Wednesday, April 16, 2014

How to regain trust in the NSA era: The IGUS Gambit

How might the Obama Administration best respond to wave after wave of "NSA revelations" that roil and cloud the political waters?

NSA-Snowden-AssangeIronically, almost none of Edward Snowden's leaks -- or those of Julian Assange -- revealed anything that was illegal per se. What they have done is stir a too-long delayed argument over what should be legal!  Specifically, the Patriot Act and the ratchet effect on surveillance that always happens when a country enters a state of panic. The post-9/11 alarm is finally fading and -- (barring some new, panic-inducing event) -- elements of the Patriot Act and pervasive surveillance are now up for public debate.

See page 206* of The Transparent Society: Will Technology Force us to Choose between Privacy and Freedom? (1997) -- where this cycle of terrorism and increased government surveillance was predicted in precise -- and rather creepy -- detail.

NSA-WATCHING-WATCHERS Elsewhere, I recently dissected and appraised the forty-two suggested reforms that a commission presented to President Obama, many of which he has instituted or sent to Congress. Here I want to focus on one important, trust-building measure that would make a huge difference.


= Meeting the needs of the Public and the PPC =

As expected, most of the current argument is about the wrong side of the issue -- mewling plaints calling to prevent society's elites (like the NSA or Google) from seeing -- an effort that is fated to be futile, condemned to absurdity by Moore's Law.

But at last there is talk also of doing what will work -- improving the degree to which the citizenry can supervise and have confidence that government remains essentially a servant of the people.

The main sticking point is over the need that members of the Professional Protector Caste (PPC) have for tactical secrecy, or the ability to conceal their operations from villains and adversaries.   This need is very strong, but so is that of citizens to feel assured that secrecy remains only tactical, short-term and pragmatic, never an excuse for permanent avoidance of accountability.

INSPECTOR-GENERAL-UNITED-STATESI have over the years offered several innovations that might achieve a win-win -- securing both tactical shadows for the PPC to be effective, while ensuring accountability that at least partially reassures the public. Foremost among these proposals would be to create the Office of Inspector General of the United States (IGUS).

IGUS could be established with a one-page law that simply transfers all of the inspectors general in every agency and department to an independent service under a figure of noted rectitude, whose staff might then perform their functions without the inherent conflict of interest that stymies so many IGs. IGUS members would be trained in both confidentiality and prim skepticism on the taxpayers' behalf, allowing PPC agencies to continue tactically secret investigations, but always with the peoples' delegated gaze over their shoulders.

NSA-Citizen-OversightA POLITICAL WIN-WIN: 
Without question, proposing and establishing IGUS would be an agile jiu-jitsu move on the part of the Obama Administration. It would simultaneously say:

"We understand that public confidence is shaken and this move should help to restore it while preventing the worst and most perniciously chronic abuses… while at the same time allowing our skilled public protectors to continue doing their important jobs. It is also the quickest way to do this, requiring the fewest changes in law."

Will this satisfy everybody? Of course not… nor should it! Indeed, I do not consider IGUS to be enough. I have several more proposals that would work in parallel with IGUS, so that in-sum we all can truly be sure that our watch dogs remain loyal (if fierce) dogs, and never wolves.

inspectors-GeneralNevertheless, establishing an Office of the Inspector General of the United States would be a good start. And it would allow the Administration to be seen acting vigorously, in a forward, pro-active direction that BOTH enhances public trust and allows our agencies to do their jobs.

My IGUS proposal was written in greater detail as one of two dozen "Suggestions for the Incoming Obama Administration" way back in 2008. Alas, not one of them got to anyone's ear. C'est la vie.

Still, you can read about it here: Free the Inspectors General!


== Political Miscellany ==

Lying with Data: Fox viewers in the family? Show them this chart that appeared on their news” network and ask if they can explain why almost no American scientists are republican, anymore.  See this appraisal, also: The Statisticians at Fox News use classic and novel graphical techniques to lead with data. 


Transparent-Society-206*Page 206 of The Transparent Society: Will Technology Force us to choose between Privacy and Freedom?

