Larry Lessig, harari, Lessing, Orwell, Amis, Twain, Christopher Hitchens, Richard Feynman, Aaron Swartz, Bill Gates, Demis Hassabis, Kurt Vonnegut, AA Gill, Galileo, RFK, Darwin, Solzhenitsyn, Freud, Jung, Maria Santos Gorrostieta Salizar, Douglas Adams, Lumumba, Nkrumah, Bennoume, Eagleman
AI Geoffrey Hinton, kaggle, Jeremy Howard, blanket,
Goldacre, Harford, Dubner, Gates, Hannan, Ronson, Appleyard,Ruby Ridge, Bilderberg, Branch Davidians, Scott Galloway, McLuhan,Gary Kildall, scott Thornbury, Tucker Max, Jordan Peterson, William Cooper, Rosalind Franklin (watson), Chomsky, Levin, Bin Laden, Icke, Mark Kennedy (undercover cop)
Van Rompuy, Stephen King (economist), Matt Taibbi, Tetlock, Caldeira, Snowden, László Bogdán
Franklin, linguaskill marking, bias, angus barbieri, case studies, Gates India, Thiel Gawker, CRISPR covid, Corruption
https://en.wikipedia.org/wiki/Transactional_analysis here
ongoing clipboard
(Reese Witherspoon) "You blocked this bill, nobody else and I want to know why."
(Rep. Rudd) "why? Why does anything happen in Washington, survival. You have no idea what it takes to get here, to stay here. The money it takes. And it just so happens my chief financial contributor happens to have purchased half-share in a major cosmetics company, and THEY want to continue testing on animals. So much so that they are willing to backroll my opponent in next years elections if I did not kill YOUR bill."
(Reese Witherspoon) "I trusted you. I looked up to you."
(Rep. Rudd) "I can't do anyone any good if I'm no longer here."
(Reese Witherspoon) "But you're not doing anybody any good. Nobody in your district. Not even yourself."
I have put an enormous effort over the course of many years, with limited success, into getting product managers and designers to understand that it's fine to be wrong. Being wrong is just the process of getting to the right answer." The story of how both Flickr and Slack were created from Butterfield's attempts to build the Game Neverending are an inspiration, https://www.wired.com/2014/08/the-most-fascinating-profile-youll-ever-read-about-a-guy-and-his-boring-startup/ as is the story of his epic resignation letter from yahoo, "Stewart tried to quit after three years. But Caterina had just left too, and lots of other high-ranking people were fleeing Yahoo, and so the company talked him into staying a few more months to help avoid the appearance of a mass exodus. ("I was told it would look bad if I left," he says.) During his last several months at Yahoo, he didn't actually do anything. With his time finally served, he told his manager, Brad Garlinghouse, that he was leaving. Garlinghouse asked Stewart to write a resignation email that could be forwarded to Yahoo's human relations department. So Stewart did. https://www.theguardian.com/media/2008/jun/20/digitalmedia.yahoo1ViewMute thread
FERRISS: In order to scale, you have to do things that don’t scale.It may sound counter-intuitive. But in order to scale, you have to get your hands dirty. Hand-craft the core experience. Serve your customers one-by-one. And don’t stop until you know exactly what they want. That’s what Airbnb CEO Brian Chesky did.
On the first episode of Masters of Scale, Brian took Reid back to his lean years — when he went door-to-door, meeting Airbnb hosts in person. This clip we’re going to hear starts with Brian recalling a conversation he had in 2009 with Paul Graham, the founder of Y Combinator, who gave him some perplexing advice….
CHESKY: And he asked us, “Where’s your business?” And I go, “What do you mean?” “Where’s your traction?” And I go “We don’t have a lot of traction.” He goes, “People must be using it.” I said, “There are a few people in New York using it.” And he said something I’ll never forget. He said, “So your users are in New York and you’re still in Mountain View.” I said, “Yeah.” And he said, “What are you still doing here?” And I go, “What do you mean?” He said, “Go to your users. Get to know them. Get your customers one by one.” And I said, “But that won’t scale. If we’re huge and we have millions of customers we can’t meet every customer.” And he said, “That’s exactly why you should do it now because this is the only time you’ll ever be small enough that you can meet all your customers, get to know them, and make something directly for them.”
HOFFMAN: Brian and his co-founders followed his advice to the letter.
CHESKY: We literally commuted to New York from Mountain View. So we would be in Y Combinator for Tuesday night dinners and then Wednesday Joe and I would go to New York. We literally would knock on the doors of all of our hosts. We had their addresses and we say, “Knock knock. Hello. Hey, this is Brian, Joe, we’re founders and we just want to meet you.”
Alison van Diggelen: I understand Hitchhikers Guide to the Galaxy, that wonderful book by Douglas Adams, that was a key book for you. What was it about that book that fired your imagination?
Elon Musk: I guess when I was around 12 or 15 … I had an existential crisis, and I was reading various books on trying to figure out the meaning of life and what does it all mean? It all seemed quite meaningless and then we happened to have some books by Nietzsche and Schopenhauer in the house, which you should not read at age 14 (laughter). It is bad, it’s really negative. So then I read Hitchhikers Guide to the Galaxy which is quite positive I think and it highlighted an important point which is that a lot of times the question is harder than the answer. And if you can properly phrase the question, then the answer is the easy part. So, to the degree that we can better understand the universe, then we can better know what questions to ask. Then whatever the question is that most approximates: what’s the meaning of life? That’s the question we can ultimately get closer to understanding. And so I thought to the degree that we can expand the scope and scale of consciousness and knowledge, then that would be a good thing.”
“Why do people argue about something they haven’t looked into at all?”
Feynman doubt, uncertainty
“I have approximate answers, possible beliefs and different degrees of certainty about different things, but I'm not absolutely sure about anything."
By honest I don't mean that you only tell what's true. But you make clear the entire situation. You make clear all the information that is required for somebody else who is intelligent to make up their mind.”
Feynman
The only way to have real success in science, the field I’m familiar with, is to describe the evidence very carefully without regard to the way you feel it should be. If you have a theory, you must try to explain what’s good and what’s bad about it equally. In science, you learn a kind of standard integrity and honesty.
"Afterthoughts," p. 217-218
Git teach
audrey tang
Taiwan
Zen tao
“Thirty spokes meet in the hub. Where a wheel isn’t is where it’s useful.
Hollowed out, clay makes a pot. Where the pot’s not is where it’s useful.
Cut doors and windows to make a room. Where the room isn’t, there’s room for you.
So the profit in what is, is in the use of what isn’t.”
Neighbor: “Nasrudin, can I borrow your clothesline?” Nasrudin: “I need it right now. I’m hanging flour on it.” “What? That is ridiculous. Whoever heard of someone hanging flour on a clothesline?” “Only those who others don’t want to lend it to!“
our founder Brennan McEachran’s 1/50/99% feedback system, where you check in on projects when the work is 1% done, when it’s 50% done and when it’s 99% done – and it’s that last one that’s the trickiest. That’s when team members can shy away from asking for feedback or guidance.
The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.
Tolstoy
Every act of conscious learning requires the willingness to suffer an injury to one's self-esteem. That is why young children, before they are aware of their own self-importance, learn so easily; and why older persons, especially if vain or important, cannot learn at all.
Engine No. 1, a hedge fund just six months old, manages around $250 million in assets. It owns a meager 0.02% of ExxonMobil, the oil and gas giant that’s worth $250 billion.
Yet the hedge fund, instigating an activist campaign to turn ExxonMobil away from fossil fuels, managed to get two of its nominees elected to the ExxonMobil’s board on May 26—much against the company’s wishes. A third shareholder was declared elected a week later, after final votes were counted.
Looking back, it can almost seem as if Engine No. 1 was set up expressly to effect these changes in ExxonMobil’s board. Ever since it was founded in December, Engine No. 1 has been calling on ExxonMobil’s shareholders to “Reenergize Exxon”—the name of its campaign, complete with slick web site. The fund’s arguments were strategic rather than ideological: that the company’s returns have been consistently disappointing shareholders over the last 10 years, and that it needed fresh direction in a rapidly decarbonizing world.
