Sunday, November 23, 2008

Soros Examines the Causes of the World Financial Meltdown

In the latest issue of the New York Review of Books, philanthropist, currency trader and international financial expert George Soros offers his own view of the world financial meltdown.

soros-globalization
The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil or a particular country or financial institution defaulting. The crisis was generated by the financial system itself. This fact—that the defect was inherent in the system —contradicts the prevailing theory, which holds that financial markets tend toward equilibrium and that deviations from the equilibrium either occur in a random manner or are caused by some sudden external event to which markets have difficulty adjusting. The severity and amplitude of the crisis provides convincing evidence that there is something fundamentally wrong with this prevailing theory and with the approach to market regulation that has gone with it.

Later in his rumination, Mr. Soros gets to an important point that is routinely, even fetishistically, ignored by those who recite incantations of Faith In Blind Markets.

This remarkable sequence of events can be understood only if we abandon the prevailing theory of market behavior. As a way of explaining financial markets, I propose an alternative paradigm that differs from the current one in two respects. First, financial markets do not reflect prevailing conditions accurately; they provide a picture that is always biased or distorted in one way or another. Second, the distorted views held by market participants and expressed in market prices can, under certain circumstances, affect the so-called fundamentals that market prices are supposed to reflect. This two-way circular connection between market prices and the underlying reality I call reflexivity.

Soros is quite right to focus on human nature -- and our propensity for delusion, in particular -- as a root of the problem. In fact, while markets are wonderful wealth generating machines, that harness competition between individuals and groups in positive-sum ways that benefit us all, they are not mystically simple or perfect. Nor do they arise (as the sun does) out of immutable physical law.

Indeed, if you scan human history, you will find very few examples of market-based systems that escaped meddling and ruination at the hands of the very same elites who stood at the top of the social order -- the owners of nearly all capital, who insisted that they knew what's best, and nearly always squelched competition, rather than let it flow and thrive. In the vast majority of cultures, it was top owners who shut down what we would call open market behavior. A threat far more prevalent than peasant revolts or socialism.

Market Fundamentalists tell themselves a dogma that Adam Smith himself never believed, that markets are rooted in - and organically emerge from - human nature. This is fundamentally wrong. Our natures developed in a Darwinian-tribal context that predated civilization and markets. In order to understand this, simply study the power and economic arrangements in most tribal or pastoral societies. And even later. Try calculating what fraction of the population in most ancient nations must have been descended from the harems of kings. (Recent data show that 8% of the Chinese population, today, is directly descended from Ghengis Khan.)

While it is true that some deeply human imperatives do work well with markets - e.g. our ability to both cooperate and compete, our embedded notion of fairness and quid-pro-quo. other human drives do not. For example, the propensity to cheat and deceive. And our remarkable tendency to tell ourselves satisfyingly delusional stories that aren't well-based in fact. This latter trait makes us wonderful artists, but also great believers in simplistic dogmas.

Like the simplistic dogma of perfect, equilibrium-seeking markets.

What Mr. Soros appears to see clearly, and describes well, is the role of delusion in our both our recent "credit bubble" and a much longer, post-Reagan "super-bubble" that was based upon the assumption that markets automatically correct for all distortions, even though traders can be like any other tribe, influenced by group-think, by shared myths and by zealous optimism. Even by their own standards. hedge-betters did not include enough wagers that pondered the possibility of a serious downturn to what was obviously a bubble,

400000000000000120267_s4What Mr. Soros appears to leave out is another aspect of the present crisis, how it was driven not only be delusion, but also by cheating, predation and parasitism. These are three different - if related - things. Cheating is where players seek to limit Hayekian knowledge flows by limiting the transparency that markets require to function.

Predation is outright lawbreaking -- or else stealing by using some loophole, the way that a crony network of golf buddies took over the boards of scores of US corporations, appointing each other to CEO slots and voting each other huge bonuses -- in effect creating a cartel of top managers -- all somehow without triggering the rules against interlocking directorates and restraint of trade. Above all, their belief in market forces was proved hypocritical, since such pay raises for CEOs should (under capitalism) draw in talent from other fields until managerial talent supply pushed prices down again. (See: The Syndrome of the Essential Man.)

Parasitism is the least examined of these forces, in part because it is almost perfectly legal. It happens when an entire species of creature arrives on the scene, that contributes little to economic activity, but draws sustenance from healthy companies, just like a vampire bat siphoning blood from cattle. In my last economics related posting, I suggested that this has happened to our civilization with the arrival, in layer after layer of management, of swarms of "business school graduates."

For all his faults, when Walter Wriston ran Citi Bank, the institution was all about... banking. Because Wriston and his colleagues were, above all, bankers. Likewise, companies led by widget-makers tended to remember that their core business is widget-making. Even if some of the engineers went on to get MBAs and law degrees, at least they would remember the product. The service that customers paid for.

But as corporations were taken over by a caste who never made a product or provided a service, it is only natural that goods and services dropped in priority, while parasitical aspects of business gained importance, like developing innovative ways to hedge and leverage instruments to squeeze a little more profit out of transactions in commoditized debt.

Think of it this way. When vampires are in charge, they will emphasize blood. Even if they are smart vampires who claim to have the health of the cows at heart (so to speak), their goal will be to maximize the flow of blood. Now, blood is important. Like money, it enables the body to live and take nourishment to all its cells. Money and blood matter... but their purpose, in the long run, is to help the body stay alive -- or to help the company to make competitive goods and services. When the vampire tunes the cow's body to deliver JUST the right amount of blood to keep it alive, under ideal circumstance, and no more, guess what happens when the slightest thing goes wrong?

Above all, both vampires and business majors like to live on the edge. They assume the body that they are tapping will remain in equilibrium forever. Reserves? Those are for wusses. Hence, another "management" psychosis that will hit us hard, very soon... our industrial over-reliance on just-in-time production practices -- abetted by tax laws that punish warehousing and robust practices -- will surely be the second shoe to drop.

The drastic step of closing undergraduate business schools and only allowing MBA candidates who heve spent some time in goods and services, may be drastic. But it could be effective.

executive suite movieThese warnings are not new. Last time, I urged that folks try watching Executive Suite,” a 1954 Robert Wise film starring William Holden and Barbara Stanwyck. Though a bit silly, it really does address some of these issues, at a level that movies seldom aspire-to.

The essay by Mr. Soros should be read. We all need to ponder new ways of looking at old problems.

83 comments:

Dave Rickey said...

Fundamental irrationality, and the "Heinlein Mind" (Man is not a rational creature, but a rationalizing one), is something I've been wrestling with lately as well. Neuropsych is turning up a lot of hard evidence to the effect that none of us is as rational as we think we are, and most of us don't even do a very good job of pretending.

Which means that my own efforts to plumb irrationality are probably just creating a more complex system of rationalization for my own predispositions.

Geoffrey Allan Plauche said...

This analysis ignores the fundamental cause of the financial crisis: the easy credit policy of the federal government. This is ultimately what led to the bubble that inevitably had to burst. A fractional reserve central-banking system with fiat money is at the root of the artificial, systemic boom-bust cycle. Government-induced easy credit leads to greater risk-taking and to malinvestments during the artificial boom.

"Indeed, if you scan human history, you will find very few examples of market-based systems that escaped meddling and ruination at the hands of the very same elites who stood at the top of the social order -- the owners of nearly all capital, who insisted that they knew what's best, and nearly always squelched competition, rather than let it flow and thrive. In the vast majority of cultures, it was top owners who shut down what we would call open market behavior."

Yes, and how do they generally accomplish this? Through government intervention, through a government-business partnership.

Robert said...

An interesting thing about taxation shows that the higher corporate taxes are, the better off corporations are. Part of this is a result of greed. In order to minimize the amount of money that the corporation is taxed for, corporations reduce the amount of profit that goes back to shareholders and top management and instead reinvests profits into the company itself.

A side effect of this is a healthier company that is constantly evolving and growing, rather than pumping out maximum profits for the shareholders.

An example of this can be found with the private company EBSCO Publishing. The ownership of EBSCO reinvests the profits of the company back into its infrastructure, allowing new technologies and expanding upon services. As a result, EBSCO has grown as a leader in the Information Technology firm, outperforming publicly-owned companies in the same industry.

The publicly-owned company suffers from the inherent flaw that it exists currently to maximize profits for shareholders. This is done by cutting expenses. One expense? Infrastructure improvements.

But if an owner of an automobile doesn't change his or her oil in order to help improve his or her finances over the short run, over the long run the car will suffer greater mechanical problems that would cost far more than the cost of changing the oil. Likewise, a company that skimps on infrastructure improvements ends up falling behind those companies that improved on infrastructure, despite the short term "gains."

Ironically enough, higher corporate taxes may very well be the medicine to help fix our economy by encouraging industries to focus on infrastructure over profits and thus increase its own survivability.