Sunday, April 13, 2014

Money flows that might prevent new World Wars

Syria-Russia-Iran-IraqVeteran U.S. diplomat and Middle East expert Dennis Ross made some interesting points about President Obama's trip to Saudi Arabia in an L.A. Times editorial: "Next Test for Obama: Soothing the Saudis." He referred to the Saudis biggest concern, the rise of militant Shiite Islam and an axis of Iran-Iraq-Syria that now includes an aggressively revanchist Russia. A problem that some have referred to as "World War Four".

Alas, Mr Ross ignores the elephant in the room. That the Saudis are not the victims in any of this. Their relentless push to establish fiercely conservative Wahhabi madrassas all over the Sunni Muslim world helped to create Al Qaeda and most of the 9/11 attackers. Their own textbooks declare the west to be an evil place, to be tolerated only while necessary. Above all, they have striven, since 1948, to stymie peace between Israel and its Arab neighbors. By pushing to keep Palestine as an open wound, they ensured only that the Levant region would remain embroiled and steeped in pain, never achieving what the Saudis' Hashemite rivals once dreamed-of -- an alliance between Arabs and Jews that could strengthen all concerned.

One wonders, as the generations pass along, if the admittedly brilliant grandsons of Abdulaziz ibn Saud might be flexible enough to envision how that long-deferred option is worth trying, at long last. That Israel and the Levant and Egypt and Arabia have potential far beyond mere oil, especially if all parties were to help foster synergies, instead of trumped-up enmities.


Saudi-aid-PalestinianThe Saudis, especially, have the wherewithal to offer aid and investment – a deal that would be impossible for the Palestinian side to refuse. And such an offer would corner Israel with an economic carrot that transcends any and all sticks.

Above all, such a jiu jitsu move by the Saudis would render the Russo-Shiite axis futile… almost cute in its impotence, next to the scientific/technological/economic superpower that would blossom in the Sunni-Israeli zone.

(Don't bring us the purported Saudi "peace offer" from a few years ago.  It was tepid, amounting merely to an acceptance of the world consensus that Israel in here to stay. It took none of the expensive and memically painful steps necessary in order to boost the moderates on both sides of the Palestinian-Israeli gulf.)

 All of these benefits await, but are only perceived by those of flexible mind.

Alas, Mr. Ross shows us no hint of any of that.

== A “Helvetian” scenario? ==

SMUGGLE-DEVELOP-COUNTRIESIt's hard to build your country when the money keeps slipping away. Foreign capital flight has been a problem for developing countries this year, but a bigger problem might be the funds smuggled out by tax evaders, corrupt officials and criminals — $946.7 billion in 2011. Nearly a trillion dollars, according to the latest estimates released today by a team of economists at the non-profit Global Financial Integrity, an increase of more than 10% over the previous year. For comparison, total foreign aid to developing nations in 2011 was just $141 billion.

"The nations most hamstrung by illicit flows are in Africa, where illicit flows are the equivalent of 5.7% of GDP; the average developing country lost 3.7% of GDP in 2011. That's a huge amount of money to lose that could otherwise be invested in private or public enterprise that might improve the lives of people living there. Instead, it winds up in tax havens—including the United States and the United Kingdom. "This isn't really just a developing world problem it's facilitated by developed country banks and tax havens," Brian Leblanc, one of the economists behind the study, told Quartz."

"Indeed, with six times more money leaving developing countries illicitly than entering them as aid, advocates for these nations might do well to back policies to block these flows. Promoting tax-haven crackdowns and convincing powerful multinationals to submit their transactions to more scrutiny is hard to do, but it could pay dividends for development down the line."

MIDDLE-CLASS-RISEIn EARTH I portray a dozen developing nations having suddenly realized that several trillion dollars -- ripped off from poor countries by former kleptocratic lords -- sits in Swiss and other bank haven accounts.  When all else failed, they declared war on Switzerland -- in the 2020s -- in order to use the rights of belligerent powers to seize assets all over the world and to coerce return of enough money to save millions of children.

Things needn’t come to that! In fact, a deal might be worked out in which developing nations agree to keep the restored funds deposited in Swiss banks! Only with interest and collateral value now going to the nation’s children, not former klepto-presidents. Such a deal would, in a shot, restore hope and trust… and guarantee the bankers against the kind of comeuppance they think (right now) can never come.