The past decade saw ExxonMobil’s total shareholder returns—dividends included—languish at -15%, compared to the 271% return the S&P 500 provided. Sticking to oil and gas, and not exploring clean energy alternatives, was an “existential risk” for ExxonMobil, Engine No. 1 argued. (Engine No. 1 did not respond to a request for comment.) On Dec. 7, the hedge fund sent ExxonMobil a letter listing its four nominees for the board. “It is time,” the fund wrote in the letter, “for shareholders to weigh in.”
Who is behind Engine No. 1?
Engine No. 1 was set up by veterans in the investment industry. Chris James, the fund’s founder, worked for a range of investment firms beginning in 1991, and co-founded Andor Capital Management in 2001, where he tended to the fund’s tech portfolio. Andor survived only until the financial crash of 2008, when the firm shut down and returned its $2 billion in assets under management to investors. By then, though, James had long split with Andor, setting up the San Francisco-based Partner Fund Management in 2004 with about $430 million in assets, to invest in global equities.
Although James began his career as an analyst, he transformed gradually into a big-picture investor. One research report, written in 2011, remarked: “Mr. James is not intimately involved in the details of the bottom up research process… [He] will often challenge ideas that are driven from the bottom up, particularly when they do not line up with his top down views.”
In 2014, Partner invested $96 million in Theranos, the blood-testing startup. Not long afterwards, Theranos’ science came into question, and in 2016, Partner sued Theranos, claiming that the fund had been fooled into parting with its money “through a series of lies, material misstatements, and omissions.” The following year, Theranos and Partner reached a $43 million settlement out of court.
At its peak, in 2018-19, Partner managed nearly $6 billion in assets. By March 2020, before the pandemic began, Partner’s assets had dropped to around $3 billion.
The activism behind Engine No. 1
James funnels his philanthropy through the James Family Foundation, which endows scholarships and supports conservation and environmental studies programs at a number of state universities. James has also chaired the board of Tipping Point, an organization that raised funds from San Francisco’s wealthy elite to address issues of chronic poverty in the Bay Area. He was a donor to Neighbors for a Better San Francisco, a PAC that funded city official candidates who ran against progressives. Last year, the PAC unsuccessfully opposed a referendum to double real estate transfer taxes on sales of $10 million or higher.
In an interview with Bloomberg, James said that Engine No. 1 was born out of his attempt to start a new coal mine in the mid-2000s, near his hometown of Harrisburg, in Illinois. He saw the price of coal fall and the market for coal withering, he said. It seemed to point to radical shifts in the use of energy. “That was a real eye-opening exercise,” James said.
When he started Engine No. 1, James hired Charlie Penner to head the fund’s “active engagement practice”—to, in other words, lead the charge in activist investing campaigns such as the one at ExxonMobil. Penner had worked previously at Jana Partners, a 20-year-old firm that is heavily interventionist in the companies it invests in.
In at least one instance, Jana pressed for changes that were more socially responsible than strategic. In 2018, Jana teamed up with the California State Teachers’ Retirement System and, using their combined $2 billion-worth of ownership in Apple shares, pushed Apple to help parents limit their children’s use of phones. The same year, when Jana set up a new fund managed in part by Penner, it included on its advisory board Sister Patricia Daly, the “nun with a fund“—a vocal member of a coalition of faith-based investors. Daly has, in particular, targeted ExxonMobil, one of her coalition’s portfolio companies, over its “liability, or at least poor integrity, related to its knowledge about the climate impacts of its core business practices,” as she wrote in a letter in 2016.
Penner led the minor shareholder revolt against ExxonMobil in similar fashion. He sought the support of massive asset management firms such as Vanguard and BlackRock, which together own roughly 15% of ExxonMobil. But he also turned back to his old ally, the California State Teachers’ Retirement System, as well as to the Church of England and the New York State Common Retirement Fund. The latter two organizations had already urged shareholders during the last annual meeting to persuade ExxonMobil to address the climate emergency. “If you can get Exxon to change,” Penner told Bloomberg, “everybody else in the industry has to listen.”
Kat and Vicky want to know why I eat breakfast alone reading a book, instead of talking to them. I explain to them that however nice and interesting they are, the book is written by an intelligent expert and filled with novel facts. They explain to me that not sitting with someone you know is a major social faux pas and not having a need to talk to people is just downright abnormal.
I patiently suggest that perhaps it is they who are abnormal. After all, I can talk to people if I like but they are unable to be alone. They patiently suggest that I am being offensive and best watch myself if I don’t want to alienate the few remaining people who still talk to me.
posted November 15, 2004
I’m amused by your story, but I don’t know if you’re polling your readership for advice or just remarking on your day. If the former, I’m with Kat and Vicky.
I’m assuming it’s the latter. Hey, it’s your life, but decisions have opportunity costs.
I don’t know Aaron, this seems a little arrogant to me. They’re not interesting enough to get your attention? You’re much more on the level of an “expert” and would rather learn “novel facts” as if you couldn’t get that from the other two? I don’t think you’re as self-absorbed as that….
“But there’s nothing to it!” he insisted. “Why is it so popular?”
Inside the bubble, nobody asks this inconvenient question. We just mumble things like “democratic news” or “social bookmarking” and everybody just assumes it all makes sense. But looking at this guy, I realized I had no actual justification. It was just a list of links. And we didn’t even write them ourselves.
This explains one of the puzzling features of the 1918 pandemic. When it was over, people didn’t talk about it. There were very few books or plays written about it. Roughly 675,000 Americans lost their lives to the flu, compared with 53,000 in battle in World War I, and yet it left almost no conscious cultural mark.
Perhaps it’s because people didn’t like who they had become. It was a shameful memory and therefore suppressed. In her 1976 dissertation, “A Cruel Wind,” Dorothy Ann Pettit argues that the 1918 flu pandemic contributed to a kind of spiritual torpor afterward. People emerged from it physically and spiritually fatigued. The flu, Pettit writes, had a sobering and disillusioning effect on the national spirit.
The number of tricks he invented for his theatre was extensive, but his most remarkable one was the "Light and Heavy Chest". He took advantage of the infancy of the usage of electricity, especially the then-novelty of Hans Christian Ørsted's discovery of electromagnetism, to his advantage. Robert-Houdin brought on a small wooden box about a foot wide. He said that he had found a way to protect it from thieves. He asked a spectator to lift it, usually a small child. The child lifted it with ease. Then, he brought an adult male up from the audience and asked him to lift the same box. The adult male was unable to lift the box.
In 1856, he was asked by Louis-Napoleon to pacify the tribes in French Algeria. During this period, the French Army commanders maintained order in the newly pacified region. They supervised local Muslim administrations and the "bureaux arabes". These areas were closed off to colonization by the Europeans.
Napoleon III was worried about religious leaders called Marabouts. The Marabouts were able to control their tribe with their faux magical abilities.[6] They advised their leaders to break ranks with the French.[2] Napoleon wanted Robert-Houdin to show that French magic was stronger.[6]
The magical mission began with an informal show at the Bab Azoun Theatre in Algeria, where he would give performances twice weekly.[2] He also gave many special galas before the country's tribal chiefs. He used The Light and Heavy Chest during these performances, but instead of playing it for comedy as he had in Paris, here he played it straight. Robert-Houdin once invited the strongest tribesman on stage and asked the Arabian to pick up the wooden chest placed on stage. The Arabian picked it up with no problem. Then Robert-Houdin announced that he was going to sap his strength. He waved his wand and declared: "Contemplez! Maintenant vous êtes plus faible qu'une femme; essayez de soulever la boîte." ("Behold! Now you are weaker than a woman; try to lift the box.") The Arabian pulled on the handle of the chest, but it would not budge. He tried and tried until he tried to rip it apart. Instead, he screamed in pain, as Robert-Houdin had rigged the box to give the Arabian an electrical shock if he tried to rip the handles off. The Arabian let go of the handle, ran off into the aisle, and ran screaming out of the theatre.[3]
After his performances were done, he gave a special presentation for several chief men of their tribe. He was invited to the home of the head of the tribe of the desert interior, Bou-Allem. In dawn of the Arab desert, Robert-Houdin was challenged to do a special trick. He obliged by inviting one of the rebels to shoot at him with a marked bullet, which he caught between his teeth. He was given a certificate from Bou-Allem,[4] who wore a red robe symbolizing his loyalty to France. With this scroll praising his mysterious manifestations, Robert-Houdin went back to France with the mission accomplished.[2]
"The blow was struck", Robert-Houdin said, "... henceforth the interpreters and all those who had dealings with the Arabs received orders to make them understand that my pretended miracles were only the result of skill, inspired and guided by an art called prestidigitation, in no way connected with sorcery". He went on to say, "The Arabs doubtless yielded to these arguments, for henceforth I was on the most friendly terms with them."[4] He was rewarded for his services by the French government for suppressing any possible rebellion.[6]
In his book Hiding the Elephant, Jim Steinmeyer said that every magician of the 20th century was haunted by Robert-Houdin, "... who cast an enormous shadow over their generation".[6] American magician and escape artist Harry Houdini (born Ehrich Weiss) was so impressed by Robert-Houdin that, after reading his autobiography in 1890, Ehrich adopted the stage name of "Houdini" in honour of Robert-Houdin. He incorrectly believed that an i on the end of a name meant "like" in French; but Houdini, his own career and reputation established by that time, later lost his youthful respect for Robert-Houdin, believing that he took undue credit for other magicians' innovations, and wrote The Unmasking of Robert-Houdin in 1908.[12]
Hypnosis
Derren brown gorilla
Derren brown train
To 1.24
Is it entertainment or something worse?