Robert A. Howard, Tangents Reviews

Stefan Jones said...

DB:

Another post that could be a Salon article. Or at least put on your Salon blog.

Today's validation word: "Ahonnins." My guess: A priestly caste in charge of dividing up the unburnt parts of sacrificial animals and delivering them to the needy.

Ah, that one timed out. Now I am presented wiht "Blicare." Which sounds like a generic version of a prescription pharmaceutical.

rewinn said...

Robert's point is good; for a fuller explanation, see Larry Beinhart's "Why the Economy Grows Like Crazy Amid High Taxes"

Of course, such ideas are contrary to contemporary dogma taught in econ 101, Business programs and the Nightly News. It may be that MBAs, Econ degrees and the like produce not a corp of managers but a coterie of priests.

After all, Faith in Freidmanomics depends on an esoteric knowledge, known in full to but a few, brought to the masses by fables, evoking powers beyond those of any individual, defining correct behavior, promising reward for the virtuous and punishment for the lazy or otherwise wrongdoers, and above all not subject to proof: for any real-world example tending to disprove the belief is poo-pooh'd as being an exception.

(The same may be said of Marxism of course; like Friedmanism, it can't be disproven as a theory of human behavior because "it's never really been tried anywhere").

I cannot say that I can agree with Geoffrey's blaming government for market distortions. If you want a good example of market distortions imposed by non-governmental forces, you might consult your local Mafia shakedown artist. Or you might look at the outright fakery of Triple-A bond ratings issued by non-governmental rating agencies; it was a lack of government oversight, not an excess thereof, that caused that problem. Tranching mortgaged securities likewise went bad due to lack of regulation, not its excess ... as even Alan Greenspan recently confessed. Fiat money has nothing to do with that.

More fundamentally, without government to enforce property rights and contracts, you have no market; the very existence of markets reflect distortion by government in the natural state of anarchy or tribalism (take your pick).

Duncan Cairncross said...

David I agree about the the layer of parasites but I disagree about where they are in the companies
- admission I have a DMS (1/2 an MBA) that I studied for after 15 years in industry -
The parasites are much higher up the ladder, In the UK senior managers would just appear - there is a complete strata of rich people that rarely interfaces with the rest of us -
When a senior position is vacant it is filled from that strata, There is no conspiracy involved these people associate totally with each other - so there do not even think of anybody else for the important positions.
In the US something similar happens, the right school/college

This layer treats the companies as their own to be milked

Reserves and inventory are different, if you have inventory you will end up scrapping some of it as designs change and "things happen", the faster the changes the less inventory is appropriate.

Reserves are available to be converted.

A lot of the inventory reduction in bad JIT consists of hiding the inventory, if the materials still exist but are owned by the supplier you have not reduced inventory and you will have to pay for it (as part of your suppliers costs)
Good JIT removes the excess inventory completely and requires you to make your system robust - Quality must be -Assured- by capable robust processes.

I think part of what George Soros is suggesting is your concept of Criticism - the government (better the citizens) should monitor the financial market ready to shout -He's NAKED!!-
This would require much more openness but if we the taxpayer have bought into the market we should be able to see inside

SteveO said...

OK just for fun...

One of my "ostriches" sent an e-mail with a scenario that readers of this blog will recognize, though phrased positively (sending up e-mail trial balloons?). Perhaps you will find my enhancements amusing. His e-mail is offset with >, my responses are not and have a line of tildes outlining them.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Hi Uncle XXXXXXX!

You missed some things. Note corrections below :-)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
XXXXXXX XXXXXXX wrote:
>
> Thought you might get a laugh out of this...
>
>
>
> Democracy in Action
>
>
> You know what would really P**S OFF the Democrats...
>
> Bush should resign now.
>
> Then Dick Cheney becomes President (that would really P**S OFF the libs)!!!
>
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Bush no longer known as "Worst President Ever," Cheney now holds the title. Dick Cheney pardons Bush for all illegal actions taken 2001-2008. Bush moves to Saudi Arabia to be with the only people who made money during his presidency. Bush crowned Prince Dubya and is given a real-life castle to play with.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>
>
> Then he appoints Condoleeza Rice as VP.
>
> Then Cheney resigns two weeks later and Condoleeza Rice, A Republican,
> becomes the first BLACK - WOMAN President!!!
>
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Condi then pardons Dick Cheney for all illegal actions taken 2001-2008. Cheney now moves to Prince Bush's castle in order to continue telling Prince Bush what to say and, occasionally, reminding him to breathe. Since "first black woman" to become President was not elected, but was given it in a cynical gesture by a corrupt administration, Republicans continue to lose power across the US as they have just demonstrated that they are the worst of Affirmative Action proponents - giving someone unqualified a job just because of her gender and color - so now nobody votes for them. Republicans join the Whigs in the dustbin of history. Rational conservatives create the new Conservative Party, repudiate the corruption of their former Republican leaders, and become useful members of society again. The US regains power and stature in the world squandered by Bush -Cheney.

And they all live happily ever after. Even Dubya.
:-) 8-) :-D ;-) :-P

Tony Fisk said...

Duncan's definition of inventory varies a bit from the way I was using it.

Goldratt's Theory of Constraints breaks a process into three things:
- throughput (money from sold items)
- inventory (money invested in items currently in production. I'm sure it and the others can be broken down further, but this is how Goldratt defines it)
- overhead (money spent on producing items)

Goldratt argues that, as a part of identifying and managing processing constraints or bottlenecks, the QA effort will naturally be concentrated just upstream of the bottleneck.

(The Goal was written as an illustrative novel, with characters having to deal with the fallout of their decisions. I can quite easily see how a clade of bright young* MBA theorists would handle things if it had been presented as just a clinically detached paper: the perfect process is all throughput and no inventory or overhead. The three factors are, of course, very tightly interconnected)

'bulabbat': honorific given to a Jophur professor of economics.
* maybe not 'gen We' young!?

Anonymous said...

brin here in the road as anonymous:

I do not accept blaming all this on "easy credit." That's like saying free education produces too many neocon & lefty assholes. Yes... but that's not the point. The derivatives were LIES

SteveO - Har!

Except you cannot appoint a new VP without approval of Congress, and Pelosi is next in line. So this scam only works up to a point.

The GOP would NEVER recover

Stefan cool stuff I just submitted a VERY well written piece about "1947" to salon. But they've never printed any of my political stuff.

have fun guys...

Duncan Cairncross said...

Tony,
I agree with that definition, inventory is all of the Work In Progress (WIP) in the system,
However all inventory is not equal
The further upstream you go the less specialized the parts are and the more different things they can be used for.

I liked "The Goal" but it concentrated on throughput.
I have always found it difficult to get equal concentration on Quality,
Make Scrap Faster seems to be embedded in the operations mindset.

rewinn said...

While the Senate would never approve Rice's appointment as VP (...she simply lacks the credentials...) SteveO's delightful ostrich post introduces a more plausible scenario:

* January 19, 2009: Bush pardons Cheney and everyone else in his Rolodex, then resigns.

* Cheney is then sworn in, and pardons Bush.

* Now each have pardons, as do nearly everyone who might testify against them.

*They flick their fingers at justice!

Not to get all "conspiracy theory", but ... can you think of any reason they would not?

Other than confidence that the new Administration will "look forward not backward" or some such?

Anonymous said...

yipes to get depressed see
http://daggatt.blogspot.com/2008/11/meltdown.html

What pisses me off is that when Bush resigns for cheney, no one but a few dozen of you will say "Brin said it first!"

BHO should have a small team game\ing possible strange scenarios like this

Anonymous said...

Seriously guys.

Subscribe to Universe!

U kno whu
from the road

Tony Fisk said...

All this talk of processes, increasing throughput, and making scrap faster reminds me of the recent New Scientist special asking why economic growth is needed?

It contained a wonderful/awful anecdote about a simple explanation of economic theory included in some World Bank report. There was this diagram of the economy, with raw material inputs going in, and outputs (product and waste) coming out.

When it was pointed out that those arrows came and went somewhere (the environment), the next draft showed the diagram in an unnamed box.
When it was pointed out that the box should be labelled 'the environment', the diagram ... was removed.

(One of the first things taught in my course was that nothing exists in a vacuum. It would seem that, at the World Bank, no-one can hear you scream!)

I lent the NS edition to someone who works at a bank for display purposes. I'm not sure they had the courage to do so.

(I am subscribing. One day, I might even get a chance to read!)

- nobodie!

David Smelser said...

rewinn asked: Not to get all "conspiracy theory", but ... can you think of any reason they would not?

David:
If they have pardons, they cannot take the 5th if they were ever called before congress to testify. So either they testify or they get locked up on contempt charges.

Also, I don't think presidential pardons would protect them from civil prosecution.

rewinn said...

David Smelser commented...