History disagrees. It can come. Cut the deal.

==Creditors or Debtors?==

Treasure-Islands-Shaxson-bookIn this recent report -- The Missing Wealth of Nations: Are Europe and The U.S. Net Debtors or Net Creditors? -- analyst Gabriel Zuchman shows evidence that around 8% of the global financial wealth of households is held in tax havens, three-quarters of which goes unrecorded. Meaning that this is about much, much more than just the developing world. "On the basis of plausible assumptions, accounting for unrecorded assets turns the eurozone, officially the world’s second largest net debtor, into a net creditor. It also reduces the U.S. net debt significantly."  

It's flagrant! "... (worldwide) more investment income is paid than received each year…" and "...many European securities, in particular, have no identifiable owner…"  

Clearly this relates to my longstanding proposal -- for worldwide transparency of ownership.  It is completely non-socialistic and would probably result in taxes upon honest families going down.  All it would do is ensure that those yelling the loudest in defense of open capitalism actually live by it. 

== Grabbing, hand over fist ==

And finally -- related news that just hints at the scale of the oligarchic putsch…

Rupert Murdoch’s media group received a $882 million tax rebate from Australia last year in a revelation that is likely to reignite the debate over how much tax is paid by international corporations. Again, this generation is the savviest and most knowledgeable in history.  Do you guys honestly think that -- when it becomes radicalized -- there won't be repercussions?

Wednesday, April 09, 2014

It’s not the “One Percent”

First, before getting into the “one percent” matter…

9780812978728_custom-a68f3d31cb6007f7534ef6210f0693432759ff3d-s2-c85
I have heard few interviews on NPR that were more cogent, intelligent or rich in wisdom and knowledge than this one, with Bruce Levine, a professor of history at the University of Illinois, who is author of The Fall of the House of Dixie: The Civil War and the Social Revolution that Transformed the South and Confederate Emancipation, Professor Levine deals handily with the edifice of completely made-up rationalizations we hear fermenting these days: e.g. that slavery was declining in the South during the lead-up to the U.S. Civil War (phase 1).

Not one of the excuses offered by apologists -- like Judge Andrew Napolitano -- stand upon anything more substantial than wish-fantasies and fairy dust.

Listen to the audio interview. This is a wise and knowledgeable fellow. An example of why those waging war on science had to expand their campaign to encompass and reject history, economics, journalism and every other clade of knowledge in American life.

== It’s not the “One Percent” ==

Okay, I have a bone to pick with you “progressives” out there. Sometimes you can be as lazy and simple-minded as your opponents.

99-percentStop referring to "the one percent!" It is a trap. Indeed, it may be a polemical trick, foisted on us all by a conniving oligarchy that does not want to face the ire of a united citizenry.

Those chanting “we’re the ninety-nine percent” only thus empower Fox-pundits to respond that "most of the one-percenters are small business owners, or hard-working doctors and dentists who are demonized by the left for their well-earned success, stigmatized for providing valued goods and services."

And that's completely true!

Look, you polemical liberals out there, do you really want three MILLION of America's most productive, innovative and hard-working people to be driven into the arms of the real oligarchs, by tarring them with the same, simplistic brush? Guilt-by-association?

There's a word for that. It is "stupid."

one-percentIn fact, according to this article in the Atlantic it is the top 0.01 percent—that's the uppermost one percent of the top 1 percent—that's leaving the rest of the top percentile behind, in the dust along with the rest of us. “While nine-tenths of the top percentile hasn't seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country's wealth in half a century.”

Alas, what this article leaves out is discussing the one-percent of THAT clade… or the 0.0001%ers. Those are the folks always to scrutinize. Even the father of modern market enterprise capitalism (Adam Smith) said so!

They aren't all bad, just because they are rich! Indeed, the Silicon Valley billionaires and other entrepreneurs who developed goods and services by working closely with thousands of skilled and free-thinking engineers – these men and women know that it is a relatively flat, well-educated and open “diamond-shaped” society – dominated by a vibrant and empowered and knowing middle class – that creates the kind of opportunities that let them succeed in a positive-sum way. Getting rich while making us all richer. Guys and gals like that are sensitive to how it all would get ruined – will get ruined – if we follow the age-old human pattern. Into feudal-inherited-oligarchy.