Brown does not claim to possess any supernatural powers and his acts are often designed to expose the methods of those who do assert such claims, such as faith healers and mediums. In his performances, he often says that his effects are achieved through "magic, suggestion, psychology, misdirection, and showmanship".
Have you been to a magic show? Been to the museum of magic? Like to know how the tricks are done? Most famous trick you know of? Famous magicians? Death? How does electricity work?
VAWG (violence against women and girls) campaigners have warned that areas of Blanc’s sales pitch veer into rape promotion, as he promises to teach men how to persuade women to have sex with them who are reluctant.
Whenever Peter Thiel interviews someone he likes to ask the following question: “What important truth do very few people agree with you on?”
This question sounds easy because it’s straightforward. Actually, it’s very hard to answer. It’s intellectually difficult because the knowledge that everyone is taught in school is by definition agreed upon. And it’s psychologically difficult because anyone trying to answer must say something she knows to be unpopular. Brilliant thinking is rare, but courage is in even shorter supply than genius.
The most common answers, according to Thiel, are “Our educational system is broken and urgently needs to be fixed.” “America is exceptional.” “There is no God.”
Kwame Nkrumah, Sekou Toure, Patrice Lumumba, Haile Selassie, Nnamdi Azikiwe, Amilcar Cabral, and Sylvanus Olympio of a continent free from their colonial past will definitely come to be.
Now they kill at a distance, from the air, assassinating without trial, secure in the knowledge that even the Guardian will approve of the illegal death of a monstrous man.
He’s this Rorschach test: People read into him what they see,” he said of Mr. McCandless. “Some people see an idiot, and some people see themselves. I’m the latter, for sure.”
Emmett Louis Till was born on July 25, 1941,
N Y times obituaries
The New York Times wrote after he died on Aug. 25, 1900. “His doctrines, however, were inspired by lofty aspirations, while the brilliancy of his thought and diction and the epigrammatic force of his writings commanded even the admiration of his most pronounced enemies, of which he had many.”
Those enemies included organized religion, especially Christianity, democracy, mediocrity, nationalism and women. Nietzsche railed against these and other adversaries on pages often densely packed with allusions, symbolism and language closer to romantic poetry than fusty metaphysics. Here is a sampling of his best-known writings:
Out of life’s school of war: What does not kill me, makes me stronger. — “Twilight of the Idols”
Whoever fights monsters should see to it that in the process he does not become a monster. And when you look long into an abyss, the abyss also looks into you. — “Beyond Good and Evil”
God is dead! God remains dead! And we have killed him! How shall we console our selves, the most murderous of all murderers? — “The Gay Science”
Unlike many of his philosophical predecessors, Nietzsche did not argue for a specific weltanschauung, or worldview, even though his writings may suggest one. He distrusted any thinker who proposed a comprehensive system for interpreting the world, and he often wrote in a manner that allowed for multiple interpretations.
Nietzsche is not a philosopher in the strict and technical sense of the word. He has no system or consistent body of thought professing to explain all aspects of the universe. He does not expressly deal with epistemology, ontology or, indeed, with metaphysics in general. He concentrates himself on the moral and aesthetic aspects of things, on their “values,” as is now the custom to say, owing to Nietzsche himself, who introduced the term; and he does so with a literary force and artistic power of presentation which makes his writings specially stimulating and is really the cause of his comparative popularity.
The name Huey P. Newton can elicit cries of “hero” or “criminal,” and the space in between reflects the distance in racial perspectives that the United States has failed to bridge since Newton helped found the Black Panthers 50 years ago, when the civil rights struggle was moving beyond the South to black neighborhoods in the North and West.
Newton advocated armed self-defense in black communities, where the organization also provided social services. They would patrol the streets, guns drawn, turning them on drug dealers and police officers alike.
Expressing a willingness to defend oneself with weapons was hardly revolutionary. When Frederick Douglass was asked in 1850 what he believed to be the best response to the Fugitive Slave Act, he replied, “A good revolver.” And Malcolm X advocated the same.
The Black Panthers, which never grew beyond a few thousand members, tried to combine socialism and black nationalism. Its charter called for full employment, decent housing, and the end of police brutality.
Unlike black separatists, the Panthers welcomed all races and found wealthy liberals willing to give them money. But the group’s social programs — like a breakfast program for schoolchildren and clothing and food drives — came undone partly by the corruption of the leadership.
Historians have detailed its mistreatment of female members, extortion, drug dealing, embezzlement and murder. At least 19 Panthers were killed in shootouts with one another, the authorities or other black revolutionaries.
While “by any means necessary” became a mantra of the group, J. Edgar Hoover’s F.B.I. also did whatever possible to target the Panthers. As many members went off to prison and the group dwindled, Newton became a despotic and paranoid drug addict, wielding dictatorial powers with a small coterie, and knocking off anyone in his way.
While the Panthers’ time of influence ended quickly, Newton never escaped the organization. In 1980, he earned a Ph.D. in philosophy. But he was shot to death on Aug. 22, 1989, in a crack cocaine deal gone bad. He was 47, a victim of the same streets he had once tried to make safe.
Gandhi, Nehru and Jinnah were divided on what should happen once the British left. Gandhi, more an idealist than a realist, wanted an undivided nation; he chose to remain out of government.
The British negotiated with the Muslim League, led by Jinnah, who believed that a separate state was the only way to protect the rights of Muslims, who were a minority; and the (mostly Hindu) Indian National Congress, led by Nehru, who grudgingly went along with the British decision to divide India on the basis of religion.
Cyril Radcliffe, who had never been to Asia, arrived in India 36 days before the date of the partition to draw the lines to split one of world’s largest and most ethnically diverse countries. On Aug. 9, he finished drawing the map, but the British viceroy, his superior, kept it a secret. He didn’t want the British to be blamed for any ensuing violence. But it prolonged the uncertainty for millions and very likely increased the loss of life to come.
Cartier-Bresson’s concept of the “decisive moment” — a split second that reveals the larger truth of a situation — shaped modern street photography and set the stage for hundreds of photojournalists to bring the world into living rooms through magazines such as Life and Look. In 1947, he and Robert Capa helped create the photographer-owned cooperative photo agency Magnum.
“Those whom the gods love die young,” the ancient Greek dramatist Menander wrote. In a 1962 speech he gave by the sea in Newport, R.I., Mr. Kennedy’s father — prophetically for the son — sounded a related theme:
“I really don’t know why it is that all of us are so committed to the sea, except I think it is because in addition to the fact that the sea changes and the light changes, and ships change, it is because we all came from the sea. And it is an interesting biological fact that all of us have, in our veins the exact same percentage of salt in our blood that exists in the ocean, and, therefore, we have salt in our blood, in our sweat, in our tears. We are tied to the ocean. And when we go back to the sea, whether it is to sail or to watch it, we are going back from whence we came.”
At 17, like many other Americans, Medgar Evers enlisted in the Army during World War II. A star athlete in high school, he participated in the Allied invasion of Europe, rising to the rank of sergeant before his honorable discharge in 1946.
But for Evers, who was born on this day in 1925 to an African-American farming family in Decatur, Miss., even the segregated Army was more welcoming than the Jim Crow South to which he returned after the war.
