics. Realize that he had done much pioneering work on analog simulators and economic stability in the 50’s when the results were shown on an oscilloscope!

Phillips proposed that future developments might enable the construction of an electronic analog machine that “using a combination of econometric and trial-and-error methods, the system of relationships, the form of time lags and values of parameters of the analog might be adjusted to produce as good a ‘fit’ as possible to historical time series, and the resulting system used in making economic forecasts and formulating policies.  This would be a very ambitious project. Apart from the engineering problems involved, requiring close coordination of statistical, theoretical and historical studies in economics…” The engineering problems have been overcome with the development of massive computational capability, and the history of climate modeling provides a direct parallel in the study of global warming, an even larger problem than economic stability. 

In 2008, Queen Elizabeth, visiting the London School of Economics, asked: “Why didn’t economists forecast the crash?” Consider global finance as a separate entity, assigning resources worldwide; the ‘weather system’ in which economies operate, a chaotic global flow of cash with series of highs and lows, rapidly shifting storms and calm areas.

To borrow from Lorenz’ analogy as to the flapping of a butterfly wing setting off a tornado in Texas, the waving of financial paper by a London or Singapore trader can trigger the loss of billions of dollars in New York. Recall the ‘London Whale’ and JP Morgan, and the collapse of Baring’s Bank (1762-1995) by rogue trader Nick Leeson. He hoped to cover his errors by betting on a major rise of the Japanese Nikkei stock index, only to see it sent crashing by the 1995 Kobe earthquake. The delusion of human expectations met the realities of real-world events.

Back in the ’30s, John Maynard Keynes spoke eloquently on the unpredictability of such events and their financial impact: “About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.” More recently, Nassim Talib used the analogy of the Black Swan to explain the unpredictability of events in his eponymous book.

Consider Talib’s Mediocristan/Extremistan country analogy, replacing geography with an economic weather map where financial markets’ ‘ extreme weather’ can radically affect real-world economics. Visualize the ‘real’ economy as an aircraft flying through the ‘atmosphere’ of the financial markets. We want a smooth ride through the stable areas on our financial weather map. But the risk of encountering extreme turbulence, such as an embedded thunderstorm, is greatly increased when flying in unstable weather.

Airlines operate in all sorts of weather but avoid extremes by using weather radar and other short-term measurements to assess the risk of continuing the flight and divert around those extremes. If the weather is too severe en route, they don’t fly. Even today, their judgment may be flawed, evidenced by the 2009 Airbus crash in the South Atlantic, but airline flying has become extraordinarily safe.

The Federal Aviation Pilots Handbook guidelines on extreme weather could easily be changed into a policymakers ‘flight’ manual to insure safety. In extreme weather, the most important task is to maintain a stable attitude, rather than altitude and maximum velocity, and operate at a speed that prevents overstressing the aircraft’s structure, thus avoiding situations that could exceed its safe loads and stability envelope. Flying at maximum speed and altitude into potential extreme turbulence is the economic equivalent of turning control over to an autopilot programmed by the financial community, oblivious to the risk of flying directly into financial turbulence capable of ripping the wings off the economy.

Dr. David Leinweber of the Advanced Computational Group at Lawrence Berkeley National Laboratory has proposed just such a solution to the problems of instability in flash trading: upon  detection of instability, slow the rate of automated trading until markets enter a more stable regime, as discussed in his OECD article ‘What can NASCAR teach NASDAQ about avoiding crashes?’.  He proposes real-time monitoring of trading conditions, much as weather forecasters monitor physical data, and rapidly identifying conditions that will lead to instability, then slowing the markets to prevent these conditions from getting out of hand, as in the famous ‘Flash Crash’ and more recent high-speed trading debacles.

It’s tempting to make analogies to Hurricane Sandy, where it was impossible to predict the exact birth of the storm. Once it developed, short-term predictions of its path and impact became possible. The phenomenon of ‘gravity waves’ is perhaps a far better analogy for the interactions of financial markets with the real world economy.  They can rapidly induce severe weather events, such as 4.5-inch-diameter hail in Texas, as illustrated in this NOAA article, (be sure to watch the animation).

Weatherwise, a highly readable meteorological journal  carried a fine explanatory article describing snowfalls, where weather/ocean interactions over the Pacific and Arctic can trigger fast-moving conditions on the East Coast that shut down virtually everything. These snowstorms incur real and immediate economic impact, including the costs of snow removal. Similarly, a financial ‘gravity wave’ such as the sub-prime debacle can cause a storm that dumps enough on the real- world economy to bring it to a near halt.

Perhaps economists should revisit William Phillips’ work on cybernetics and stability as a basis for studying the interactions of financial turbulence with the real-world economy. We could then give government agencies the computational and data-gathering tools they need to monitor Wall Street and the financial community in real time, so that they straighten up and fly right.