Interestingly, those open-market-friendly rich men and women are mostly democrats.

ClassWarLessonsHistorySo. Shall we get mad? Chant and wave torches and polish our tumbrels? No, we must recall enough history to remember this is an old, old problem. Those who are meddling in our politics and hiring propagandists to restart the American Civil War, they are acting entirely according to human nature, spanning thousands of years. It is not morally culpable that they are too stupid to rise above basic, pre-sapient instinct. Alas though, it does mean that those obeying ancient-harem-seeking instincts are not as smart as they think.

By doing all of this, they in fact prove a fundamental of nature. That all good things are toxic, when too concentrated. Water, food, oxygen… wealth. It is one thing about which Adam Smith and Karl Marx absolutely agreed.

In order to save and preserve a system in which each of us can get rich -- by providing competitive-creative goods and services – even very, very rich (so long as it is fair) – then we may have to put some kind of limit upon the number of "verys."

== Obscure… but related ==

Speaking of very… this is very interesting, if too radical for our present world to experiment with… except maybe in a sci fi novel… Geo-libertarians hold that all natural resources – most importantly land – are common assets to which all individuals have an equal right to access; therefore, individuals must pay rent to the community if they claim land as their private property. They simultaneously agree with the libertarian position that each individual has an exclusive right to the fruits of his or her labor as their private property, as opposed to this product being owned collectively by society or the community, and that "one's labor, wages, and the products of labor" should not be taxed.

This is one example of the many alternatives that used to be discussed by the Greatest Generation… before we Boomers took over and made everything simplistic, reflexive, emotional… and admit it… not one of you has ever actually read Adam Smith or Karl Marx. If your life depended on it, could you describe accurately what they said? Or even define what “left” and “right” mean?

Really?  Well… this blog does attract the erudite.  But those few of you are very very rare.

== And re transparency ==

With rising public interest in what developers refer to as the “privacy economy,” researchers from the MobiSocial Lab at the Stanford School of Engineering have announced at SXSW a new type of social network, called Omlet that allows users to control their own personal data. Omlet “shields users from the monetization of their personal lives.

Monday, April 07, 2014

Science! From TWODA to "P.U." to RNA

Smithsonian-future-is-here-2014This will be a science potpourri.  But first… an announcement for you Mid-Atlantic residents! I will be among the headliners -- along with Patrick Stewart, Brian Greene, George Takei, Kim Stanley Robinson, Stewart Brand, Michio Kaku and some MythBusters -- at the Smithsonian's epic-scale "The Future is Here!" event, in Washington D.C. May 16-17.  Look it up and come if you can!  Brought to you by Smithsonian Magazine (subscribe) and the Arthur C. Clarke Center for Human Imagination (join!)

== Save the world from dopes? ==

Scientists have known for decades that Greenland’s ice sheet is melting, but they may have underestimated just how much water the second-largest ice sheet on the planet is shedding. New research indicates that a key section of northeast Greenland thought to be stable is actually dumping billions of tons of water into the ocean annually after a barrier of ice debris that had blocked its flow finally gave way. "We're seeing an acceleration of ice loss."

melting-ice"The Greenland ice sheet has contributed more than any other ice mass to sea-level rise over the last two decades and has the potential, if it were completely melted to raise global sea level by more than seven meters,” explains one expert. Between 1990 and 2011, climate change caused ocean surface temperatures around Greenland to rise 1.8 to 3.6 degrees Fahrenheit.

An interactive map shows that melting glaciers won't give us "waterworld"… but you might not want to own land where (ironically) most of the folks in the climate denialist cult live.

A side benefit of TWODA* innovation?  Computer simulations have shown that offshore wind farms with thousands of wind turbines could have sapped the power of three real-life hurricanes.

Given current trends, then, we're gonna need innovation even more than ever.

== biology "comes alive!" ==

DNA-RNA Watch this clip from the PBS series DNA. It's four minutes of amazing images, visualizing how DNA gets unzipped, read, re-zipped and turned into something like hemoglobin, all in real-time. This process of information coding, retrieval and manipulation by molecular machines of stunning specificity is going on right now inside every cell in your body.