The racial injustice there rankled so much that he resolved to fight it, becoming the first field officer for the National Association for the Advancement of Colored People in Mississippi.
“Obviously not all white people are wealthy, and obviously many minorities are rich and powerful. Lots of white people are disadvantaged. But white privilege is something specific and different from the ordinary rising and falling of a free society. It’s the fact that simply by virtue of being a white person, of whatever socioeconomic status, you get the benefit of the doubt”.
Schools which teach pupils that “white privilege” is an uncontested fact are breaking the law, the women and equalities minister has said.
Addressing MPs during a Commons debate on Black History Month, Kemi Badenoch said the government does not want children being taught about “white privilege and their inherited racial guilt”.
“Any school which teaches these elements of political race theory as fact, or which promotes partisan political views such as defunding the police without offering a balanced treatment of opposing views, is breaking the law,” she said.
She added that schools have a statutory duty to remain politically impartial and should not openly support “the anti-capitalist Black Lives Matter group”.
In 1988, President Ronald Reagan signed into law the Civil Liberties Act of 1988 which apologized for the internment on behalf of the U.S. government and authorized a payment of $20,000 (equivalent to $43,000 in 2019) to each former internee who was still alive when the act was passed. The legislation admitted that government actions were based on "race prejudice, war hysteria, and a failure of political leadership."[31] The U.S. government eventually disbursed more than $1.6 billion (equivalent to $3,460,000,000 in 2019) in reparations to 82,219 Japanese Americans who had been interned.[30][32]
If crude factors such as military power or religiously sanctioned greed are perceived as reflecting badly on us, who exactly is “us”? Who are the textbooks written for (and by)?
In 1792, at the dawning of the Haitian revolution, when masses of enslaved people rose up against French colonial power, destroying the plantations and constructing their own government, the French state began to pay the exiled former slave owners the secours, or a state-funded compensation for their property losses. This assistance was offered not only to former enslavers, but also to their descendants. It was paid by successive French governments for more than 100 years, ending in 1911, as historian Mary Lewis has detailed.
The British empire offered the largest reparations bounty of all to its former slave owners: a total of £20m in 1833, which represented 40% of the national budget, along with the statutory re-enslavement, or “apprenticeship”, of emancipated people for a subsequent four years. More than 44,000 enslavers living in the Caribbean and in Britain benefited from this feeding frenzy. Some of the reparations payments were paid in cash, but a segment was rendered in financial assets that paid dividends for decades afterward. The reparations payments were so large that the British state opted to take out a loan from the Rothschild banking syndicate to raise the funds. Over the past nine months, I have contacted the Rothschild Bank six times for comment about this loan. Initially, they acknowledged receipt of my queries and promised a response. Since July, all my follow-up inquiries have been met with silence. What is clear is that British taxpayers paid back the financiers of slave-owner reparations for 180 years, a public obligation that ended only in 2015.
It is a slippery problem, for both authorities and authors
Kleptopia: How Dirty Money is Conquering the World. By Tom Burgis. Harper; 464 pages; $28.99. William Collins; £20.
On Corruption in America. By Sarah Chayes. Knopf; 432 pages; $28.95. Published in Britain as "Everybody Knows"; C. Hurst & Co; £20.
Afew years ago Francis Fukuyama, a political scientist, described corruption as “the defining issue of the 21st century”. Whereas the 20th century saw ideological battles between democratic, fascist and communist regimes, he argued, the chief divide among today’s governments is whether they primarily serve the interests of their people (as in Denmark or Canada) or of their leaders (as in Zimbabwe or Russia). The worst are “kleptocracies”, states whose very purpose is to enable elites to plunder resources, in which bribes, favours and violence are the methods of rule.
In an era when prime ministers and presidents from Malaysia to Ukraine amass billions in cash, and Western banks that handle the money turn a blind eye to its provenance, Mr Fukuyama’s thesis commands widespread assent. Yet the lineaments of corruption can be hard to define, not least because corrupt people tend to be good at constructing excuses for themselves. After all, isn’t government supposed to encourage commerce? Shouldn’t politicians and businessmen talk? Corruption on a grand scale is fantastically complicated and tough to write about, not least (in Britain especially) because of libel law. Two new books take up the challenge.
“Kleptopia” does the job brilliantly. Tom Burgis of the Financial Times spins his tale of global corruption from the ground up. He begins with a hero straight out of a John le Carré novel. Nigel Wilkins is an ageing, introverted economist with an obstreperous streak. He takes a job as a compliance officer at the London office of bsi, a Swiss bank, just as the global financial crisis strikes. He soon suspects that bsi is laundering money for a long list of the international high and mighty, and surreptitiously copies reams of documents which he tries to bring to the attention of the Financial Services Authority. It ignores him.
Mr Burgis also follows the story of enrc, a metal and minerals outfit that listed in London in 2007. Partly owned by the government of Kazakhstan, the firm was founded by three Central Asians who bought ex-Soviet factories at discount prices, quickly becoming billionaires. The listing brings an injection of cash from Western investors; they also expand into Africa, taking in more money in Zambia and Congo. A parallel storyline concerns Mukhtar Ablyazov, a former Kazakh minister and banking tycoon turned opposition leader. In this telling, after Mr Ablyazov falls out with the regime, he, his family and his staff face lawsuits, surveillance, false arrest and torture. In 2009 he fled from Kazakhstan, where he has been convicted in absentia of murder and accused of fraud and embezzlement, all of which he denies. (He also left Britain after a judge ordered him jailed for concealing assets; he has just been granted political asylum in France.)
“Kleptopia” is wonderfully if grimly entertaining, replete with tales of Zimbabwean thugs, late Soviet gangsters and kgb officers-turned-entrepreneurs, as well as a Romeo-and-Juliet romance between the children of rival oligarchs. Mr Burgis’s depiction of the interlocking worlds of post-Soviet business and politics captures the way corruption binds together economic and political power. He meticulously demonstrates how, once overseas money enters Britain (attracted by the protections of its legal system), the associated power struggles and skulduggery follow.
When Western governments and media try to take on Kazakh wrongdoing, they are misled by what Mr Burgis terms a “presumption of regularity”. European courts treat international arrest warrants from Kazakhstan as if they emanated from a genuine national legal system, rather than the ruling clique. Worst of all, money-hungry Western banks, lawyers, public-relations firms and security consultants exacerbate the sleaze, developing a sort of international kleptocracy-service system. As the web widens, readers unfamiliar with Kazakh or Russian politics will start to come across names they may recognise, such as Felix Sater and Donald Trump.
Sarah Chayes, too, is intrigued by wide webs of corruption. Her interest in the issue began in the 2000s, when she worked for an ngo in Afghanistan. As she wrote in her excellent previous book, “Thieves of State” (published in 2015), she soon realised that resentment of government corruption was the main factor driving Afghans towards the Taliban—and that American intervention was making corruption worse.
The hydra rears its heads
Her new book ranges more widely—too widely. She begins with the decision by America’s Supreme Court in 2016 that voided the influence-peddling conviction of Bob McDonnell, a former governor of Virginia. He and his wife had accepted lavish gifts from a vitamin-supplement manufacturer, and asked the state health authority to consider recommending its products. But because no explicit bribe was offered in exchange for an official act, the court ruled unanimously that a guilty verdict could criminalise the normal conduct of democratic politics. Prosecutors say this standard has made it almost impossible to convict American politicians of corruption.
Ms Chayes tries to set this event in historical context, but she overdoes it. She starts by looking at the vexed origins of money itself, going on to tackle fractional reserve banking, credit bubbles, graft in the Gilded Age and the labour movement. But, lacking a framework to distinguish legitimate links between commerce and the state from the crooked kind, the book soon drifts into lazy condemnations of capitalism. To describe the global mechanism of corruption, Ms Chayes uses the metaphor of the hydra—an image that has been common in polemics against international finance since the 19th century. Some passages have the tinge of conspiracy theories.