Till then, the forecast will be cloudy, with a chance of default.

 

Posted in Finance/Government, Uncategorized | 5 Comments

Our Children Know

Posted on December 18, 2012 by John

 2011 Advertisement for the Bushmaster ACR taken from the web.

 (Click for larger image)

The ad heading, “Forces of Opposition, Bow Down” is designed to evoke strong emotions and convey the power to control.  Considering the unspeakable events in Connecticut, it gives perspective to look at the ad above vs. websites about the Bushmaster ACR that was involved in the tragedy, and how we deal with complex issues that stir passions. The same type of gun was used by the DC Sniper.

The first is a youtube clip of a young male proudly displaying his Bushmaster ACR at: http://www.youtube.com/watch?v=ZCUjYe7SpJE  Notice the second magazine on the table.

The second reviews a ‘virtual’ Bushmaster, used in a violent shooter video game. http://www.youtube.com/watch?v=fx4AvVV6cHY  (Not advised if gore bothers you)

And here is an ad for a large gun shop legally selling Bushmasters, except they seem to be sold out.  http://www.budsgunshop.com/catalog/index.php/cPath/36_60/sort/6a/page/1

Depressed young people read these ads and it is shamefull that we grownups seem unable to discuss important issues in a way that reassures our children that we are indeed behaving as rational adults. We’re not reticent about either side in an argument scaring the heck out of our kids to drive home their points. Imagine what a child feels when they look at the following advertisement. Having behaved in a way that has made our children feel helpless, powerless and  depressed about their future, we then show them websites laced with guns and violence.  Why does the outcome surprise us?

 Consider: violence, political extremism on any issue, heated rhetoric, assault rifles, extended ammo clips and threatened and murdered children. In situations as terrible as the Arizona tragedy, now Connecticut, it is almost impossible to look beyond our immediate perceptions. This makes it doubly important to try to understand and respond rationally. I found just such understanding in the work of Lewis Richardson, a British scientist born in 1881 of a Quaker family, educated in math and physics at Cambridge. He volunteered as an ambulance driver in World War One. Seeking to understand the nature of conflict as a way to prevent it, he listed all deaths from war and murders from 1820 to 1950, which he published as “The Statistics of Deadly Quarrels.”  When I read his conclusions, it gave me quite a visceral reaction. In any given year, murder and war account for approximately one percent of all deaths, and thus are statistically insignificant. My first thought was that this simply could not be correct, but Richardson is right. The subject of deadly quarrels has emotional power out of all proportion to its demographic and statistical meaning. It triggers only the pathos, or empathic element of Aristotle’s three aspects of meaningful debate: logos, ethos and pathos.

The pathos is so strong that appeals to logos, or logic and ethos, or ethics have little or no impact. Richardson understood the ethos and pathos of his work, as well as the logos of statistical analysis. He lumped murder and combat together. To those who held that “murder is an abominable selfish crime, but war is a heroic and patriotic adventure” he replied: “One can find cases of homicide which one large group of people condemned as murder, while another large group condoned or praised them as legitimate war. Such things went on in Ireland in 1921, and are going on now in Palestine.”  The fact that his two examples are equally relevant today speaks to the power of emotion to obstruct logical and ethical solutions.  While our actions may be driven by pathos, we must turn to logic and understanding to prevent the destruction of the ethical structure of our society.

Consider the Connecticut tragedy evaluated in light of the political power structure.  Start with the major U.S. commercial interests in the gun market, owned by Cerberus corporation, a private equity firm. Fueled by cheap takeover money, they started in 2006 to build the Freedom Group, which now owns 13 brands of guns and ammunition manufacturers, including many iconographic gunsmiths, such as Remington, Marlin, and the Bushmaster.

The Oct 19, 2009 Wall Street Journal Dossier on the group cites this 2007 statement by a gun industry source:  “One positive aspect to Cerberus’ involvement in the gun industry is that the huge political clout Cerberus commands as the ‘rescuer’ of Chrysler Corp. (which Cerberus also acquired) should undermine efforts to ban AR-platform rifles if the Democrats score big in the 2008 elections. Cerberus is big enough to make waves in Washington. Money talks in politics and Cerberus has lots of it.”  Cerberus filed with the SEC in  October 2009 to take the  Freedom Group public, but the bubble in ammo and gun profits, caused by propaganda feeding the fear that Obama would take away peoples’ weapons, collapsed.