"If they have pardons, they cannot take the 5th... Also, I don't think presidential pardons would protect them from civil prosecution"

Tru, but the choice between (A) 4200+ cases of felony-murder and (B) testifying before Congress ... is no choice. And, sadly, pardons make civil prosecution harder since criminal convictions are exceedingly useful in proving facts helpful in a civil case.

Let us hope they are arrogant enough not to fear justice. After all, they have gotten away with everything so far.

CSM said...

Ummmmm, the people with the most fanatical belief in markets also attack fractional reserve banking and fiat money. The free market gold bugs have been predicting a crash for a rather long time -- too long to be useful.

Don't conflate a pure free market economy with the mixed economy we have now. Yes, a more pure market economy also has problems, but they are different problems.

And don't whine about deregulation per se when in recent years we got Sarbanes-Oxley and the mark to market rule, not to mention Jesse Jackson and company extorting banks who didn't give loans to the uncreditworthy.

The irrational propensities you describe exist, but they also exist in government! The beauty of markets is that they provide a better check on such propensities than the political process.

That said, when wealth gets concentrated into too few hands, you cease to have a market. That's why I keep coming back here. You are on the correct track regarding concentrations of wealth/power, but many of the big government prescriptions miss the mark.

What we desperately need is a lower barrier to entry for floating new stock. We need to replace investment banking with Dutch auctions or the like.

Despite the existence of anti trust law, our government intentially increases concentrations of corporate power. When a bank fails, the government seeks out a buyer. Instead, it should be converting some of its debt into equity and be floating new shares to shore things up further.

Our financial instability comes from large institutions playing an ongoing game of Chicken. They borrow short and lend long and then whine to the government when they get squeezed.

Sociotard said...

I do love McSweeny's.

Read Atlas Shrugged Updated for the Current Financial Crisis.

Alex Tolley said...

The fundamentalist religion of "markets" is definitely worrying.

However, I suspect that it is like any organized religion - it is used to control the masses, while the elite ignore it. How else to understand the logic of bailouts, unless the players are really self-delusional.

Also, Br. Brin, please do not equate the financial market behavior of prices that Soros is referring to with the markets for goods and services. They have many similarities, but they are not the same. Soros's thoughts on financial markets should not be generalized to the working of all markets.

Matt DeBlass said...

It seems the pardon tsunami is still just a ripple along the shoreline, Bush just issued 14.

"Powne," I suppose that's what video gamers used to do to each other back in Ye Olde Days.

daveawayfromhome said...

"not to mention Jesse Jackson and company extorting banks who didn't give loans to the uncreditworthy"

Deeply tired of this conservative meme. Democrats, or whoever you blame, did not force anyone to give bad loans, they forced an "end" to Red-lining, which was the denial of loans to certain segments of the population based on race and regardless of their creditworthiness. Any bad loans given were the choice of a bank loan exec who knew they could collect a fee and bundle the risk along to someone else.

If you're going to give a simplistic single-cause for the current crisis, low interest rates are a much better one than "easy credit", since low interest rates led to the inflated housing prices.

* * *

For another good example of market distortions imposed by non-governmental forces, you might look at the Women's Clothing industry. Even though American women average dress-size 12 (Marilyn Monroe's size, I believe) the industry treats the standard to be more like size 3 or 4 (or, ideally, less). Half the women in the country are forced to shop for "plus" sized clothing. One might think that these women would be a major market force, but it doesnt seem to be the case - the mainstream clothing industry ignores them completely.

David Smelser said...

Brin wrote: If you're going to give a simplistic single-cause for the current crisis, low interest rates are a much better one than "easy credit", since low interest rates led to the inflated housing prices.

David:
Pointing to a cause suggests that the the solution to the problem (or at least a way to prevent it from occurring again) is to reverse or undo that cause.

If that premise is correct, then I don't think "low interest rates" is a good candidate for cause since I've not seen anyone suggest that we need to raise rates.

On the other hand, Karl Denniger (http://www.denninger.net), suggests these three root causes:

1. Nobody can trust a balance sheet. This is due to off-balance-sheet vehicles (which were supposed to be banned after ENRON) and “Level 3” assets, which nobody can analyze the true valuation of, as identification of the claimed assets and their valuation models are undisclosed.

2. Credit Default Swaps (CDS) are “over the counter” (OTC) transactions with no margin or capital supervision. As a consequence nobody knows if their “counterparty” can pay. In fact huge percentages of these people can’t pay – but nobody knows who they are.

3. Leverage. The SEC removed broker/dealer 12:1 leverage limits in 2004. Every firm that has failed – all
five (Fannie, Freddie, Bear Stearns, Lehman and AIG) had leverage far in excess of 12:1.

See: http://www.denninger.net/letters/genesis.pdf

Cliff said...

Neuropsych is turning up a lot of hard evidence to the effect that none of us is as rational as we think we are, and most of us don't even do a very good job of pretending.

Hmmm...I hope Zorgon is reading this.

On Universe - how does it compare to Asimov's? I'm trying to do my part for print SF, but the stories in Asimov's...
For example, the latest issue has a story where two old men take an alien out on a lobster boat so it can see the view. Then the alien dies. The end.

They're not all like this, but enough that reading it feels like a chore sometimes. And I would really prefer that my SF not feel like a chore.

unsit: Newspeak word for having a Thought Police kick the chair out from under you.

Cliff said...

RE: The Russ Daggatt blog link:

OH SHIT

(blogger password: drums
Now it's not even trying anymore)

daveawayfromhome said...

@ David Smelser: I'm flattered that you might confuse me with the good doctor, but I should point out that I aint him, even though he was not at home.

daveawayfromhome said...

Also, I dont think that it's a good answer to the cause of the crisis, but it's better than "easy credit", which generally is code for "blame the poor people for defaulting on loans forced on the banks by the Clinton Administration".
Without the low interest rates on home mortgages, prices would not have ballooned the way they did.

Though I suppose that then some other credit crisis would have brought on the collapse.

Sociotard said...

Matt DeBlass said...
It seems the pardon tsunami is still just a ripple along the shoreline, Bush just issued 14.


Meh. In November of 2000 Clinton pardoned 11 and gave clemency to one. That's less than Bush has just done, but by that point in his final year Clinton had already given many many more pardons than Bush has.

Capers said...

While I do agree about the parasitic upper managerial class (especially the UK poster's point about their callousness stemming from social cocooning rather than outright malice), the real reason I'm writing this comment is simply this:

"gadfack"


I'm thinking it's just a really polite swear word.

David Brin said...

Back from a trip showing our son Cal Poly, UCSB and my alma mater Caltech.

Earl Katz has pointed out:

Whenever I discussed the current bailout situation with people, I find they have a hard time comprehending the actual numbers involved. That became a problem while doing the research for the Bailout Nation book. I needed some way to put this into proper historical perspective.

If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion

• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion

• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion

• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion

• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion

• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)

• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion

• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion

• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion


How on god's gree Earth can this NOT be the BIGGEST RAPE committed by the neocon-kleptos?

The Citi bailout is outrageous NOT because of the amount or the necessity of saving Citi, but because of the monstrous supposition that Citi management or stockholders deserve any of it. They chose their outrageous gambles and should live with the consequences.

The new taxpayer owned entity should stay in business, serving customers, and gradually be sold off as the economy improves.

Clinton SYSTEMATICALLY gave a lot of pardons, in the normal sense of allowing them to percolate upward to corrects excesses or miscarriages of justice. The Mark Rich thing was weird.

Cliff... ASIMOV's is hopeless. Judith Berman a decade ago studied it and found that it systematically despises the future. It is Isaac Asimov's Magazine of Nostaligia, Ennui and Despair.

Subscribe to Universe and enjoy Two yowzer novellas, my fun/groaner comedy (comments & suggestions welcome) and lots more... and thus help feed my kids!

(Oh, the latest one "Shoresteaders" has slipped under the 2008 wire, so feel free to niminate it in 2009 for a Hugo! Worldcon is in Montreal!) ;-)

David Brin said...

Palin... the gift that keeps on giving...
http://uk.youtube.com/watch?v=z-kjM1asH-8

Pardoned one... grinned while the others were decapitated and drained...

David Brin said...

Fascinating hints that the Sun may seasonally affect rates of radioactive decay on Earth. (But wouldn't more flares have shown up by now?)

http://www.sciencenews.org/view/feature/id/38341/title/Half-life_(more_or_less)

Sociotard said...

A fun video featuring Star Wars vs. Star Trek. Dr. Brin will love this.

http://www.youtube.com/watch?v=v4ijDlbvAxw

Anonymous said...

I have never commented before but it just occurred to me that this idea could easily be applied to the state of the publishing industry today.

How many articles have I read that indicate how much the marketing and promotion arms (MBA heavy, of course) of the super-consolidated modern publishing houses have nearly wiped out the editor/author relationship in order to maximize returns and please shareholders?