In a way, her book illustrates the risk identified by the Supreme Court: to the oversensitive, every handshake can seem suspect. Yet Mr Burgis, too, ends his analysis with a description of a web of money-laundering, legal harassment, propaganda and violence that enmeshes the world. America and Britain, he thinks, are ever-more like Ukraine, Russia and Kazakhstan: “Like a parasite altering a cell it invades, so kleptocratic power transforms its host.” ■
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This article appeared in the Books & arts section of the print edition under the headline "The way of the world"
“This is what I want to talk about in these five lectures: how often, and how much, we are dominated by our savage past, as individuals and as groups. And yet, whilst sometimes it seems that we are helpless, we are gathering, and very rapidly – too rapidly to assimilate it – knowledge about ourselves, not only as individuals but as groups, nations and as members of society. This is a time when it is frightening to be alive, when it is hard to think of human beings as rational creatures. Everywhere we look we see brutality, stupidity, until it seems that there is nothing else to be seen but that – a descent into barbarism, everywhere, which we are unable to check. But what I think is that, while it is true there is a general worsening, it is precisely because things are so frightening that we become hypnotized, and do not notice – or if we notice, belittle – equally strong forces on the other side, the forces, in short, of reason, sanity, civilization…”
“The sad thing is, all these issues about human behaviour are so important, and so fundamental to why people get ill, anxious, sad and behave criminally, that they ought to be looked at calmly and scientifically by more people and talked about more widely. But these issues are not explored yet much on TV or in other media and yet they are far more important that politics or the ‘arts’. That’s why what you’re doing in the Human Givens Journal is so valuable.”
Lectures
Click the link in each section header below to listen to the lecture on the CBC site. Each section contains a short synopsis or key point.
“I think when people look back at this time – the one we are living through – they will be amazed at one thing more than any other. It is this. That we do know more about ourselves now than people did in the past but that very little of it has been put into effect. There has been this great explosion of information about ourselves. The information is the result of our – of mankind’s still infant ability to look at itself objectively. It concerns our behaviour patterns… and is about how we function in groups, and as individuals. Not about how we may like to think we behave and function, which is often very flattering, but about how we can be observed to be behaving when observed as dispassionately as when we observe the behaviour of other species.”
“This business of seeing ourselves as in the right and others in the wrong; our cause as right, theirs as wrong-headed; our ideas as correct, theirs as nonsense (if not as downright evil). Well, all of us in our sober moments, our human moments, the time when we think, reflect and allow our rational minds to dominate us – we all of us suspect that this ‘I am right, your are wrong’ is, quite simply, nonsense.
The political and personal implications of our tendency to think and act according to patterns of group psychology and mass morality – what Nietzsche called “the herd instinct”.
Politics, advertising, brainwashing and indoctrination – information about how society operates “which could, I believe, transform us – transform our lives and how we view ourselves.”
“We have now reached the stage where a political leader not only uses, skilfully, time-honoured rabble-rousing tricks (see Shakespeare’s Julius Caesar) but employs experts to make it all the more effective. But the antidote is that, in an open society, we may also examine these tricks being used on us. If, that is, we choose to examine them, if we don’t switch off to see Dallas, or whatever, instead.”
We may be subject to pressures that make us considerably less individual, and free, than we would like to imagine. And this imaginary picture of ourselves makes us more vulnerable and less likely ever to achieve true freedom.
“But is it possible that all the bad things going on (and I don’t have to list them, for we all know what they are) are a reaction, a dragging undertow to a forward movement in the human social evolution that we can’t easily see? Perhaps looking back, let’s say in a century, or in two centuries, is it possible they will say ‘that was a time when extremes battled for supremacy. The human mind was developing very fast in the direction of self-knowledge, self-command. And as always happens, as always has to happen, this thrust forward aroused its opposite: the forces of stupidity, brutality, mob-thinking’? I think it possible. I think this is what is happening.”
At least 15 percent of human females possess a genetic mutation that gives them an extra (fourth) type of color photoreceptor—and this allows them to discriminate between colors that look identical to the majority of us with a mere three types of color photoreceptors.
look at your own eyes in a mirror and move your point of focus back and forth so that you’re looking at your right eye, then at your left eye, and back again. Your eyes take tens of milliseconds to move from one position to the other, but—here’s the mystery—you never see them move. What happens to the gaps in time while your eyes are moving?
one could explain exactly how it was done.4 It was somehow based on very subtle visual cues, but the professional sexers could not report what those cues were. Instead, they would look at the chick’s rear (where the vent is) and simply seem to know the correct bin to throw it in. And this is how the professionals taught the student sexers. The master would stand over the apprentice and watch. The students would pick up a chick, examine its rear, and toss it into one bin or the other. The master would give feedback: yes or no. After weeks on end of this activity,
this book was written over the course of a few years by several different people, all of whom were named David Eagleman, but who were somewhat different with each passing hour.
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eagleman.com/incognito for interactive demonstrations of how little we perceive of the world.
Another real-world manifestation of implicit memory is known as the illusion-of-truth effect: you are more likely to believe that a statement is true if you have heard it before—whether or not it is actually true.
robotics problem a few decades ago, the computer scientist Marvin Minsky and his colleagues introduced a progressive idea: perhaps the robot could solve the problem by distributing the labor among specialized subagents
different factions in your brain, each competing to control the single output channel of your behavior. As a result, you can accomplish the strange feats of arguing with yourself, cursing at yourself, and cajoling yourself to do something—feats that modern computers simply do not do.
ystems: one is fast, automatic, and below the surface of conscious awareness, while the other is slow, cognitive, and conscious. The first system can be labeled automatic, implicit, heuristic, intuitive, holistic, reactive, and impulsive, while the second system is cognitive, systematic, explicit, analytic, rule-based, and reflective.10 These two processes
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1920 Sigmund Freud suggested three competing parts in his model of the psyche: the id (instinctive), the ego (realistic and organized), and the superego (critical and moralizing).11
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development: the reptilian brain (involved in survival behaviors), the limbic system (involved in emotions), and the neocortex (used in higher-order thinking). The details of both of these theories have largely fallen
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easy. In the 1960s, one political thinker suggested that the button to launch a nuclear war should be implanted in the chest of the President’s closest friend. That way, should the
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Between late 2007 and 2008, almost one million U.S. homes were foreclosed on. Mortgage-backed securities rapidly lost most of their value. Credit around the
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view. Similarly, Germans use a fanciful expression for a person trying to delay gratification: he must overcome his innerer schweinehund—which translates, sometimes to the puzzlement of English speakers, as “inner pigdog.”
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The fact that the two halves are doubles of the same basic plan is evidenced by a type of surgery called a hemispherectomy, in which one entire half of the brain is removed (this is done to treat intractable epilepsy caused by Rasmussen’s encephalitis). Amazingly, as
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as the surgery is performed on a child before he is about eight years old, the child is fine. Let me repeat that: the child, with only half his brain remaining, is fine. He can eat, read, speak, do math, make friends, play chess, love his parents, and everything else that a child with two hemispheres can do.
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phenomenon of cognitive reserve. Many people are found to have the neural ravages of Alzheimer’s disease upon autopsy—but they never showed the symptoms while they were alive. How can this be? It turns out that these people continued to challenge their brains into old age by staying active in their careers, doing crossword puzzles, or carrying out any other activities that kept their neural populations well exercised. As a result of staying mentally vigorous, they built what neuropsychologists call cognitive reserve. It’s not that cognitively fit people don’t get Alzheimer’s; it’s that their brains have protection against the symptoms. Even while parts of their brains degrade, they have other ways of solving problems. They are not stuck
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It may similarly explain the appeal of prayer, especially in those religions that have very personal gods, deities who lend their ears with undivided attention and infinite love. The newest twist on this ancient need to tell secrets to a stranger can be found in the form of websites like postsecret.com, where
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this amazing fact: if you are a carrier of a particular set of genes, your probability of committing a violent crime goes up by eight hundred and eighty-two percent. Here are statistics from the U.S. Department of Justice, which I’ve broken down into two groups: crimes committed by the population that carries this specific set of genes and by the population that does not: Average Number of Violent Crimes Committed Annually in the United States
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if you carry these genes, you’re eight times more likely to commit aggravated assault, ten times more likely to commit murder, thirteen times more likely to commit armed robbery, and forty-four times more likely to commit sexual assault. About one-half of the human population carries these genes, while the other half does not, making the first half much more dangerous indeed. It’s not even a contest. The overwhelming majority of prisoners carry these genes, as do 98.4 percent of those on death row. It seems clear enough that the carriers are strongly predisposed toward a different type of behavior—and
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dangerous set of genes, you’ve probably heard of them. They are summarized as the Y chromosome. If you’re a carrier, we call you a male.
this book was written over the course of a few years by several different people, all of whom were named David Eagleman, but who were somewhat different with each passing hour.