First quarter 2010 profits were halved. Bloomberg/Businessweek ran a 28 October 2010 article entitled, “Misfires Aplenty at Cerberus Gun Unit’. Their premier new product, the Bushmaster ACR,  has been recalled because of a dangerous, accidental tendency to go on full-automatic fire. This type of misfire should be no surprise from the company that mismanaged Chrysler and GMAC severely, was bailed out with several billion taxpayer dollars, then triggered a robo-signing mortgage crisis. Adding insult to injury, one of their board members and major investors was involved in the Madoff scandal and was a board member of GMAC under Cerberus ownership. He resigned shortly after the Federal Reserve gave bank-holding status tp GMAC, giving them access to $5 billion in taxpayer money via TARP. Former Vice President Dan Quayle and former Bush Treasury Secretary John W. Snow remain as senior management of Cerberus.

Not surprisingly, Cerberus Capital Management was the biggest contributor to the Ben Quayle (son of Dan Quayle) 2010 congressional campaign.  Ben Quayle introduced pro-gun legislation during his one-term tenure in Congress, including the Second Amendment Sovereignty Act to block regulation under the United Nation’s Arms Trade Treaty, removing funding to negotiate or implement this treaty–shades of Congress recent killing the ratification of the international treaty on rights of the disabled, negotiated by George H.W. Bush and ratified by 126 countries. The illegal small-arms trade addressed by the Arms Trade treaty is worth $60 billion annually. Maybe money really is the root of all evil.

It is an extreme position to say that military weapons should be available to the general public, and it is equally extreme to say that all guns should be banned.  We owe our children a meaningful debate, seeking a sensible middle ground between these extremes.  To solve all these crucial issues, from gun control to the financial cliff to climate change, we need responsible politicians, who will take the risks of meaningful legislation, not piecemeal political grandstanding driven by the calculus of their own political advantage. We need a media who will report fully on not only the legislation, but the gun industry itself, and if (or perhaps inevitably when) our political and business leaders act with contemptible, self-serving stupidity, reveal the facts that expose them for the fools they are.

Otherwise, we will have no future, and go on trying to fool our children, lying to them until the very end.

The children know.

 

(Shortly after this article was posted to the Web, Cerberus announced that they would sell Freedom Works, which manufactures the Bushmaster.  For an earlier article on the idiocy of some politicians, please see an earlier post, Politicians, Perspicacity and Paintball.  However, it’s not funny any more)

 

Posted in Uncategorized | 1 Comment

The eleventh hour of the eleventh day of the eleventh month.

Posted on November 13, 2012 by John

I was born in England after WWII, and I still remember the paper red poppies, sold as the remembrance of Armistice Day, celebrated by Veterans Day in the U.S.   I wrote this piece several years ago, and somehow, on this most recent Veterans Day, the realities of war seemed lost in the force of present events.  Yet we should remember another force; the words of the soldier poets that speak to a connected individuality deep within us all.

Until WW I, poems glorified war.  Minds at War, The Poetry and Experience of the First World War covers the change from the nationalistic enthusiasm of Rupert Brooke with the patriotic opening lines of Soldier, “If I should die, think only this of me:/ That there’s some corner of a foreign field/That is for ever England.”, to Wilfred Owen’s immortal Dulce et Decorum Est, an unbelievably horrific description of a young soldier too slow to put on his mask in a poison gas attack.  The title and the Latin in the last lines come from an ode by the Roman poet, Horace

My friend, you would not tell with such high zest

To children ardent for some desperate glory,

The old Lie: Dulce et decorum est

Pro patria mori.

(literally, “Sweet and honorable it is, to die for the fatherland”).

The American school of WW II poetry had been ignored until Harvey Shapiro, former editor of The New York Times Magazine, published Poets of World War II.  Shapiro, who flew 35 missions in Italy in WWII, served as tail gunner in a B-17.  The poems selected offer a wide range of perspectives.  Defeat by Witter Bynner, describes how the German prisoners in Texas were treated with more respect than the black G.I.’s   He gives us one of the few widely read and anthologized poems of the war, Death of the Ball Turret Gunner by Randall Jarrell

From my mother’s sleep I fell into the State,

 And I hunched in its belly till my wet fur froze.

 Six miles from earth, loosed from its dream of life,

 I woke to black flak and the nightmare fighters.

 When I died they washed me out of the turret with a hose.

Jarrell’s notes on the poem; “A ball turret was a Plexiglas sphere set into the belly of a B-17 or B-24, and inhabited by two .50 caliber machine-guns and one man, a short small man. When this gunner tracked with his machine guns a fighter attacking his bomber from below, he revolved with the turret; hunched upside-down in his little sphere, he looked like the foetus in the womb. The fighters which attacked him were armed with cannon firing explosive shells. The hose was a steam hose.”