Then go on to another great biology video of "The Central Dogma" of protein synthesis. In which RNA polymerase and other active elements are represented as spaceship-like nanomachines. A fantastic instructional video that will leave you entertained and informed… with a cool-oh sound track.

And dig it: single-celled microbes that grow in biofilms have come up with a way to electrically reach out and pull electrons from minerals in the soil so they can stay in the sun.

Ah but science calls for judgment! After years of predicting it would happen -- and after years of having their suggestions largely ignored by companies, farmers and regulators -- scientists have documented the rapid evolution of corn rootworms that are resistant to Bt corn.  Read about how proper procedures were mismanaged and ignoring the scientists is leading to an agricultural problem of real substance.

== Technology, save us, oh deus ex machina… ==

P-PeeScientists have discovered a way to take the phosphorus out of our pee (and that’s a lot — we piss out 3 million tons of it each year). In my novel EXISTENCE is where most of you first heard about the coming Phosphorus Crisis. Well now one forecast is coming true. The P.U. or Phos-Urinal (not 'pee-yew') is coming!  (Is it too soon for the predictions registry?)

And more news: U.S. scientists say that emerging photovoltaic technologies will enable the production of solar shingles made from abundantly available elements rather than rare-earth metals, an innovation that would make solar energy cheaper and more sustainable. I spoke of solar shingles even back in EARTH. But the overall lesson is what's important --

-- that there are ways out of our messes, if obstructionists and denialists would stop hating on science and decide to help, instead.  Keep saying one word to them, a word for which they have no reply. TWODA.

Want more wonders? Before teenager Anne Makosinski, apparently, no one on record has thought to use thermoelectric technology to power a flashlight. Peltier tiles produce an electrical current when opposite sides are heated and cooled at the same time, so why not make a hollow flashlight that uses heat from the hand that's holding it?

Google has released a concise list of "Ten Myths About Google Glass." Mostly on target and calming stuff… though very conservative, down-pedaling what everyone can tell is coming… and a whole lot more than just a few sci fi authors will tell you about.

So cool! See an animation of the "Council of Giants" -- a dozen big galaxies that surround our Local Group (which is mostly the Milky Way and Andromeda) in a very thin sheet, constraining our two spirals and having guided their evolution.

Physicists are exploring possible "hidden variables" loopholes in quantum mechanics that might involve elements of the universe holding quasi-conversations - or conspiring to exchange decisions - with each other, in an interchange that scientists are (mostly-whimsically) calling "free will." Few consider this loophole to be likely. But now there appears to be a way to test it, using light from the oldest quasars in the cosmos.

And this eclectic museum is located in Baltimore, Maryland. “The American Visionary Art Museum (AVAM) looks worth a visit.

== Finding the black boxes from MH 370? ==

How much quicker would we have found the fading pings from MH 370's black boxes, if sea planes or flying boats were still prominent in the world?  Planes had to buzz over the potential debris fields, but for a closer look, or to lower soon-sensors, had to wait till ships with special equipment could arrive.  (Yes, there are military sonobuoys. I'd wager some have already been dropped in secret.)

Most of the time with a "sea plane" they land in a protected harbor, river, or inland waterway. Open ocean landings are quite hazardous, mostly done to rescue personnel, sometimes the sea plane crew then requires rescue. The Japanese may be employing the ShinMaywa US-2 flying boat on this operation, a model also used by India, but lacking the range to be much use in far-distant operations.

There is a new Chinese sea-plane, approved for construction by AVIC General Aircraft Company. The Dragon 600, expanded from the earlier SH-5 sea-plane would be as large as an Airbus 320, could be used for tasks such as emergency rescue, fighting forest fires and sea patrols. .

A pit of aeronautical pedantry, a seaplane has pontoons, a flying boat has a hull that floats on the water. Confusion is understandable when both terms are nearly obsolete. The Spruce Goose, the Catalina, and the Albatross would be flying boats.