I'm sure my above is a little simplistic and generalized, but it does seem to be a larger, troubling trend over the past twenty years.

And, than you Dr Brin for having such an excellent and passionate blog. It was a great source sanity during the election process.

Darin

David Brin said...

To cheer your Thanksgiving (my favorite holiday by far):

Subject: Excellent bailout perspective

Check out the website for more.
Earl

http://www.ritholtz.com/blog/2008/11/big-bailouts-bigger-bucks/

Whenever I discussed the current bailout situation with people, I find they have a hard time comprehending the actual numbers involved. That became a problem while doing the research for the Bailout Nation book. I needed some way to put this into proper historical perspective.
If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion

• Louisiana Purchase : Cost: $15 million, Inflation Adjusted Cost: $217 billion

• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion

• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion

• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion

• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)

• Invasion of Iraq : Cost: $551b, Inflation Adjusted Cost: $597 billion

• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion

• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion


Alas, it gets worse.
Bloomberg puts the commitments at $7.7 trillion. And that is a few days old – I’m not sure it captures everything to date. Hard to keep count:

http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk&refer=home

Bloomberg is suing the Fed under the Freedom of Information Act to get more info on which banks it has lent to, how much, and what the collateral is.

TechNald said...

i agree with you too.

Brother Doug said...

What really makes me mad about the Citygroup bailout is that my widowed mother receives a pension and health care from Citygroup because my late father worked for an insurance company that got bought out by Citygroup.

They treated their employees like s%&t, forced into early retirement the experienced honest workers like my father, then looted the company and stuck my family with their reduced pensions and bargain basement health care. A big shift of liability to the workers and there was nothing my dad could do to stop it because they had no union and no power.

So if Citygroup fails my mom loses her pension and the stock they gave for 401k matching. All that work my father did was stolen and the CEO's got away with the cash.

I hate to say it but at this point I think the only option is to follow the Japanese government model and buy up controlling shares in companies and use it to guide the economy and pay for government worker pensions.

Brother Doug

Nicholas MacDonald said...

B Doug:

Near the end of his life, Peter Drucker saw the emergence of what he called "Pension Fund Socialism" (which I don't think he saw as a bad thing). He noticed that, through the vast 401(k) and pension schemes, America's workers had actually come to have a collective ownership stake in a vast segment of the economy- easily as much as 40% of the entire capitalization of the NYSE. This seems to echo John Stuart Mill's own predictions that a socialist system would eventually emerge, not through government nationalizations, but through the workers gradually buying ownership shares in the means of production.

The question I'm asking is this- how do we translate this vast "fund ownership" into some sort of control or stewardship? How do we turn powerless owners into actual stakeholders? Is there any way to do this short of nationalizing segments of the economy or government buy-ins?

Brother Doug said...

Well Nicholas MacDonald:
I was thinking about the same thing but every scenario that is politically feasible ends up being manipulated by the CEO's for there own benefit. It’s a mess. I conserder myself smart and more knowable about markets than 95% of Americans but I don’t see a good solution.

From what I observe only the Japanese have done it successfully. The California state employee pension fund (CALPERS) was a good model how we might copy them until this meltdown exposed that the feds are the only ones with the power to make it work.

David Brin said...

It seems that nobody is interested in subscribing to Baen's Universe Magazine or reading my latest novella.

The coupon code EE329517B2 that I've offered seems to have gone unused, even once.

Aw c'mon. Is the economy that bad? Or my reputation as a storyteller?

Jon said...

In my case it's because I am completely broke; the only David Brin stories I can afford to read are through the library. (and even there, I have to read them there, or your free ones online, my fees are too big.)

I still haven't gotten a chance to read Sky Horizon yet.

Tom Craver said...

I'm starting to see a few pundits discussing something I've been thinking about since late last year - what happens when the 2008 market collapse hits taxes? It's already starting to hit in the more exposed states

The flip side of "tax the rich" is what we'll see in 2009, as the investing class now have losses large enough to wipe out pretty much any 2008 gains that they've already paid estimated taxes upon, and for which they will be owed refunds! (Too bad we've already spent it all.) AND they'll be able to pay much lower estimated taxes over the course of 2009, based on lower income in 2008.

So 2009 - a lot less tax revenue coming in, a fair chunk going back out as refunds early in the year - just as the bailout funding hits its stride.

My guess - stagflation as the feds desperately try to chart a course between totally shutting down the economy with high interest rate borrowing, and triggering massive inflation by "printing" money.
----------
"whies" - laments of those who don't understand why the good times must end.

David Brin said...

Ack! Well THAT was a pretty awful show.

Dang, why is that freaking French quack-poet such a fixation with the History Channel?

I gotta pick these things more carefully.

Rob said...

The coupon code EE329517B2 that I've offered seems to have gone unused, even once.

In my case, I simply looked at the price and then forgot to do it.

A comparable web publication, Card's IGMS, offers about 12 stories per quarterly issue, for $2/issue. Once a mainliner offers a story there, I buy the issue. Maybe that's a pricing model Baen could adopt? Or is there much much more there than 50 stories a year?

Perhaps it's a price thing? Or as you say, an economy thing? I dunno. I'm kind of saving up for an Apple TV or something like it...

William_Shatner said...

Didn't Eisenhower have a 91% tax rate on the wealthy?

The PROBLEM, and I will argue with Denninger about this as well, is that we don't have a trade policy that protects wages -- we have a trade policy that protects profits, as if Multinational corporations are going to shower us with love after they use our CIA and Military to preserve even more profits and cheap resources. The PROBLEM is that we keep putting people from the financial industry in charge of riding heard on financial policy -- rather than someone who cares about the working person in America.

20-25% of GDP since 2003 has been on Credit alone. We have "experts" who want no pain for the wealthy, and keep manipulating credit and other instruments so that nobody in the country club has to chip a nail.

You cannot correct an economy by financial trickery. If the US produces nothing of value, then eventually, something is going to get devalued. The crisis is; that all the crooks who have been running this scam, know that they can't get that 10-15% YOY growth out of the buying public. It's the "Bill Gates walks into a Bar" joke -- the average person in that bar is a Millionaire, but there is no sense in catering to anyone else in the bar. The war on the working middle class, and on Unions, started with Reagan. But the SUCCESS of the wealthy, is ultimately their failure. Bill Gates and Warren Buffet cannot create a market. The Derivatives and other "fantasy money" markets, could blithely create schemes to trade on Sub-Prime loans and other nonsense -- such that there was more to be made on trading fantasy paper, than in selling tickets to Disney World, manufacturing cars, producing bio-tech.

Nope, the wealthy of the world got suckered into a giant Ponzi scheme, because they already suckered the middle class into debt. But where do they go from here?

Either the Super Rich, become merely Rich, or their buddies like BushCo, Bernanke, and Paulson, make sure they never get a boo boo, OR, you and I get the check for their party, and we continue to contract the economy. It is possible that this will mean a run from the dollar, and a total loss in confidence in the financial systems. Yes, fundamentally, I don't see how our banking system can actually work over the long-term. I'd be open to someone explaining how we can have factoring, that allows Banks to leverage a deposit into 10 or more loans. Then charge interest,... which results in a built-in inflation rate. Only new debts can create new loans, but eventually you have more and more debt -- which can only be offset by more and more velocity in money. This makes it appear that there is lots of growth -- but you've done nothing but trade paper. Have we had a greater than 10 year period where we haven't had "surprise" bank bailouts?

The economy is going to be shrinking fast. The ONLY remedy I see, is to force an increase in wages. This would allow workers to buy more and take out loans. This would then be coupled with a trade policy that charged for differences in wages on imported goods, and for pollution as well. Oh, and go back to taxing more on those who get more from the economy

The Auto Union workers make about $28 an hour, not $75. That bigger figure is based upon workers divided by costs -- which adds the pensions of current retired workers. Well, those people paid into those accounts, GM and Ford owes them to workers like a bank owes you back your deposit. Calling this an employment cost is a flat out lie, and the media is in on it, because it works for Rich owners -- not Unions. If Ford and GM can lowball these workers, then it will mean other workers will get paid less very shortly.

Money is relative. The people who have been weened on this bogus notion of a "free market" or "free trade" don't understand anything important. It doesn't really matter in the scheme of things, if we spend more on products or labor, if there is no other choice. It just shifts where the money is made in the economy. If you keep making goods that employ labor cheaper, you won't be able to buy the goods -- because your LABOR won't pay enough. If you CANNOT hire a worker for less than $10, your burger will not go up in price at McDonalds -- because the MARKET sets that price. However, if more people can afford more, and are willing to pay that, the price of the burger will inflate. But this time it is because of wages -- and not because someone got a second mortgage on the home. If Burger Meister can pay an undocumented worker $2 an hour, and McDonalds has to pay $5.75, then Burger Meister can afford to undercut McDonalds for a short time. By allowing one company to cheat -- this distorts the market, and leads to consolidation and unemployment. You know what we haven't had in the financial markets? Anyone making sure there wasn't cheating going on.