Perhaps no soldier poet anthology better captures the Vietnam war than  Unaccustomed Mercy, Soldier Poets of the Vietnam War, edited by W.D. Ehrhart, which contains several works by Horace Coleman.  However, Coleman’s hard to find collection of his own poems, In the Grass, is the most powerful as he speaks of combat, yet brings the war back to America in Still Life with Dead Hippie. Kent State, May 4, 1970.  His poems also look to the future.  Writing about an event in which protesters, including John Kerry, threw their medals back at the government and demanded better treatment for veterans, Coleman’s In the Grass gives us Notes for the Veteran’s War Protest

 

Ralph: concerning plans for the local march,

 the following:

 1. Saw the weary demonstration in Washington,

 the burning faces of our sad boy warriors

 throwing their medals at the president.

 2. Think we should emulate but not copy, so:

 when the delegation arrives at the state capitol

 first read the petition:

 “We are not afraid to kill. We are sorry we murdered

 our souls. We did as told but we learned how to say NO!

 Stop it. Or we will stop you. Don’t resist. You can’t stop

 the ghosts you made of us.”

 Next, have those who lost legs crawl forward and neatly

 stack them. Then bowl the skull of your best killed buddy

 down the aisle.

 Finally, have the blind push the quadruplegics forward

 (they will have knives in their teeth to give to the legislators

 to use on themselves). We leave. If they don’t use them we

 come back.

 Horace

 PS. Save the instructions for your grandkids. They’ll come in handy.

Iraq is producing its own poetry, personified in Here, Bullet by Brian Turner, who served a year as an infantry team leader in Iraq in 2003.  One poem I simply couldn’t finish, as I knew where it was going. but here’s the title piece, which Turner wrote, put in a plastic bag, and carried in his breast pocket throughout his tour of duty.

Here, Bullet

 

If a body is what you want,

 then here is bone and gristle and flesh.

 Here is the clavicle-snapped wish,

 the aorta’s opened valves, the leap

 thought makes at the synaptic gap.

 Here is the adrenaline rush you crave,

 that inexorable flight, that insane puncture

 into heat and blood. And I dare you to finish

 what you’ve started. Because here, Bullet,

 here is where I complete the word you bring

 hissing through the air, here is where I moan

 the barrel’s cold esophagus, triggering

 my tongue’s explosives for the rifling I have

 inside of me, each twist of the round

 spun deeper, because here, Bullet,

 here is where the world ends, every time.

 These books diverge completely from the war visions of politicians.  In her essay, The Magic of Images: Word and Picture in a Media Age, Camille Paglia notes that it essential for the word and the book to mediate the never ending assault of new media advertising and propaganda so we can truly comprehend our world.  The soldier poets’ words do just that.

 

 

 

Copyright reserved by the authors of the poems.

Minds at War  Roberts (ed)                                           ISBN 0 952 8969 0 7

Poems of World War II  Shapiro (ed)                          ISBN-10: 1931082332

Unaccustomed Mercy Ehrhart (ed)                              ISBN-13: 978-0896721906

In the Grass   Coleman , Horace                                    ISBN: 1885215-14-2

Here, Bullet   Turner, Brian                                             ISBN: 1-882295-55-2

Posted in Uncategorized | 2 Comments

Is the Financial Sector Worth What We Pay It?

Posted on October 19, 2012 by John

Plenty more where that came from!

(This article is cross posted from my article for OECD Insights where they provide discussion of a wide range of subjects that influence world development)

A basic capitalist tenet is that the market represents the most efficient way to allocate capital. How well is it working?

We are rapidly evolving a fast-moving, increasingly cybernetically interlinked capital marketplace that, as Lord May observes in the Santa Fe Institute Journal, has become intertwined in ever-more complex interdependent patterns. He goes on to ask how much are we, societally, paying the financial sector to allocate capital? More importantly, is the sector allocating capital to further societal goals, or merely enriching itself and a narrow segment of the world’s population? Human nature is powerful. John Stuart Mills said, in Social Freedom: “Men do not merely desire to be rich, but richer than other men”.

Benjamin Friedman holds, in The Moral Consequences of Economic Growth, that “greater opportunity, tolerance of diversity, social mobility, commitment to fairness and dedication to democracy” derive directly from economic growth. He shows that even during stagnation–let alone recession and depression–those values can vanish easily. Brad Delong observes, in reviewing Friedman, that if the majority of the people do not see an improving future, these values are at risk even in countries where absolute material prosperity remains high. Given rising political intransigence and loss of common social purpose in the U.S., and the rise of nationalistic political sentiments in Europe, the effects of increasing stagnation and inequality are becoming more evident, despite the financial sector’s phenomenal growth.

In a 2006 speech on the growing integration of the financial sector and the broader economy, Rodrigo deRato, Managing Director of the IMF, noted its supposed general stability and growth, and that from 1990-2005 the estimated sum of equity-market capitalization, outstanding total bond issues (sovereign and corporate) and global bank assets rose from 81% to 137% of GDP, while over-the-counter derivatives markets tripled in the latter five years to $285 trillion, six times global GDP, 50 times the U.S. public debt. So if the financial sector has worked, we should see proportional acceleration of growth plus improved consequences for all society.