Just a thought.  Here is hoping they find the things.  If so, what a validation of dispersed transparency!  The one company whose satellite nailed the travel arc of the plane from just a single radio query ping… they deserve some kind of prize… and we all deserve to have all commercial airliners far better tracked.

twoda-brin
======

*TWODA: Things We Ought to Do Anyway…to alleviate climate change… but that will help us economically, politically, internationally even if 99% of scientists prove wrong about climate warnings!  Increasing research and developing methods of energy efficiency should be on the table, even if you are a climate skeptic! The fact that you are NOT eagerly negotiating TWODA measures proves one thing.  You are no "skeptic" but a member of the denialist cult.

Saturday, April 05, 2014

Probing the future: very good news… and some very bad...

Good-judgment-projectWe'll get to weighing some very good news… and some bad… in a second. But first --

So You Think You're Smarter than a CIA Agent? asks an article on NPR News, citing The Good Judgment Project -- a four-year research study organized as part of a government-sponsored forecasting tournament. Thousands of people around the world predict global events. Their collective forecasts are surprisingly accurate. 

For the past three years, 3,000 average people have been quietly making probability estimates about everything from Venezuelan gas subsidies to North Korean politics as part of  an experiment put together by three well-known psychologists and some people inside the intelligence community. According to one report, the predictions made by the Good Judgment Project are often better even than intelligence analysts with access to classified information, according to Alix Spiegel on NPR News.

Philip Tetlock, one of the three psychologists who came up with the idea for the Good Judgment Project, also wrote Expert Political Judgment: How Good is it? How Can We Know? His concept started simple:

First, if you want people to get better at making predictions, you need to keep score of how accurate their predictions turn out to be, so they have concrete feedback.

PredictionsRegistryBut also, if you take a large crowd of different people with access to different information and pool their predictions, you will be in much better shape than if you rely on a single very smart person, or even a small group of very smart people.'

These desiderata will sound familiar to some of you, who have read my own, decade-old calls for new kinds of Predictions Registry concept — which ought to be civilization’s utter-top priority, for a number of reasons that I lay down in that article.  As for "collective smarts" see how Smart Mobs are portrayed in Existence!


== Reasons for optimism, while everyone goes grumpy ==

A fascinating study for the US Defense Department concludes that three "almost shocking" dollops of positive news are transforming our prospects for the better -- even as the public mood in the U.S. keeps sinking into inexplicable funk. The report: "Some Aspects of the Future Security Environment: Considering 1987, 2012, and 2037," looked back and forward 25 years, according to an unclassified summary released by Office of Net Assessment of a Summer Study in late 2012, by Jesse H. Ausubel and Alan S. Curry.

It begins by surveying the world effects of globalization, an ongoing phenomenon which remains fraught with tension and opportunities for economic setbacks… but under which vast numbers of human families are rising, every year, out of grinding poverty, into some level of (very) basic comfort. Those who complain about other effects of globalization, while conceding the good things, have some credibility. Those who do not, have none.

Optimism-PessimismThen comes a real surprise: "Water provides a second big change in resource concerns during the past 25 years. In 1975, almost all experts forecast large increases in use of water by the United States. In fact, most of the forecasts vastly overestimated demand -- and water withdrawals in the United States peaked about 1980. The trend in actual use has been flat for decades, even as U.S. population has grown about 80 million, the population of Turkey. Agriculture consumes far the most water. In the United States the decoupling of food production from land accounts for much of the moderation of demand. Sparing land usually means sparing water, both here and abroad. We see in farming in other industries increasing precision where we use more bits of information but less stuff -- less energy, fertilizer, pesticide and water. So the idea of a global water crisis seems far-fetched."

How fascinating. We've become so used to gloom and assuming the world will burst into flame everywhere over water. Indeed, there will likely be some local stress!

"At the same time, some regions clearly experience stress because of weak management and complex borders. Among regions to watch are upper basins where nations are building dams to capture water that flows downstream through other nations, e.g. the upper Indus, Mekong, and the Tigris and Euphrates, where Indian, China and Turkey; respectively, are adding storage with all its benefits and risks, including political consequences downstream.”