But with the extra money that Burger Meister makes by shafting employees (reminds a person of Wal-Mart), they can bribe politicians and buy into the media, and Henry Paulson can just add a provision that gives them a tax break when they buy out McDonalds. In fact, he might buy shares that don't vote of McDonalds and some fantasy price they ask, and then let Burger Meister buy the voting shares for a very cheap bargain price. Effectively having taxpayers pay for the buy-out of a fast food giant. After that, Burger Meister will be too big to fail -- but the press won't be hammering them for any future bail outs, because of course, they won't be wasting money on Union workers.

If there is no demand, there is no market. You can give as much as you'd like in tax breaks for the wealthy and they won't hire more workers, or give us enough charity to make a real difference. This is a fundamental and unavoidable problem and until our consciousness changes to re-learn the mistakes of the great depression.

William_Shatner said...

Dave Rickey said...
Fundamental irrationality, and the "Heinlein Mind" (Man is not a rational creature, but a rationalizing one), is something I've been wrestling with lately as well. Neuropsych is turning up a lot of hard evidence to the effect that none of us is as rational as we think we are, and most of us don't even do a very good job of pretending.


I think we are both irrational and rational. It's recognizing your motivations that really counts. This is why Libertarianism is doomed to failure; it depends upon a total rational and independent person. This is a very important concept that is fundamental to society and must be answered.

Here is what I see as the problem with Human Kind actually living in a "meritocracy;"

While I might be rational about the food I eat -- I might have a gambling problem. You on the other hand, may have a food problem, and not a gambling problem.

We can have a mommy state, that tries to "protect us." And too much of that will fail. However, I do not believe that you "de-incentivize work" as much as the Free Market folks claim. The most basic desire of any kid, is to make people proud and to do something cool, only heavy marketing turns this into a desire for material gain. You also cannot incentivize well fed people under this theory -- yet we have a country full of plump, overworked and under rested people who have to pay outrageous fees for someone else to watch their kids.

However, I'd say, that If I made my list longer than Food, or Gambling, I would eventually come up with a weakness for everyone on this blog. Either we protect each other a little bit from our weakness -- our irrationality pretending to be sane, or we leave some of us open to predators --- who will eventually corrupt our system. Even if I have a gambling problem, I have to contend with the people who can't avoid McDonalds to save their lives. And from every study I've seen, eating this crap will rot your brain, diminish your sex life, and turn you cranky. I'm going to have to pay some more taxes to deal with the health problems or I'm going to deal with a large population of dim-witted people voting the wrong way.

That's what happened to America. We made education and good citizenship an "al a Carté" experience, and everyone chose the Brownie "al a Modé." Instead of a few moderate laws to raise standards in food, and to pay for more people going to college, we didn't look at each other as a resource that needed to be invested in.

I don't want a mommy state -- but I also recognize that every one of us is slightly irrational. But not in all things. The important balance is to realize, that NO EXTREME is going to work. Forcing helmets on everyone is not a good idea -- except when we drive a motor cycle. And allowing the "market" to decide good health in our schools and fast food is also a bad idea -- because there is no bottom to what they will do to make their food yummy, addictive, and as cheap as possible.

I bring up food because we can all see that it has had major impacts on health. Some of us work out and eat right -- but that is only some of us (not me, these days -- but it used to be). Latest research showing that junk food causes effects like Alzheimer's; http://www.reuters.com/article/scienceNews/idUSTRE4AR48G20081128 -- that's just one article, and we will have another one like it next week. We've allowed the marketplace to add rat poison to babies milk -- and now the FDA is trying to lower standards so that "some" of this protein boosting toxic waste is OK. We've allowed lead paint on toys, Fluoride (a waste product form aluminum) in our water supply, Benzene in Fuel (it's 50% in gas and has no purpose other than saving the costs for disposal), and Corn Syrup -- which gets a subsidy, to replace something we can digest in almost all our food. The use Corn to fatten up all the livestock in the country, yet somehow, we can't seem to determine that this fattens up people as well? Huh, I guess we also let the free market decide what we get taught, right?

As we've discussed; Conservatives distrust human nature, and Liberals tend to trust human nature. You cannot go too far in either direction. You should always assume that people can be trusted, but make contingencies for when they aren't. However, we've perverted this to mean; the Citizen is not trusted, and is spied upon, but Corporations and people in power, get the assumption of innocence and no oversight, until someone can prove without a doubt in a court of law that they are guilty -- but of course, you will have to break the law and run against Corporate Secrets laws in order to prove this, so you will probably be ruined in the process.

We've got to get back to distrusting ANYONE with power, and requiring them to prove themselves, and leaving the people without power, the Hell alone until they get some. We've got to look at the common good, and not leave it up to the decision of a corporate balance sheet -- which more often than not, give us good research into new ways to hook our kids on junk food.

William_Shatner said...

Robert said...
An interesting thing about taxation shows that the higher corporate taxes are, the better off corporations are. Part of this is a result of greed. In order to minimize the amount of money that the corporation is taxed for, corporations reduce the amount of profit that goes back to shareholders and top management and instead reinvests profits into the company itself.


>> You just made a bunch of Conservatives heads explode.

Yes it is true, but nobody is going to believe this point. If you are going to be taxed a lot, and your only way to reduce taxes is investment -- you invest.

But, if you spend your money on think-tanks and media outlets, you can get everyone thinking that lower taxes makes a great economy. That second alternative is actually, much cheaper for the owners, and you get back about a 1,000 for every $1 you spend on a Congressman. But it inevitably leads to a market failure.

William_Shatner said...


Rewinn said...
Of course, such ideas are contrary to contemporary dogma taught in econ 101, Business programs and the Nightly News. It may be that MBAs, Econ degrees and the like produce not a corp of managers but a coterie of priests.


That was what I was trying to say on the last blog topic. My frustration in a large company, that pretends that there is some sort of "executive meritocracy" is that it really is about "group think." MBAs and the like, get picked to run companies, because they think the right way. You promote friends who will promote you. If you get high enough on the latter, you join a country club.

Why are most CEOs from Yale and Harvard? Because most CEOs are from Yale and Harvard.

Executive compensation is decided by other executives. From there, they hire people with the belief system that compensation is based upon merit -- and it is a self-referencial truth. Therefore, people without money, must be flawed and deserve their position. The Founding Fathers, fought off a bunch of royalists, to create a noble land that looked out for the "Well Fare" of the common man, only to produce a society of people who believe in royalties, paid for a new class of robber barons. I know that is a bit broad-brush and extreme. We have things more right than wrong. But, yeah, we've got too many people who have bought into the status quo of Business royalists. MBAs are not learning useful things, so much as they are learning the correct belief system.

All this will become really obvious in about a year. But history repeats, because the people who made a profit from the mistakes of the past, make sure they use those ill gotten gains to buy up the history publishing companies.

Robert said...

I've actually seen a webcomic explanation on why Meritocracies don't work. In short, human nature works against the very fundamentals of a Meritocratic society, and our own need to succeed allows ruthless, less talented people to rise to power.

The scary thing about Poisoned Minds is that (outside of the superintelligent artificial intelligence manipulating things behind the scenes), the author has been amazingly prescient on some of the elements that led to the sociopolitical situation in his scifi future (there are two timelines going on in the comic, one set a hundred or so years in the future, the other in the "present day").

Rob H.

William_Shatner said...


CSM said...
And don't whine about deregulation per se when in recent years we got Sarbanes-Oxley and the mark to market rule, not to mention Jesse Jackson and company extorting banks who didn't give loans to the uncreditworthy.


Well, talk about conflating different things. This sounds about like blaming the Sierra Club for the price spikes in oil. The tiny tail is not wagging the dog here. The powerful banks, do what the powerful banks want to do, and they loan to the uncreditworthy because they know they can make a buck, and make a second buck when we bail them out -- which we always do. Jessie Jackson has zero power.

Sarbanes-Oxley stinks, and doesn't protect us from the fraud that caused the problem -- which is the point. It means we need a lot more people documenting useless info -- and that is more jobs. It creates a barrier to entry -- which is what the big companies that put it in place wanted. Most legislation passing all these rules, is not to protect the public, but to provide barriers to entry and is drafted by the big companies -- contrary to popular opinion, which seems also to be drafted by big PR agencies.

The Powerful are calling the shots. They didn't go bankrupt because of defaults on loans -- they already knew were going to default when they sold them. They went bankrupt because they were greedy, and over-leveraged in high gain/high risk ventures.

William_Shatner said...

Looks like I got a bit pent up from a Week off with the family.


Anonymous said...
I have never commented before but it just occurred to me that this idea could easily be applied to the state of the publishing industry today.