This is not happening, as Cornia and Court report in Inequality, Growth and Poverty in the Era of Liberalization and Globalization.Global poverty reduction has stalled for 30-40 years, despite an approach to growth based on “…a neo-liberal policy package, [including] stringent focus on macroeconomic stability, liberalization of domestic markets, privatization, market solutions to the provision of public goods, and rapid external trade and financial liberalization.” They reveal that inequality has grown faster during the same period in the majority of countries for which data is available. The paper also shows that increased inequality greatly encumbers the climb from poverty and that excessively low or high levels of inequality impede growth, provoking various ills, including crime, social conflict and uncertain property rights. In the US, bank employees were found to be signing thousands of foreclosure documents without checking the information in them in so-called robo-signings that rendered the documents illegal.

All the data seem to affirm Friedman’s assertion that all societal strata should participate to maximize the moral benefits of economic growth. Further support can be found in Court’s conjecture about an optimum range of equality. This is confirmed by modeling work at Dominican University, discussed in a previous OECD Insights post, which shows that there is indeed an optimum level of equality for a given economic structure useable for policy planning, to insure capital allocation to economic growth for public purposes. Returning us to Lord May’s point that we must know how much economies are ‘paying’ the financial sector to allocate capital, including payments to banks, sovereign funds, hedge funds, private equity, and the managers, often in major international banks, of the estimated $21-32 trillion of largely secret “offshore” financial assets.

The financial crisis and subsequent Euro problems show that we are paying vast sums for a system that, as Joseph Stiglitz, former chief economist of the IMF, points out, doesn’t allocate capital where needed, causing capital flows that are pro-cyclic, exacerbating peaks and lows of business cycles.   What efficient capital distributive function is served by the approximately $1.5 trillion of daily flows sloshing about in the casino of OTC foreign exchange activities, and the nearly 70% of all U.S. market trades conducted algorithmically, without human intervention?

Keynes may have lost the 1944 Bretton Woods battle for a solution that transcended national financial self-interest but his plans for an international clearing agency are prophetic, especially considering how the combined financial sector dominates national and international policy for its own ends “ As Keynes said, “… no country can . . . safely allow the flight of funds for political reasons or to evade domestic taxation or in anticipation of the owner turning refugee. Equally, there is no country that can safely receive fugitive funds, which constitute an unwanted import of capital, yet cannot safely be used for fixed investment.” Right again, Lord Maynard.

Useful links

OECD work on financial markets

Posted in Uncategorized | 9 Comments

Downton Abbey Economics

Posted on October 14, 2012 by John

Celebrating the Height of Empire as Queen Victoria Opens the Great Exhibition of 1851

How much do Public Broadcast Service viewers understand about the economy that led to the lifestyle of the wealthy Edwardian-era family in the hit series Downton Abbey? If one watched only PBS historical dramas, the British history leading up to the Abby era seems to run to the understanding that Horatio Hornblower  (born imaginarily in 1771) and the Royal Navy defeated the French, and somewhere in there, Jane Austen came to her Sense and Sensibility (1811), and didn’t James Watt (1736-1819) invent the steam engine and thus power the Industrial Revolution upon which England built a mighty Empire on which the sun wouldn’t set until World War One came along and upset the elegance and gentility of the Edwardian Era?  Well, there may have been a couple of social issues here and there, along with the Titanic, providing the PBS drama with some good plot points.

The historical truth is markedly different.  The span of relevant history starts out with a major bailout of the landed gentry and the banking system, and ends with the rise of the financial sector providing much of the income for the Downton Abbeys of the time. It progresses through the Industrial Revolution to a late-Victorian English ruling elite that was smug, narrowly educated and scientifically illiterate, rich from the financial sector but with a manufacturing base that had been increasingly starved for the capital to keep up with the technological pace of change.  It spans a time of tectonic social shift from an agrarian economy to one where a rising industrial middle class needed workers for its factories. Because of that fundamental change, the working poor were largely cut off from the land and social structure which produced the food they ate, making them dependant solely on the factories that provided their wages.

The bailout occurred when Parliament passed the Corn Laws, a steep tariff on cheap imported grain   As the eminent British historian Eric Hobsbawm wrote, “The Corn Laws which the farming industry imposed on the country in 1815 were not designed to save a tottering sector of the economy, but rather to preserve the abnormally high profits of the Napoleonic war-years, and to safeguard farmers from the consequences of their wartime euphoria, when farms had changed hands at the fanciest prices, loans and mortgages had been accepted on impossible terms.” The linkage to the sub-prime debacle and subsequent bailouts is obvious. Then, as now, making risky loans based on bubble-inflated real estate was a recipe for trouble.