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eagleman.com/incognito for interactive demonstrations of how little we perceive of the world.
The so-called 'PayPal mafia' represent the best, worst, and most controversial aspects of Silicon Valley
When David Sacks left PayPal, shortly after eBay paid $1.5bn (£1.2bn) for the company in 2002, the first thing he did was finance a movie. The result, 2005’s Thank You For Smoking, became a sleeper hit, and returned its $10m budget many times over.
The dotcom bubble had burst, and Sacks could have put his tech days behind him. But as one big screen mobster famously said, just when you think you’re out, they pull you back in. Sacks went on to found Yammer, a social network for offices. It was later bought by Microsoft for $1.2bn.
This Cosa Nostra does not go around breaking windows, but in Silicon Valley, it is just as notorious. Sacks is one member of the “PayPal mafia”, the network of the first employees at the payments company who have gone on to enjoy immense wealth and influence in the tech industry.
Its don, Peter Thiel, PayPal’s former chief executive, was the first outside investor in Facebook, and remains one of tech’s most powerful venture capitalists. His consigliere and co-founder Max Levchin backed the likes of Stripe and Pinterest.
The family also includes Tesla’s Elon Musk, LinkedIn’s Reid Hoffman, and the founders of YouTube, Yelp and Palantir. Today, the roughly two dozen members continue to finance one another, sit on each other’s boards, and work at each other’s companies.
Since the “PayPal mafia” term was coined by Fortune magazine in 2007 (amplified by a striking photo shoot in which 13 of the group dressed as mobsters), they have only become richer and more revered.
Sacks, a venture capitalist, has invested in two of Musk’s ventures, SpaceX and The Boring Company, as well as Thiel’s data analytics company Palantir and Levchin’s Affirm. In turn, Yammer was backed by Thiel and Levchin.
Sacks says the image of the clutch of employees becoming the elite would have been preposterous 20 years ago, when Confinity, as the company was then known, launched PayPal, a way to send money over the internet.
“We kind of laugh that people portray us as this very powerful group today, it’s really just this group of friends that came together,” says Sacks, who was the company’s chief operating officer. “It’s not like this was seen as a very attractive group to belong to… [we] were misfits.”
Thiel and Levchin had stuffed Confinity with acquaintances from Illinois and Stanford universities, creating a competitive atmosphere in its early days that only became more so when it merged with Musk’s online banking start-up x.com in early 2000, the peak of the dotcom bubble.
Peter Thiel, a tech investor, entrepreneur, venture capitalist, fund manager and co-founder of Paypal CREDIT: KIM KULISH/CORBIS NEWS
The combined company settled on the name PayPal, but in other respects was defined by a “creative confrontational style”, says Keith Rabois, now a partner at Thiel’s investment firm Founders Fund. Rabois was hired in 2000, shortly after Thiel had replaced the ousted Musk as chief executive and in the middle of the tech crash.
“The company was a catastrophic mess, Elon had been fired and it was burning $10m a month in a market where you couldn’t raise additional capital.”
PayPal, survived, unlike many start-ups at the time, but changed when eBay, the auction website where PayPal had first spread, came knocking. The $1.5bn it paid is now small change but in 2002 it rocked the tech world. It was one of the first big deals in the aftermath of the crash, and made PayPal’s founders rich and miserable at the same time.
Eric Jackson, a former PayPal marketing executive, said there was an instant clash between PayPal’s leaders and Meg Whitman, eBay’s chief executive. “[eBay was] very much slow, cautious and consensus driven. You’d have endless meetings.”
Rabois says that in one three-hour meeting, when Sacks flicked through a 120-page slide show ahead of schedule, “you could see the look of horror on their [the eBay executives’] faces”.
What resulted was a mass exodus. Musk was already gone, and when Thiel quit, many followed. Rabois pinpoints this as the moment the mafia was made: the smart people and the smart money had left tech, leaving the crew of PayPal outcasts as the only team in town.
“There was this big vacuum, Silicon Valley was going through a nuclear winter,” Rabois says. “We went from these misfits that didn’t have a lot of connections to the only people around. It turned out there were several waves of innovation coming and we were the only ones who believed it. It wouldn’t have been possible if everyone else wasn’t depressed.”
Sacks adds that many of the tricks and tactics developed at PayPal went on to be repeated by the company’s descendants. PayPal had spread across eBay partly due to a simple piece of code written by web designer Chad Hurley that sellers could copy to let them easily take payments. So when Hurley was trying to get traction for his fledgling video website, YouTube, he used the same idea.
Reid Hoffman, former executive chairman of LinkedIn CREDIT: DREW ANGERER/ GETTY IMAGES
Riches followed. Google paid $1bn for YouTube, and Microsoft bought Hoffman’s LinkedIn for $26bn. Thiel’s $500,000 investment in Facebook in 2004 was worth billions by the time it floated eight years later. Most are now investors, and own stakes in hundreds of companies between them.
The mafia has also been united by controversy. In ultra-liberal Silicon Valley, Thiel has been vilified for supporting Donald Trump, and several members describe themselves as conservatives. There are no women in the PayPal mafia, and two members have been forced to leave jobs after allegations of sexual harassment.
Does the mafia’s enduring success rely partly on being a closed network with undue influence and respect?
“I think that’s the stupidest comment ever,” Rabois says. “We were a bunch of misfits, nobody at PayPal had any connections, we had to forge our own network from scratch.”
Jackson says the criticism of the group is “complete b-------. The number of people whose careers have been launched and advanced, it’s too long a list to ever write. They’ve done so much good over the years”.
Even so, as the mafia has grown richer and more influential, the links between its members seem as powerful as ever.
Sacks brushes off the mafia term, saying the group has occasional reunions, but insisting there are no secret underground meetings.
“It wasn’t really a mafia, it was more like a diaspora,” he says.
“eBay took over, burned down our temple and drove all the people out. And we had to go to other lands and start new things.”
Nasal breathing, as opposed to mouth breathing, has another important advantage, especially for effective and efficient exercise: It can allow for more oxygen to get to active tissues. That is because breathing through the nose releases nitric oxide, which is necessary to increase carbon dioxide (CO2) in the blood, which, in turn, is what releases oxygen. Mouth breathing does not effectively release nitric oxide, which means the cells are not getting as much oxygen as through nasal breathing, which could lead to fatigue and stress.
A recent study demonstrated this. The study tested 10 runners, both male and female, who for six months had been utilizing nasal-only breathing while exercising. Participants were put through standardized testing, once with nasal breathing and then with mouth breathing, to compare their maximum oxygen intake rates. They were also tested for various other respiratory and exercise markers, including oxygen and carbon dioxide levels while exercising.
Their maximum rate of oxygen consumption did not change from nasal to mouth breathing. But the study found that the runners’ respiratory rate, breaths per minute, and ratio of oxygen intake to carbon dioxide output decreased during nasal breathing. The researchers said this is probably because of the lower breath rate used during nasal breathing, which allows more time for oxygen to get to the bloodstream.
Hyperventilation through the mouth, i.e. the quick and hard breaths through the mouth that so many of us take when exercising at high intensity or feeling stressed, causes the body to offload more CO2, making it harder to oxygenate our cells. In intense moments, nasal breathing is the ideal way to oxygenate our systems.
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Nasal breathing also activates the part of the nervous system that supports rest, recovery and digestion, rather than the part of the nervous system that is responsible for survival or stress states, such as flight or freeze. That means that, even if the body is in a stressful state of high-intensity exercise, nasal breathing can provide a sense of calm and allow us to function better.
“The fact is, it’s incredibly difficult to learn or process anything in survival mode,” says Brian Mackenzie, author, athlete and founder of the Art of Breath, a program that teaches how to use breathing to optimize athletic performance. “We are now understanding some of the deeper layers to managing stress, which has direct impact on not only the general population, but is at the heart of how elite performers can optimize performance”.