How many articles have I read that indicate how much the marketing and promotion arms (MBA heavy, of course) of the super-consolidated modern publishing houses have nearly wiped out the editor/author relationship in order to maximize returns and please shareholders?

Perhaps its better to look at economies as eco-systems. When we put the tigers in charge, they see no value in trees and grasslands because it only gets in the way of them catching and killing their prey.

You can see this negative feed-back loop happening all over. WE have to re-examine whether the constant increase in profits is even feasible in this world anymore. Even if we had unlimited resources and power -- could the planet sustain it? Probably not. I suspect that the "Green movement" is the best way to go, where we seek to value things like the CPU market already has, like; "calculations per watt." We could build an economy on constantly finding ways to do more with less. It would be a different culture -- but even if it is pointless to find how to make a computer with say, less sand -- it is still a way to "keep score" which seems to be fundamentally necessary to people. I'm hoping to grow out of that, but not many of us can before the age of 75.

>> @DB,
I'd buy into some reading club, but it would take away from Blogging. And my two jobs. And my family with kids. We just got a dog.

It is either your "Universe" magazine or a puppy at this point. Have you seen this pup? He is like a curly white cotton ball, and he has cute paws. He also has this tiny little whine. "Mm, mmm, mmm." That means he needs to go out and potty. Only 3 weeks old and he knows how to communicate to another species. We had a President who couldn't communicate to his own. My dog is a genius.

I'm looking for names. Supposedly he is from some breed called; "Bison Fridge" or some sort. Hypoallergenic and very calm. Not so sure he isn't a cat. Basically, all those cute stuffed puppies that are sold to little girls look like this dog. Here are the names so far;
Casper
Dash
Lint
See Foo (um, the name of a Kung Fu teacher -- misspelled of course)
Snow Monster
Dipity (short for Serendipity)

I'd love a more ingenious literary name, but I don't have the vast neural connection to factoids of many around here -- apparently fast food has done its work. Getting a good name is important.

Stefan Jones said...

"In short, human nature works against the very fundamentals of a Meritocratic society."

Heeyyyyy, what are you trying to pull? That strip is about sapient foxes. No fair trying to apply their sociobiological tropisms to us.

(Yes, I'm being a wise-ass.)

Tony Fisk said...

Rather than treating the shrinking economy as a threat, consider it as an opportunity.

Oh, the puppy? Call him 'Sirius'.

He'll be reading Stapledon, and *demanding* (MM-MMMM!) a Universe subscription in no time!

... Maybe make that 'Gromit'.

(I haven't used the coupon because my subscription is still current. Fair point about the blog and family, however)

'cuffash': what people wear at the end of their arms.

Tony Fisk said...

We need a name for this activity!

(liffcapcha?)

ejikers: hedgehogs thumbing a lift

Matt DeBlass said...

Sorry Dr. B, I'm gonna have to plead poverty this month.
I dumped November's meager discretionary income on my major project for the month, logistics for my first marathon (Philadelphia, yes I finished, yes I'm bragging, I was slow but I finished) and will take a bit to catch up to where I can spend on anything that I can't eat or put in my gas tank.

"ingollik": A far-future dialect of Anglic

Doug S. said...

I didn't sign up for Universe. I looked at the price, and decided not to subscribe. So, for me, yes, it's a price issue.

It's $30 per year. There are six issues per year. That makes for a price of $5 per issue.

Back issues are not included, but they can be bought for an additional $30.

I can see the names of the stories available in the back issues, but I do not know how long they are. Therefore, I do not know how much quantity of content I would be buying for my $30 - and for $30, I could buy several paperback novels.

(Incidentally, I don't spend my own money on print magazine subscriptions or movie tickets, either.)

How big is the coupon code discount, anyway? You never said how much it was worth...

Tony Fisk said...

for $30, I could buy several paperback novels.
....new paperbacks?

rerich: what bailouts do.

Cliff said...

Cliff... ASIMOV's is hopeless. Judith Berman a decade ago studied it and found that it systematically despises the future. It is Isaac Asimov's Magazine of Nostaligia, Ennui and Despair.

That sounds eerily like the emotions that crop up all too often when I read it.
Any idea where I might be able to find Berman's study on it?

And as it happens, my subscription renewal just came in the mail. Maybe I will forgo it and switch to Baen's.

Tony Fisk said...

"Judith Berman Asimov"

Google is your friend

William_Shatner said...

Serius?
Is that for "seriously"
or Serius satellite, or the star cluster, or the constellation. Is that a wolf?
Cereus? Did you mean Cerebus?
Or related to this? Sirius Mystery, Dogon tribe (Skeptical Inquirer Fall 1978)
This seems a better fit; SIRIUS NO DENSETSU (A.K.A. The Sea Prince and the Fire Child)
I'll have to wait for the kids to see it and get inspired.
The name just doesn't seem "cute" enough.

I guess Google can make all of us seem like obscure reference geniuses. Sounds like a good movie though.

Maybe I need to check out some old Chechwa (sp?) tribal words, since my kids are 50% Inca-American princes.

Tony Fisk said...

The name just doesn't seem "cute" enough.

...hence the late inclusion of 'Gromit'

Not 'fluffy' enough? Make him a pocket dog. Plasticine and lint will work wonders!

(My daughter has a turtle called 'fluffy'. Actually, she has a lot of turtles... it really is turtles all the way, down here!)

predo: chechwan term for 'liffcapcha'

Tom Craver said...

If high taxes encourage corporations to re-invest, rather than return their profits to shareholders...then high taxes are a bad idea.

Corporations commonly blow huge wads of cash "investing" by buying up hot companies in attempts to break into new business areas, then eventually have to bail out and take a big tax loss.

As a shareholder, I'd rather they'd return the money to me. I may spend it - helping the economy - or I may re-invest it. The latter would push up stock prices, which would in turn make it more attractive to invest in start-up companies who will likely do much better by focusing solely on that new business area.

"Unknol" - the de-edification that takes place over spring or summer breaks.

Robert said...

@Tom - Have you not looked at what businesses have been doing with the tax cuts the Shrub gave them? Mergers and Consolidations up the wazoo. Reinvesting in the company means doing such things as infrastructure improvements, purchasing new computers for workers, investing in new office chairs and in programs to ensure workers don't suffer from workplace injuries. It means behaving responsibly.

Those print companies that have invested in new technologies are able to print books cheaper and in smaller numbers than the old traditional printers. This allows them to gain more of a profit as a result.

Companies also invest in research and development, and then come out with long-term product development to succeed beyond the next year. Those companies that are private and invest profits back into the company itself often are more successful than companies that squeeze every last iota of profit out of the corporation and return it to selfish stockholders who punish the company at the smallest sign of weakness. (And having stocks drop significantly because profits were ONE FREAKING CENT below expectations is a sign of selfishness and idiocy.)

If you look at Dr. Brin's past blogs, you will notice something: industry and business does better under the "tax and spend" Democrats than under the "lower taxes" Republicans.

Rob H.

Tom Craver said...

Robert - Who's talking about tax cuts?

My preference would be to tax all corporate profits (excluding operations and maintenence, but not expansion or losses to bad corporate investments) directly to the shareholders, at their individual tax rates. Raise the top personal tax rate, if necessary, to keep it revenue neutral.

Corporations could keep and re-invest profits - but they'd better have a sensible explanation ready for the shareholders who'd be paying the taxes.

It would encourage investors to insist on corporate accountability for internal investments.

A corporate executive who blows hundreds of millions on a failed expansion into a new line of business shouldn't be praised for "risk-taking" - he should be pilloried for not being able to make the investment work, or for investing in an un-workable scheme.

Leave "risk-taking" to start-up companies that could grow on the vast amounts of capital this would shake loose from corporations. Corporations do best and are most efficient when focused on a single clear-cut area of business. Leave risk-spreading and diversification to mutual funds.

Robert said...

Focusing on the "reliable" product and not taking risks is what got the automotive industry in the dire straights it is currently in. Rather than pushing the technology to build more and more fuel-efficient cars, they built more and more gas-inefficient cars that were comfortable and looked pretty, and worked through advertising so that smaller cars weren't as "sexy" or "American."

Businesses need to indulge in risk in order to grow. It's just they need to moderate that risk and ensure it doesn't risk bankrupting the company. In addition, the religious pursuit of profits has resulted in companies laying off 30% of its workers and insisting the other 70% of the workers pick up that slack... and when they do, then laying off another 20% of the workers and pushing employees to pick up that slack as well.

Profits are but one element a company should strive for, and it should not be the fulcrum on which the success of a company is measured. Such things as employee satisfaction, quality of products, company image, and the social responsibility of the company are equally important, and all together give a far more healthy view of the state a company is in.

A company could have monstrous profits, but a product that sucks and is defective, a reputation as a company that poisons the environment and ignores its responsibilities, and workers who hate working there. Do you honestly think profits will remain hot a few years down the line, especially if there's a competitor who has a better product and a far healthier work environment?