The costs of the tariffs literally took bread out of the mouths of the newly emerging class of factory workers, who then needed higher wages just to eat. This would mark the emergence of three distinct economic forces: the landed gentry, who at the time controlled Parliament; the rising industrial middle classes, (the true job creators of the time, who at that time did not have the right to vote) who felt that the tariffs were restricting economic growth by forcing them to pay more for workers and thus consume capital for expansion, and third, the working class itself.  Thus, the simplification of social tensions to class warfare between the rich and poor was, and still is, simply wrong . The fundamental battle was the landed gentry against the combined job creators and the working class.  This can be seen from the early 1800’s alliance formed between the workers and the growing class of industrialists.

There were several attempts to formulate social structures to which would bring about political reform.  A significant example was the Birmingham Political Union, whose goal was reform of the House of Commons ‘to be achieved by a general political union of the lower and middle classes of the people’.  At the same time, the Cooperative Movement, largely started by Robert Owen, who operated his mill at New Lanark, was having a significant impact.  (It’s well worth visiting the New Lanark World Heritage site to see the relevance of his ideas to the modern day, including the environment, health and child care, housing, and education.)  Pressure from these social movements, including a mass meeting 200,000 members of the Birmingham Political Union, pressured the House of Lords, afraid of violent social unrest, to pass the 1832 Reform Act.

The Reform Act would extended the voting rights to the middle class industrialists, which lead to weakening of the Corn Law and increasing calls for free trade.  After eventual repeal in 1846, the imports of grain from the prairie farms of North America expanded rapidly, supplying the U.S. and Canada with earnings to buy the output of increasingly industrialized England, led by Henry Maudslay (1771-1831) and his advances in machine tool design such as his screw-cutting lathe, and micrometer, which had made possible precision manufacture and thus mass production. The results were celebrated by Queen Victoria’s multiple visits to the 1,851 foot long ‘Crystal Palace’, which housed the Great Exhibition of 1851, celebrating Victorian manufacturing and scientific prowess.

However, Britain began to rely increasingly on trade, overseas investments and financial and insurance services while starving her home industry of capital improvements to take advantage of subsequent technological advances, many of which were British.  There is no clearer example than that of the steel industry, where the British developed literally all of the major advances, from the Bessemer Converter (1856) to the Siemens-Martin open hearth furnace (1867) to the Gilchrist-Thomas process (1887) which was almost instantly adopted by American steel magnate Andrew Carnegie, who paid $250,000 (a fortune at the time) for the U.S. rights.  By 1910, the U.S. was producing twice the tonnage of steel as Great Britain, who had formerly supplied over half the world’s steel yet was starved of capital to adapt more efficient technology.

When assessing the economics of the time, the educational system is most telling, with the ‘reform’ of the most prestigious boys schools in England, which had historically started as charity schools but had evolved into institutions for the children of the ruling class.  The Public School Act of 1868, by its full title ‘An Act to make further Provision for the good Government and Extension of certain Public Schools in England,’ removed the nine schools, amongst them Eton, Harrow and Winchester, from Crown control and provided each with an independent governing body.  However, despite the recommendations of famed biologist T.H. Huxley, whose famed 1860 debate with Bishop Samuel Wilberforce led to the wider acceptance of Darwin’s Theory of Evolution, Parliament refused to mandate scientific education in the schools.  Indeed, Eton had only added arithmetic in 1836!  Instead the school imbued their students with the Victorian mythology as to Britain’s place in the world.  In 1900, Germany graduated 3000 engineers, while in all of England and Wales, only 250 degrees were granted in scientific and technical fields.

The disastrous effects of the social structure showed up in a working class stunted by decades of malnutrition.  In the 1870s,’s the height of the twelve- year- olds at the prestigious ‘public’ schools was a full five inches taller than that of the industrial students in their separate schools.   When the nation conscripted its soldiers in 1917, this first comprehensive look at the health of the male population showed that two thirds suffered disqualifying disabilities.  Providing significantly improved conditions for the working class, proper nutrition, comprehensive education and, despite the work of reformers like public health pioneer Florence Nightingale, all this and readily available health services were decades in the future.

Thus, the residents of Downton Abbey represent a British upper class that was ill-equipped by education and temperament to enter the 20thcentury, in charge of a country with outdated industry and dependent on increasingly competitive international finance and trade with other rapidly industrializing nations.  England, like Holland and Spain before her, went through the same rhyming pattern of technology and trade, rise of the power of the financial sector, followed by decline.   It is a good question to ask ourselves: where on this timeline where does America stand?.  Does the country celebrate and support the innovative brilliance of the science and technology of a Maudsley or a Darwin, or the deal-making financial sector that preserved the Downton Abbeys for the privileged few? What does the answer mean for our future place in the world?