Okay, as Forest Gump would say – “one less thing….” Sort of. But then…

== Is fracking your friend? ==

"A third big surprise in resources of the past 25 years is the discovery and acceptance of the abundance of natural gas, methane."  Since this report was issued in 2012, the arrival of frack-released gas and oil has crashed into public attention, with nearly everyone leaping to take one extreme position or the other. Either this is capitalism at its best, with no need to regulate, or else it is satanic poisoning of the air and aquifers.

In fact, there are many reasons to believe the trend needs and merits strongly assertive regulation by a government that implements the public will, to get both the economic stimulation/jobs/security that come from energy independence and the capping of leaking greenhouse gas sources and tight protection of aquifers. Both the benefits of methane weaning us off of filthy coal and continuing the spectacularly successful incentives that have brought sustainables like solar and wind into the mainstream, becoming viable at a rate that’s far faster than automobiles and airplanes became practical, a century ago.

The potential harms that accompany good news seem to set members of my Baby Boomer generation a-quiver with agitation and zero-sum thinking. Almost never do boomers, of left or right, contemplate the positive sum, win-win. The possibility that we might enhance the good effects and minimize the bad.

Our calmer and more pragmatic heirs will be better off without our grumpy-boomer asses around.

== Feed us! ==

Then there’s agriculture. It was thought that the increases in crop yield that happened under Borlaug’s “Green Revolution” were peaking just as populations were rising, bringing the curse of Malthus back into play. In fact, the verdict is mixed, so far. There is clear evidence that climate change is affecting crop yields - destroying both farmlands and grazing zones. These problems are exacerbated by many stupidities in re water use, pest management, monoculture, monopoly controlled GM seeds and a myriad other vexing perplexities and needs for action. On the other hand, new kinds of crops emerge all the time. And we also have on the horizon algae-culture, and tissue-culture meat, and far better fish farming, any of which may be game changers.

We’ll need them. For when fertile zones at lower latitudes turn to desert, we lose areas with two growing seasons. Canada and Siberia may get warmer but the new “farmlands” lack topsoil and languish in total darkness for half the year. This is not a fair trade.

The report also discusses mixed news about population. There is the aging developed world, with fears of demographic collapse. There is China, with it’s own one-child-affected situation. There are realms like Africa and India where Malthus looms as a spectre… and a few places of relative balance like the US and Canada, who benefit from the invigoration of immigration. It is WAY too soon to breathe any sigh of relief!

Still… it don’t look (yet) like Soylent Green.

Ah, but then there’s worrisome news….

== China on the brink? ==

China-shakes-world“China is like an elephant riding a bicycle. If it slows down, it could fall off, and then the earth might quake.” – James Kynge, China Shakes the World: A Titan's Rise and Troubled Future -- and the Challenge for America.


After 30 years of sustained economic growth topping 8% and a successful bank cleanup in 2000, the People’s Republic was well on its way to blowing through the “middle income trap” and transitioning to a more advanced consumption-based economy. But then in 2008 the banking crisis in the United States abruptly ushered in a painful era of balance sheet repair across the developed world and delivered a demand shock to emerging markets. Rather than allow the Chinese economy to fall into recession at such an inconvenient time, the Party leadership sprang into action to stimulate demand with its largest fiscal deficit in more than 60 years and to mobilize bank lending with historically low interest rates and enormous liquidity injections.”

As a result, China’s total debt-to-GDP (including estimates for shadow banks) grew by roughly 20% per year, from just under 150% in 2008 to nearly than 210% at the end of 2012 … and continued rising in 2013. Even more ominous, corporate debt has soared from 92% in 2008 to 150% today. 

“China has consumed just 65pc of the cement it has produced in the past five years, after exports. The country is currently outputting more steel than the next seven largest producers combined – it now has 200m tons of excess capacity, more that the EU and Japan's total production so far this year.”

But property is the biggest bubble, as it was in the U.S. and Europe. “The average price-to-rent ratio of China's eight key cities is 39.4 times – this figure was 22.8 times in America just before its housing crisis.”

George Soros holds that “The major uncertainty facing the world today is not the euro but the future direction of China.”

== The lesson: optimism? Pessimism? ==

OPTIMISM-PESSIMISM-3It’s neither! It is that the world is far, far too filled with good trends and news to make cynicism and gloom anything other than wretched, simplistic treason. Show me the cynic who is actually and pragmatically useful to anyone! Or who actively and effectively helps to solve any of the problems that he (almost never “she”) grouses about!