Not only are beans a great source of plant-based protein, they're also packed with both soluble and insoluble fiber. The process of digesting the fiber and protein in beans burns extra calories, and both types of fiber help lower insulin levels after digestion and cause your body to store less fat. Think of every bean as a little metabolism-boosting pill. One study found that people who ate a ¾ cup of beans daily weighed 6.6 pounds less than those who didn't—despite bean eaters consuming, on average, 199 calories more per day.
A study in Finland looked at sets of identical twins and discovered that in each set of siblings, the twin who slept less had more visceral fat. If you do nothing else differently, just getting an extra half hour of shuteye will make all the difference. If you're chronically sleep deprived, don't be surprised if you gain a few pounds without eating a morsel of extra food. "A lack of sleep can cause several metabolic problems," says nutritionist and Holistic Health Coach Seth Santoro. "It can cause you to burn fewer calories, lack appetite control and experience an increase in cortisol levels, which stores fat."
Lack of sufficient sleep—under the recommended seven to nine hours a night for most adults—also leads to impaired glucose tolerance, a.k.a. your body's ability to utilize sugar for fuel. "We all have those less-than-adequate nights of sleep," says nutritionist Lisa Jubilee, MS, CDN. "But if it's a regular thing, you're better off lengthening your night's sleep than working out, if fat loss or weight maintenance is your goal."
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Here are some of the most common verbs in English that you will see with reflexive pronouns.
To introduce. At this point in your English language journey, you are probably familiar with this verb. To introduce yourself means to tell someone your name when you are meeting for the very first time.
I will introduce myself to everyone at the party.
To convince. If I say, “We convinced ourselves to try sushi,” it could mean that we ate this delicious meal after discussing whether or not we thought it would be a good idea. It also might mean that we were a little nervous about trying sushi for the first time, but we decided to try it anyway.
I didn’t want to apologize for singing loudly and annoying everyone, but I convinced myself it was the right thing to do.
To hurt. If I say, “I hurt myself when I fell,” it means that I became injured when I fell. You can injure yourself or hurt yourself without having done it on purpose! There are other reflexive verbs having to do with being harmed. A person can cut themselves or kill themselves (this last one is usually understood to be done on purpose, and is the same as “commit suicide”).
When I tried to stand on my chair, I lost my balance and injured myself.
To drive. If I say, “You drove yourself to the party,” it would mean that you got into a car and used it to get to the party.
Because I was hurt, my friends wouldn’t let me drive myself home.
There are also some verbs that change their meaning slightly when a reflexive pronoun is added.
To enjoy. This is where it gets a little confusing. To say that you are enjoying yourself doesn’t mean that you are what you are enjoying. To enjoy yourself simplymeans to have a good time.
I enjoyed myself at the party, but some of the other guests didn’t enjoy themselves as much.
To help. To help yourself can mean exactly what it sounds like. For example, someone might say, “I can’t help you if you won’t even help yourself.” But to help yourself can also mean to take or serve yourself food or drinks. Someone who is hosting a party or who has invited you over to their home as a guest might tell you to help yourself to refreshments (food or drinks).
I helped myself to too much sushi, so there wasn’t enough left for everyone else.
To behave. Parents often yell, “Behave yourself!” if their children are doing anything bad, such as making too much noise, getting their clothes dirty or climbing trees. They might also simply yell, “Behave!” “Behave” by itself can either mean act properly and acceptably, or just act in a specific way. For example, you can “behave badly.” If you behave yourself, though, that always means that you behave well.
If I am ever invited to another party, I will try to behave myself.
These are only a few of the most common reflexive verbs. You will find many others during your English learning journey.
Other Ways Reflexive Pronouns Can Be Used
Besides being used in reflexive verbs, reflexive pronouns can also be used in sentences in a couple of other ways.
With Prepositions
You can use a reflexive pronoun with a preposition to give more information in a sentence about what is happening.
Let’s take a look at this sentence:
I went home to be alone.
Another way that we could say alone here is by myself.
I went home to be by myself.
This might seem strange, because if you think about it, you are always by, or near, yourself. However, as we saw in the examples above, reflexive pronouns are used in their own special way in some common phrases and expressions. The most important thing to understand here is that the pronoun myself is being used to refer back to the subject, I.
Here is another common way a reflexive pronoun can be used with a preposition:
She bought a dress for herself.
In this sentence, herself is who she bought the dress for. Like with Lisa teaching English to herself, you need the word herself to be clear.
If you said, “She bought the dress for her,” it would sound like she bought the dress for some other person.
For Emphasis
Reflexive pronouns can also be used to emphasize (stress, or give attention to) information in a phrase.
Consider this example:
I want to do it myself.
The person speaking this sentence could simply say, “I want to do it,” and have it mean almost the same thing. However, the word myself emphasizes the word I, showing that the speaker wishes to draw attention to this word.
You might see this usage of a reflexive pronoun in this kind of exchange:
“It seems like you could use some help with the laundry. Would you like me to fold these shirts?”
“No, please don’t, I want to do it myself.”
Here is another example:
They wanted to feed the dogs themselves.
In this sentence, it sounds like they might not have trusted someone else to feed the dogs.
It would be fine to just say, “They wanted to feed the dogs.” However, themselves makes it seem more important that they be the one(s) to feed the dogs. It makes it seem like it is important that they personally feed the dogs, and not just that the dogs are fed.
When You Don’t Need to Use Reflexive Pronouns
Unless you want to emphasize an action, you don’t need to use reflexive pronouns in cases where a person usually does something to or for themselves.
For example, instead of saying David shaved himself after his shower, you can just say David shaved after his shower.
Instead of saying Paulina dressed herself for dinner, you can just say Paulina dressed for dinner.
Resources for Practice
If you have made it this far, you have already learned a lot about reflexive verbs and pronouns! However, here are some resources you can use to get even more familiar with them:
This reflexive pronouns quiz from Englisch-Hilfen lets you practice using reflexive pronouns in sentences with a fill-in-the-blank challenge.
This quiz from My English Pages first has you identify all the reflexive pronouns, and then has you choose the right ones to go in sentences.
This quiz on English2Test covers a lot of different usages of reflexive pronouns.
These resources will help you start seeing how reflexive pronouns are actually used. The examples in this post and the above quizzes don’t cover all the possible usages of reflexive pronouns and verbs in English. However, now that you have learned all the reflexive pronouns, you will more easily be able to notice all the different ways they are commonly used.
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What are the optimal biases to overcome? (August 29, 2012)
There's a very good reason that Rosalind Franklin did not share the 1962 Nobel Prize: she had died of ovarian cancer four years earlier and the Nobel committee does not consider posthumous candidacies.
There’s a very good reason that Rosalind Franklin did not share the 1962 Nobel Prize: she had died of ovarian cancer four years earlier and the Nobel committee does not consider posthumous candidacies. Moreover, the Nobel rules stipulate that each prize may be shared by no more than three people; and, as the committee often favors those who initiated the award-winning research, Maurice Wilkins would probably still have been the preferred candidate, since his lab’s investigation into the structure of DNA had begun well before Franklin arrived from Paris. Watson later suggested that, had Franklin lived, she and Wilkins should have shared that year’s prize in chemistry, with the prize in physiology or medicine going to himself and Crick. But that, of course, never happened—and records show that Franklin was never even nominated.
Scott Galloway
My dad, 89, is sequestered in his assisted living facility in San Diego. Nobody can see him. His meals are left at his door. He does take a masked walk every day, but it’s taking a real toll. In the five months he’s been in lockdown, his dementia has begun to march faster. Every time we speak he says he’d like to see me and the boys one last time and would like to come to Florida, forgetting the situation we’re in. I agree, we start talking dates, and he gets emotional. He then says he’s sorry for whatever he’s done to make me mad at him. Thing is, he hasn’t done anything and I’m not mad, but there’s no talking him off it.
As his hearing aids never seem to be working, I end up venturing outside so I can yell … "DAD, YOU’VE DONE NOTHING WRONG, WE HAVE A GREAT RELATIONSHIP, I LOVE YOU AND YOU LOVE US, WE’RE FINE." He responds, "What?" We do this for about two minutes or until the neighbors’ lights go on wondering wtf is going on next door. He hears me and, again, seems relieved. He’ll then just deflate and say, "This dementia thing. I just feel … I just feel so lost."
The medium is the message
The key here is to recognize the medium is the message. Exploit the one attribute of the format that can be much improved: visuals. These always look awkward and very fifties during live testimony, though Representative Katie Porter does a great job with her mini white boards (note to self: get one).