Posted in Finance/Government | 49 Comments

Napoleon III, Butter and West Marin

Posted on September 14, 2012 by John

Large cheese waiting for shipment on the platform at Fallon, West Marin in the late 1800’s

Napoleon III had a huge effect on agriculture, product branding, lobbying and indeed, on the health of West Marin’s dairies. In 1869 he offered a prize for developing a butter substitute for his army, while appeasing the lower classes (as they were described at the time) with a low-cost spread. By clarifying animal fat and extracting the liquid portion under pressure, letting it solidify, then combining it with water and esters of butyric acid (naturally present in butter) French chemist Hippolyte Mège-Mouriés produced a gray substance that spread and tasted somewhat like butter. He likened the color to pearls, using the Greek word for pearl, margaris, and came up with the name oleomargarine.

Meanwhile, in Point Reyes, the dairy industry was establishing the superior quality and taste of its product as one of the first branded consumer goods. In 1857 Clara Steele and her family began making cheddar cheese with milk from range cattle, for sale in San Francisco. To insure a less hazardous and more stable milk supply, they started a 6,000-acre dairy ranch in Point Reyes. By 1861 it was the State’s biggest dairy producer. In 1864 they made a 21,800lb cheese for the Mechanic’s Fair in San Francisco. Pieces of the “20 feet in circumference, 18 inches thick,” cheese were sold for a dollar a pound to benefit charities. I guess using the larger circumference rather than the slightly over six-foot diameter was designed to impress. It was still a big cheese.

In the 1870’s, by adding ranches in what is now Point Reyes National Seashore, West Marin became the state’s leading dairy region. The Shafter-Howard dairies started stamping a trademark on their butter to distinguish it from lower-quality competitors. By 1878, California’s rapidly-growing dairy industry had enough influence to get the legislature to pass the State’s first dairy law, making it a crime to sell the newfangled oleomargarine as butter. This started what became perhaps the first major battle between industries where the weapons in the fight for market share were legislation and branding. At first the dairy industry prevailed, forcing regulations and taxes on the emerging margarine industry.  At the turn of the century, some dairy states even passed laws saying that margarine must be dyed pink to avoid confusion with butter.

Margarine technology changed. The battle raged as the dairy and margarine industries grew larger and more centralized. The dairy industry got special taxes imposed on margarine; the margarine industry avoided the ban on coloring their product to resemble butter by including packets of color to be kneaded into the gray margarine to make the color more appealing. Finally (well, not quite), President Truman signed the Margarine Act of 1950, repealing all federal taxes and restrictions on the lower-priced spread. The Point Reyes Light, at the time known as the Baywood Press, ran stories prophesying that the loss of the lucrative market for high-quality dairy products would doom West Marin’s agricultural industry.

Sadly they were largely correct: milk, butter and cheese became commodities, indistinguishable in quality, taste or origin. West Marin’s milk products, long prized for taste and quality, could no longer charge a premium representing true value. The farms and the community declined. Margarine had won the lobbying battle and changed the regulations that once favored butter.

This was an early case where two competing consumer products battled for market share via regulation. Economists call this type of behavior ‘rent seeking’ (from the 18th  -century political economist Ricardo’s theory of rents): the business is trying to profit by getting the rules changed, rather than competing in trade and producing wealth. This devastates local communities, as small producers of high quality goods are forced out, favoring larger producers with more political influence.

We see it today in discrimination against small local fishermen in California’s allocation of fishing rights that favor large, out-of-state trawlers and lobbying by large food distributors to let cheaper, less inspected foreign produce such as oysters to be imported and compete with local sources. This is additionally bad for local communities as the income and services to support the businesses are lost to the community and seldom return. But there are bright spots like the Strauss family, who pioneered organic dairy ranching on the West Coast, and organic beef producers who show that it is indeed possible for local producers to compete in the marketplace.

Even with organic dairy products, ‘rent seeking’ continues, as large East Coast producers try to slant regulations to favor their farming methods at the expense of competitors. Our legislators must ensure that local agriculture, fisheries and the communities they support are not penalized by predatory “rent seeking” regulations that favor large businesses.  May the highest-quality, most-sustainable product win.