I would say the same thing about fizzy, polyanna, best-of-all-worlds optimists, too… if you could point me at any. Sure, I know a few “singularity” types who think we’ll all be gods within 30 years. But none of them prescribe indolent shrugs, the way cynics do. Most optimists admit the desperate need for action!

But cynics aren’t our worst adversaries. The very worst people – enemies of your future and of your grandchildren – are the manipulators who are propagandizing to millions that they should hate science. Hate the people who know stuff. Hate the very idea of mixed, vigorous, confident, can-do effort to solve problems, partly together, via consensus government, while mostly through our markets and families and individual efforts.

Those are the folks who are waging war against your kids.

Thursday, April 03, 2014

FLASH BOYS versus SKYNET – How Wall Street may be even more dangerous than Michael Lewis thinks

michael-lewis-flash-boysMichael Lewis's new book, Flash Boys: A Wall Street Revolt, has certainly gathered tons of well-deserved attention. He was on the Daily Show and his interview on NPR is an absolute must-listen podcast in which you'll painlessly (except for an angry gut reaction) learn an awful lot about how Wall Street is (surprise) cheating the rest of us.

Lewis focuses especially on an area about which I've inveighed heavily for two years… the perils of High Frequency Trading.

You don't have time for books or podcasts? Then if you read or even skim any in-depth article this month, make it this one… an excerpt from FLASH BOYS about how the world of fast-pitched Wall Street trading has become rife with computerized cheating, so pervasive that any justification is impossible through the usual rationalizations of "market forces" and "correct price equilibration." No little guy can win the full value of his trades. No retirement fund manager can use keen insights to maximally benefit her clients without paying a large "tax" or overhead in stolen value.

Excerpt-Flash-boysLewis's article appears to have a relatively happy ending, with the creation of a new trading center that corrects some of the grotesque advantages of behemoth banks and super-empowered Hugh Frequency Trading (HFT) operations. And I hope the sunny optimism of the final paragraphs comes true! (Failure to correct the cheating will lead us to French Revolution levels of anger, with tumbrel-riding lords losing much more than their "genius" predatory gains.)

What is more likely is a moderate series of reforms that -- like those our ancestors performed under Teddy Roosevelt -- restore just enough fairness and flatness and wary trust to keep it all in motion for another generation… and maybe restoring a bit of strength to the beleaguered middle class.

Michael-lewis-stock-riggedIndeed, the hoo-row over this one book appears to be affecting markets! It has prompted a few traders to bet against shares of the Nasdaq OMX Group, the parent of the NASDAQ exchange. One analyst estimates that about 25% of Nasdaq's revenue, and about 33% of earnings, are attributable to high-frequency trading. The Wall Street Journal offers: The Responsible Way to Rein in Super-Fast Trading

If HFT is reined in - maybe with timing measures but far better with a tiny Tobin Tax -- then this one particular cheating mode will be controlled.

== Would that solve it? ==

But the danger remains… that we might return to the normal patter of 99% of human cultures across 6000 years. And that is the lesson of this book. Those who manipulate and distract us from getting mad and reforming capitalism are not only our enemies… but they are the enemies of the very same flat-fair open capitalism that they claim to admire.

Contradiction-Capital-MarketsRationalization and excuse-making for the predatory depredations of a monopolistic cartel of financial "wizard" parasites.

Alas, the relatively optimistic tone of FLASH BOYS must be viewed with caution. The "solution" of a new, neutral exchange can easily be perverted by the next round of cheating -- both Adam Smith and Karl Marx called cheating the ultimate enemy of fair and flat and free competitive and creative markets.

Indeed, so long at the stock exchanges are controlled by closed cartels of conniving "seated members" there will be an inherent incentive for them to trade with each other, commission-free, which is the essential unfairness of HFT… and not the timing factor that Lewis dwells upon.

TransactionFeeTerminateI have also offered another, more science fictional but chillingly plausible reason to fear the many billions of dollars that major trading firms are pouring into the HFT versions of artificial intelligence (AI). It is a failure mode that grown more credible by the day. It could wind up wreaking devastating harm.