Shareholders don't often look at the entire picture. They look at their own personal profits and if it's not as high as they want, they get upset and demand action. It is motivated by greed rather than sound business practices, and it's unhealthy for industry and for society as a whole. And it is part of what has led us to the edge of a cliff that is crumbling.

Rob H.

William_Shatner said...

The "Stockholder" is the most important thing for a company has got to go - along with the fantasy that markets are self-correcting.

Venture Capital starts a company, and Stock helps it get a cheap loan in a sense, in order to improve and re-invest in the company. Without a tax incentive to coerce re-investment, the whole exercise is pointless. The stock market has become a high-tech gambling casino, and the Derivatives market even worse. Since Paulson and Bernanke, found it to be their jobs to let the kids run the candy store, nobody is stopping companies from being "Market Makers" a nice way of saying "Stock Manipulators."

If you want stocks to mean something and help invest in a better future, then make them two years or more between sale -- or a steep penalty if not for some emergency. You should actually prevent employees from owning stock -- at least the executives, because they should be depending upon the long-term value of the company and their job, not trying to fluff up the stock value every quarter. Our entire economy has just-in-time inventories and get rich quick investing. Other than a few things, like tax-payer sponsored research on drugs, which the drug companies are happy to patent and charge us extra for, there is little long term research outside of Universities.

The Oil Industry does not invest. The Steel Industry does not invest. The real money is playing with paper -- or it was, until about a month ago, when that little house of cards collapsed.

When John Q Executive wakes up in the morning, he should be thinking; "How do I make my company better?" Rather than; "How do I help my stock portfolio." Heck, we could just have a government run business bank and scrap all stocks for all I care. The market is useless for evaluating companies now. The "bet" is based upon what the stock will do in a few days, and the company is just the pony of the week. Meanwhile, we have 401K plans that automatically invest in stocks -- all sorts of automatic buying. Do all these companies automatically go up? No. But yet, we constantly invest as if it does. So, IBM isn't valued as to what IBM can do in 10 years, IBM is valued based upon the share of the market it will return in a quarter. Enough said.

>> I was listening to Thom Hartmann, and a caller had a great idea for the auto industry. Allow Americans to reserve a plugin-hybrid or electric car from any of the big three automakers. $5000-$10,000 that would sit in an account and allow automakers to borrow against, until delivery -- targeted in 2 years. So, a citizen could say; "I'll buy a car with a deep discount." And they start putting some earnest money away for it, and get the "bail out" money, but on contingency for delivery.

It re-builds a market for cars which is drying up, and it forces innovation. The strings attached means that the automakers get nothing, if they try to pull up ropes and go to China or Mexico. Sounds like a great idea to me.

William_Shatner said...

To add to what Rob H. said...

The idea of forcing great profits from a company may be fundamentally unsupportable as a culture and a planet. It will blow a few gaskets -- but investments should be diminished as a way to make money.

I have had stocks, but the most VALUE or return I've ever gotten, is from what I do in labor. However, this is not true of true capitalists, those who make money from investments.

It's kind of like the idea of royalties for patents -- it was intended to spur innovation, likewise, investment is intended to spur growth. But why is an auto manufacturer or bank going to invest in a plant, when more money can be made on some financial venture? Or in buying up the competition? And why stay in America at all, when you can lobby congress, to get rid of Tariffs and just make everything in a country that has no labor laws or safety constraints? There is very little incentive to build anything in the USA.

If a company does not grow more than 5% a year - it is a bad stock investment. Yet it provides jobs. It may actually be vital to industry -- like the steel plants. If Capital Gains were taxed higher, money may leave the country.

We need a system that changes the balance between Labor and Capital -- because it is mostly Labor vs. Capital. What you are saying when you want to make Shareholder value a better ROI, is that you want to compensate Labor less -- add in Royalties, and I think those are the principle ways to make money. We used to understand this, but there has been a lot of education, to make workers think that lifting all the Yachts, will also lift all the Row Boats. How's that working? The past 26 years has seen a sharp increase in productivity, and wages have flat lined. They used to track within a percentage point except for things like Depressions and Wars.

When the wealthy had a 90% tax rate, we had plenty of growth and innovation. Oh, you don't want to be wealthy or own a business because the taxes are too high? Well, I'd be happy with 90% tax on $3 Million per year -- so for every wealthy whiner, there are ten more people who would take their place. I don't think it needs to be that high -- but for a time, there needs to be a surcharge on wealth as a "War and Financial Bail Out Tax." It should go on imported energy products and dividends and it should be right there in their face when they pay taxes. Or tax trades that Financial Institutions make by 1% -- that should cover their handout. They have this idea that we can borrow from China and the Saudis forever -- yeah, well forever just ended folks.

William_Shatner said...

Sorry to be so chatty on the blog, but I was Just listening to "Ring of Fire" and had to share. This should help spread some outrage and perspective to those Ostriches who still think that Unions are the problem;

Lost in the discussion of how competitive Ford is to Toyota is the following little statistic;
The CEO at Ford makes $30,208 per hour based upon a 60 hour work week, meanwhile the Toyota CEO makes $289 per hour based on that same 60 hour work week for a successful company. No telling if the Ford CEO actually works 60 hours -- but what is a few hundred Million dollars give or take a year? Perhaps if we doubled this man's salary, he might be more inspired to build plug-in hybrids like Toyota.

Based on the totally inflated figure of US auto workers making $75 per hour (that is based upon owed pension funds to retired workers, healthcare and perhaps even executive funds -- the real hourly wage is $28 -- thank our craptastic media for missing that) That is the pay of 402 workers per hour, or a little over 1200 workers if we were talking about actual compensation. The Toyota CEO gets the pay of 3.8 workers.

Of course, the CEO of Ford lost $500 million the last two years. I think I found it -- it's sitting in his f-ing pay check. In this same time, Toyota's market share has risen to $245 Billion.

Does the media mention that Toyota also pays for its worker's healthcare in Japan?

David Brin said...

SATIRES

Atlas Shrugged Updated For The Current Financial Crisis.
By Jeremiah Tucker
http://mcsweeneys.net/2008/11/20tucker.html

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?
http://www.independent.org/blog/?p=513

Gilmoure said...

Our two fuzz balls (60 lbs. and 70 lbs.) are named Sheila and Sasha. Daughter likes "S" names. I like Sirius. Lots of different meanings a connotations. And it can be shortened to Siri.

Man, William_Shatner's on a roll. Good stuff; thanks!

Gilmoure said...

Looks like common citizens save the day again.

For Heroes of Mumbai, Terror Was a Call to Action

On any ordinary day, Vishnu Datta Ram Zende used the public-address system at Mumbai’s largest railway station to direct busy hordes of travelers to their trains.

But last Wednesday just before 10 p.m., when he heard a loud explosion and saw people running across the platform, he gripped his microphone and calmly directed a panicked crowd toward the safest exit. The station, Victoria Terminus, it turned out, was suddenly under attack, the beginning of a three-day siege by a handful of young, heavily armed gunmen.

“Walk to the back and leave the station through Gate No. 1,” he chanted alternately in Hindi and Marathi, barely stopping to take a breath until the platform was cleared. No sooner, gunmen located his announcement booth and fired, puncturing one of the windows. Mr. Zende was not hurt.

Overnight, Mr. Zende became one of Mumbai’s new heroes, their humanity all the more striking in the face of the inhumanity of the gunmen. As the city faced one of the most horrific terrorist attacks in the nation’s history, many ordinary citizens like Mr. Zende, 37, displayed extraordinary grace.

Many times, they did so at considerable personal risk, performing acts of heroism that were not part of their job descriptions. Without their quick thinking and common sense, the toll of the attacks would most likely have been even greater than the 173 confirmed dead on Monday.

Cliff said...

Berman's piece was interesting. (For those who are lazy like me:
www.judithberman.net/sffuture.html )

But her critique was leveled at the field of SF in general for becoming too backward looking, based on the assumption that editor Gardner Dozois was picking the best stories available.

My hunch is that there is still a bias in Asimov's towards stories about old people and fear of the future. But it'd be interesting to see a similar comparison performed today and see how things have changed.
For instance, I have seen quite a few stories that reflect the conditions of our current state of war.

mertins - medieval castle decorations, shaped as playful sprites

William_Shatner said...