 

(I originally wrote this for  the Pt. Reyes Light in 2009)

 

Posted in Environment, Finance/Government, Living next to the fault line | 3 Comments

Polluted, Political, Pregnant or Profitable

Posted on August 22, 2012 by John

Male Chastity Belt, US Patent No.995600 by Jonas E. Heyser, 1911.  Ideal for preventing platform self-abuse and hypocritical behavior in the more risque quarters of Miami during the upcoming Republican Convention

Occasionally scientific fact, polemical positions and public policy collide where none of the principal parties look good. Recall the lack of self-awareness of Jonathan Swift’s Lilliputians and the strife between the ‘Big Enders’ and ‘Little Enders’ in Gulliver’s Travels. Consider, in context, the grave problem caused by endocrine disruptors from birth-control pharmaceuticals that pass through the female body, down the toilet and eventually into the aquatic environment, causing male fish—as documented in the scientific literature – to start growing eggs in their testes. Canadian experiments show that levels as low as five parts per trillion can cause species collapse. This creates a clear policy decision that should involve a rational social debate between those groups with a stake in pollution, pregnancy, politics and profit. Fat chance.

The Politicians:  Apparently, irony has become illegal in the U.S., pre-empted by Todd Akin, Paul Ryan and other R’s. The Republican platform’s abortion plank, which includes the potential elimination of hormonal birth control, is based on spurious medical ‘science’ and a doctrine dating from the 13th century legal text Fleta, as referenced by Vanessa Heggie in the Guardian. The position of Ryan, Akins et. al. brings to mind, with only slight modification, the lines from a rock and roll classic: “Don’t know much about history, don’t know much biology, don’t know much about science books….Don’t know much about economies…” etc.  “What a Wonderful World This Would Be.” Given Congress’ approval ratings, sinking self–interestedly downwards in an ocean of post Citizen’s United bribery, we can’t expect solutions from them.

The Right to Life crowd.  Given the destruction of God-given fisheries and pregnancies (even in the case of rape) one might think that they would argue against hormonal birth control from the perspective of logic, fact and environmental damage. This path is not open to them, as it would involve using science and reasoning, leading to understanding reproductive biology, which might get them uncomfortably close to evolution. God knows what might happen if they started looking at sociology, anthropology and the patriarchal/tribal society’s desires to control women’s reproductive rights. They seem to be sure that things must have been so much better when, as recently as Victorian England, women didn’t even control their own property, let alone their own bodies.

The Environmentalists.  The inability to protect the environment from endocrine disruptors mirrors the ineffectiveness of much of the environmental community, reflecting their widespread invocation of the precautionary principle in trying to ban anything they don’t like, rather than its intended purpose: to guide regulatory actions where credible scientific evidence of potential risk exists. To grasp the environmental and economic impacts, check the recent Nature article by researchers Richard Owen and Susan Jobling. While the effects on fish (see above) in British rivers was first noted 30 years ago, only a decade or so after the widespread introduction of the birth control pill, virtually nothing has been done. As the article points out: “The need to protect our environment from the harmful effects of EE2 is clear, but understanding our willingness as a society to pay for that protection is not. Nor is it obvious where responsibilities lie including whether pharmaceutical companies have a moral duty of care for all their products, which could be better designed so that they are safe for the environment.”

 Profits and Pharma:  Birth control is big-pharma fantasy made real, estimated to reach $17.2 billion annual revenues worldwide by 2015, used by 98% of the U.S. female population at some time in their lives, much of which involves taking a pill nearly every day. However, things change when one looks more closely. Checking on the Center for Disease Control website, amongst non-hormonal methods, the copper T intra-uterine device (IUD), which lasts up to 10 years and is 99% effective, eliminates the problem of birth-control hormones released to the natural environment. Dr. Jeffrey F. Peipert of the Contraceptive Choice Project (check out the videos) at Washington University of St. Louis shows that IUD users have far fewer unwanted pregnancies, no hormonal balance/estrogen problems and are far more likely to continue the method. The problem? Initial costs are much higher, though over-all cost over time is significantly less. IUDs are often not covered by insurance and, of course, big pharma doesn’t get to sell a pill a day to millions of women.

We only need the Right to Life crowd to say “while we don’t approve of hormonal methods on ethical grounds, we respect your right to control your own body, if you don’t screw up the environment.” (Plus, as the Contraceptive Choice Project shows, when women have control of their own bodies, it reduces abortion rates and teen pregnancy dramatically.) The environmentalists need to use the existing science effectively by properly implementing the precautionary principle to protect the environment from endocrine disruptors. And our politicians should tell the manufacturers of hormonal birth-control chemicals that the continued release of EE2 endocrine disruptors will be phased out rapidly, unless those manufacturers will pay to fix the problem, with the costs to be borne by them and their customers.

Problem over, right?  Not with the Republican Party platform, to be in plain view at their upcoming convention. The Contraceptive Choice Project shows that we need more education and accessibility. Maybe we can let Akin and his fellow Republicans, and the others who have displayed their abysmal ignorance of human rights and the female reproductive system so publicly, sit in on the classes.

 

Posted in Environment, Finance/Government, Science | Comments Off on Polluted, Political, Pregnant or Profitable