Just read http://mcsweeneys.net/2008/11/20tucker.html
It was worth it:

"There's a whole world out there of byzantine financial products just waiting to be invented, Dagny. Let the leeches run my factories into the ground! I hope they do! I've taken out more insurance on a single Rearden Steel bond than the entire company is even worth! When my old company finally tanks, I'll make a cool $877 million."
...
Their eyes locked with an intensity she was only beginning to understand. Yes, Hank ... claim me ... If we're to win the battle against the leeches, we must get it on ... right now ... Don't let them torture us for our happiness ... or our billions.
...
He fell upon her like a savage, wielding his mouth like a machete...
...
"Collateralized debt obligation."
"YES! YES! YES!"
...
John Galt's face betrayed no signs of pain or fear or guilt, and his body had the clean tensile strength of a foundry casting with skin the color of a polished full-port brass valve. In the center of this secret mountain valley where the titans of Wall Street had retreated for an extended junket was a 3-foot-tall dollar sign of pure gold atop a granite column. It was tacky, yes, but it was also their emblem, a symbol of their triumph.
...
"And that's why I created the financial plan you found. It's true, it works. But it is not sustainable. It will ruin this country's financial system, and then we'll see how those who despise us prosper when their lenders and investors refuse to invest or lend." He laughed joylessly. "Funny, isn't it? I must destroy the very thing I love in order to save it."
"Just to avoid paying taxes?"
"I do not compromise my beliefs, and I will kill anyone who asks me to!"
...
He shrugged. "What is infinity?"
She let out a rich, powerful moan, like the sound of a passing diesel train in the night.

/Classic

Tom Craver said...

Robert -

Corporations are driven by current tax policy to retain profits so shareholders can defer paying capital gains taxes. Since they're holding onto the shareholder's profits, they are driven to make that capital yield more profits, by growing and expanding.

They run into a Corporate Peter Principle - expand to the point where their failures wipe out net capital accumulation. Then get stuck there until they lose track of their core mission, and collapse in the face of competition.

So I have to ask - why are you so set on pushing for capital accumulation into ever fewer, ever larger, ever less efficient existing corporations, headed by ever fewer executives being paid ever higher salaries?

Why do you want to encourage corporate incompetence, exporting jobs to where workers can be more easily exploited, shoddy products, financial game-playing, and so on?

Because that's what you're arguing for, even if you haven't realized it.

The economy would function more efficiently (and perhaps even more kindly in the long term) if tax policy instead drove corporations to return profits to shareholders, who would in turn be driven to invest in more efficient and innovative companies.

Ilithi Dragon said...

Wow, a lot of interesting info there, Shat, thanks! Gonna have to go back through it later and take notes.


On Universe: I intend to subscribe, but haven't gotten around to it yet - busy weekend over the holiday.


Slespi: Sleep aid in the form of a slurpy.

Ilithi Dragon said...

Hey, you guys wouldn't happen to have solid information/references to refute the "the Government/Democrats forced the banks to make bad loans" argument handy, would you? I did some quick searching, and didn't turn up much (mostly just "OMGWTFBBQ!!11! The Government/Democrats FORCED the banks to make bad loans!!!111!one!1" stuff). I can probably find it on my own after a more in-depth search, but I figure somebody here probably has a handy reference that'll save me an in-depth search. Thanks!

Mattei: Having matte tones?

Rob said...

Ilithi,

The line of reasoning stems from the idea that Democratic congresscritters labeled tight credit standards as "racist", due to the coincidence of poverty with racial minorities. The intent was to open up opportunity for honest, hardworking minorities.

Unfortunately for that line of reasoning, the labeling by congresscritters was bipartisan, as far as I've been able to see.

Cliff said...

Wait a second, I thought it was an official plank of the GOP platform to open up loans and mortgages for the lower classes.
I could swear I've seen Brin post that here several times - I'll go look for it.

Cliff said...

There it is, posted by Stefan Jones:
http://davidbrin.blogspot.com/2008/09/who-is-credible-to-fix-mess-its-time.html

I posted the 2004 REPUBLICAN PARTY PLATFORM which has several paragraphs lauding the ownership society and calling for barriers to be lowered to allow minorities to get homes. Oh, and how the party could help by eliminating regulations so more homes could be built, and helping people get homes without down payments.

All there in black and white:

http://www.presidency.ucsb.edu/showplatforms.php?platindex=R2004

As for Illithi's initial question - try searching for some legislation Phil Gramm snuck through around 2000; it's my understanding that he managed to get a bunch of this stuff deregulated.

Ilithi Dragon said...

Thanks, guys!

I've talked to people who've been blaming that for the state of the economy, and/or using it as a stick to beat against 'Leftist Democrats/Liberals', and I'm looking for a solid source I can reference to show them wrong. I'm also trying to put together a rough but fairly easily-explainable picture of why our economy is in the state it is, with the sources and information to back it up. I think I have a good idea already, just not refined and informed enough to present to other people. Definitely gonna have to do more of my own research on that, though.

Cliff said...

Illithi - here's a clip of an economist, Peter Schiff going on to Fox News and explaining why we are in so much trouble. It's entertaining because the blowhards ridicule him mercilessly (thus showing how horrendously wrong they are). But he also makes a lot of good points.

http://swampland.blogs.time.com/2008/12/01/save-money-turn-off-your-tv/

(If Blogger doesn't like the long link, I'll get a tiny url for it.)

imbersh - phrase used by drunk people demanding payment.

Ilithi Dragon said...

Thanks, Cliff! I can get the link fine, but the computer I'm on right now can't handle videos. I'll give it a look when I get home.

licaton: That theoretical partical William_Shatner was talking about earlier.

David Brin said...

The frantic pretzel-writhing of the right would be hilarious, if it did not show us to be members of a species capable of utter delusion. And they call ME a fantasy writer?

The "ownership society" measures were a purely republican push, to increase the number of "greater fools" in every market, from mortgages to stocks to wild investment schemes, all in order to inflate the value of assets already owned by top Republicans.

1) sucking in vast numbers of under-qualified mortgage buyers was only part of it. There was also the push for negative mortgaging... getting millions of Americans to draw down their home equity. THAT had no racial-justice silver lining. It was simply a way to vampire value out of middle class Americans.

(It amounted to a a much larger share of recent equity loss than a few measly billions lent to a few poor ghetto folks.)

2) The attempt to privatize Social Security... had it been allowed... would have destroyed by now several trillions of dollars in value from the SSI fund. This is utterly inarguable and should be pushed in the faces of those fanatics,. relentlessly and forcefully.

The purpose of this privatization was never to let individuals benefit. It was to flood the stock markets with a hundred million new buyers of stock! Even if everything had been honest, that would have primarily benefited the then-current OWNERS of stock, largely the GOP-rich. Who would have sold high, so that average Americans could later sell-low.

But of course, it WASN'T honest. We all would have been screwed. Fortunately, the dems stopped this one.

(Ironically, if the Dow suffers another steep plunge, THAT is when I might be happy to see part og the SSI fund buy up tons of cheap stock.)

3) Are they actually telling us that there are 600 trillion dollars worth of fraudulent mortgages in America? That a few hundred thousand poor black people, lying about their income, are actually to blame for a scam that dwarfs all US expenditures on all its wars, put together?

(In fact, it has been proved that it was mortgage BROKERS who did most of the lying, pushing bad mortgages in order to draw commission, knowing they would never be responsible for the bad loans. A collapse of the banking fiduciary relationship that was entirely Wall Street and GOP-driven.)

These delusional assholes need to be hammered again and again.

98% of the deficit spending and obligations ever incurred by the United States happened under the watch - and policies - of four Republican presidents. Who had only one consistent priority. To benefit an already outrageously rich top 0.1%.

Excluding Eisenhower, capitalism and small business and markets and even stock values ALWAYS do better under democrats. That is utterly and always. Repeat that in their faces. Always always always......

The CEO caste has ripped us off more, and destroyed more value, than the hated US government could ever be remotely accused-of.

Adam Smith proclaimed that freedom and markets have far more to fear from aristocratic cronyism than from socialism. Which is why the right has been turning its back on the founder of capitalism theory.

BOTH socialism and crony elitism are deadly enemies of sensible market freedom. But the obsession of the right with just one of them is tantamount to tunnel vision psychosis.

Keith David It's-a-Taylor-Series! Smeltz said...

>> Try calculating what fraction of the population in most ancient nations must have been descended from the harems of kings. (Recent data show that 8% of the Chinese population, today, is directly descended from Ghengiz Khan.)

To the best of my knowledge, almost all of us are directly descended from the harems of kings. (I believe I am descended from both Charlemagne and Buddha.)

However, while that is no doubt because kings had more babies than the rest of us, part of that may be because the babies of kings were better documented than those of the rest of us. Certainly, Charlemagne for one kept excellent records.

If we were to count Charlemagne's decedents, we would probably find that he had many more than the average peasant working for him. But "number of decedents" doesn't tell us the whole story either because it doesn't record the level of (non-harmful) inbreeding along the way, does it?

But none of that is why I'm posting. My primary concern is that the lines connecting me to Charlemagne and Buddha, while they are probably direct, are so long that the genes might be diluted beyond recovery. How can I measure the significance of their effect on me? How can I compare that with the effect of the genes of their advisors and noblemen?