"The medium is the message" is a phrase coined by the Canadian communication thinker Marshall McLuhan and introduced in his Understanding Media: The Extensions of Man, published in 1964.[1] McLuhan proposes that a communication medium itself, not the messages it carries, should be the primary focus of study. He showed that artifacts as media affect any society by their characteristics, or content.
McLuhan uses the term 'message' to signify content and character. The content of the medium is a message that can be easily grasped and the character of the medium is another message which can be easily overlooked. McLuhan says "Indeed, it is only too typical that the 'content' of any medium blinds us to the character of the medium." For McLuhan, it was the medium itself that shaped and controlled "the scale and form of human association and action."[2] Taking the movie as an example, he argued that the way this medium played with conceptions of speed and time transformed "the world of sequence and connections into the world of creative configuration and structure."[3] Therefore, the message of the movie medium is this transition from "lineal connections" to "configurations."[3] Extending the argument for understanding the medium as the message itself, he proposed that the "content of any medium is always another medium"[4] – thus, speech is the content of writing, writing is the content of print, and print itself is the content of the telegraph.
It means that the nature of a medium (the channel through which a message is transmitted) is more important than the meaning or content of the message.
McLuhan tells us that a "message" is, "the change of scale or pace or pattern" that a new invention or innovation "introduces into human affairs."[7]
JULY
Wing nut
The Dzhanibekov Effect or Tennis Racket Theorem wing nut to 2.14
Balls
2 balls gravity
Stacked ball drop
2 balls
Nope, they don't, because of conservation of momentum. Momentum depends on mass and velocity. The mass of the object does not change as it falls obviously, but velocity of the lighter ball increases ever so slightly slower (and tops out earlier, it has smaller terminal velocity, google it, the equation clearly shows it depends on mass) because the ball collides with air particles as it falls, and these collisions follow the conservation of momentum principle. Each such collision detracts from the momentum of the ball and given that it cannot detract from it's mass, it detracts from it's velocity. The less mass the ball has, the more it's velocity contributes to it's momentum, so the lighter it is the more momentum it loses. The only environment where they do fall at the same time is vacuum. Of course these effects are negligible at the distance he's using, but they are there and I would expect from him to do better and mention them.
Have you seen the experiment with a ping pong ball hovering atop a stream of air? That's basically falling in place, like skydiving in a wind tunnel. Now replace that ball with a lead ball of same size and shape. You think it'll still hover? Mass matters, if there's a fluid (water, air, whatever) in which the object is moving.
CELTA is a qualification for teaching English as a foreign language. It focuses on developing practical skills with face-to-face teaching practice, which will provide you with the techniques and confidence you need to begin teaching as soon as you finish the course.
Ways to take CELTA
The CELTA course can be taken in different ways:
full time – usually 4–5 weeks
part time – from a few months to over the course of a year
online – a blended learning course, combining online self-study with hands-on teaching practice.
After the initial spin-up by a jet of helium which brings the rotor to 4,000 RPM, the polished gyroscope housing is evacuated to an ultra-high vacuum to further reduce drag on the rotor. Provided the suspension electronics remain powered, the extreme rotational symmetry, lack of friction, and low drag will allow the angular momentum of the rotor to keep it spinning for about 15,000 years.[51]
Superconductivity & The London Moment
Superconductivity was discovered in 1911 by the Dutch physicist H. Kammerlingh Onnes. He found that at temperatures a few degrees above absolute zero, many metals completely lose their electrical resistance. An electric current started in a superconductor ring would flow forever, if the ring were permanently kept cold. But, superconductors also have other interesting properties. In 1948, the theoretical physicist Fritz London predicted that a spinning superconductor would develop a magnetic moment—created by the electrons lagging the lattice of the superconducting metal—which is therefore exactly aligned with its instantaneous spin axis. In 1963, three different groups, including a GP-B graduate student, demonstrated the existence of this London moment experimentally.
The rate of reversals in the Earth's magnetic field has varied widely over time. 72 million years ago (Ma), the field reversed 5 times in a million years. In a 4-million-year period centered on 54 Ma, there were 10 reversals; at around 42 Ma, 17 reversals took place in the span of 3 million years. In a period of 3 million years centering on 24 Ma, 13 reversals occurred. No fewer than 51 reversals occurred in a 12-million-year period, centering on 15 million years ago. Two reversals occurred during a span of 50,000 years. These eras of frequent reversals have been counterbalanced by a few "superchrons" – long periods when no reversals took place.[12]
A superchron is a polarity interval lasting at least 10 million years. There are two well-established superchrons, the Cretaceous Normal and the Kiaman. A third candidate, the Moyero, is more controversial. The Jurassic Quiet Zone in ocean magnetic anomalies was once thought to represent a superchron, but is now attributed to other causes. FROM
One device survived, almost unnoticed, from the Greenglow days - a propellant-less electromagnetic or EmDrive, created by British aerospace engineer Roger Shawyer.
What sets the EmDrive apart from other concepts? As Shawyer puts it: "We're no longer looking to control gravity itself. We're beating gravity the smart way." Because the EmDrive actually appears to do something. In tests, it seems to move under its own steam.
“Every right thinking person thinks the same as me”
the journalist points out what while Euan doesn’t look much like his father, his similarity to Tony Blair’s voice is uncanny. He also observes that he’s clearly persuasive like his father, after raising more than £3 million from Silicon Valley investors to fund WhiteHat’s expansion (at the end of 2018 they had 43 staff and had placed 550 apprentices).
He’s married to Suzanne Ashman, a glamorous venture capitalist and the daughter of motor racing entrepreneur Jonathan Ashman. She went from St Paul’s high achieving girls’ school to Oxford to study the Westminster cocktail of Politics, Philosophy and Economics. A certain high-flyer, she was named as a prominent European financier in Forbes’s 30 under 30 list and is now a partner at LocalGlobe specialising in the social impact space.
.Radcliffe, who doesn't have a public presence on social media, wrote a heartfelt response to Rowling's comments in a blog post for The Trevor Project, a non-profit devoted to suicide prevention among LGBTQ+ youth.
"Transgender women are women," he wrote. "Any statement to the contrary erases the identity and dignity of transgender people and goes against all advice given by professional health care associations who have far more expertise on this subject matter than either Jo (Rowling) or I."
Warning: This piece contains inappropriate language for children.
For people who don’t know: last December I tweeted my support for Maya Forstater, a tax specialist who’d lost her job for what were deemed ‘transphobic’ tweets.
I compounded my accidental ‘like’ crime by following Magdalen Berns on Twitter. Magdalen was an immensely brave young feminist and lesbian who was dying of an aggressive brain tumour. I followed her because I wanted to contact her directly, which I succeeded in doing. However, as Magdalen was a great believer in the importance of biological sex, and didn’t believe lesbians should be called bigots for not dating trans women with penises, dots were joined in the heads of twitter trans activists, and the level of social media abuse increased.
I mention all this only to explain that I knew perfectly well what was going to happen when I supported Maya. I must have been on my fourth or fifth cancellation by then. I expected the threats of violence, to be told I was literally killing trans people with my hate, to be called cunt and bitch and, of course, for my books to be burned, although one particularly abusive man told me he’d composted them.
I’m concerned about the huge explosion in young women wishing to transition and also about the increasing numbers who seem to be detransitioning (returning to their original sex), because they regret taking steps that have, in some cases, altered their bodies irrevocably, and taken away their fertility. Some say they decided to transition after realising they were same-sex attracted, and that transitioning was partly driven by homophobia, either in society or in their families.
Most people probably aren’t aware – I certainly wasn’t, until I started researching this issue properly – that ten years ago, the majority of people wanting to transition to the opposite sex were male. That ratio has now reversed. The UK has experienced a 4400% increase in girls being referred for transitioning treatment. Autistic girls are hugely overrepresented in their numbers.
The same phenomenon has been seen in the US. In 2018, American physician and researcher Lisa Littman set out to explore it. In an interview, she said:
‘Parents online were describing a very unusual pattern of transgender-identification where multiple friends and even entire friend groups became transgender-identified at the same time. I would have been remiss had I not considered social contagion and peer influences as potential factors.’
Littman mentioned Tumblr, Reddit, Instagram and YouTube as contributing factors to Rapid Onset Gender Dysphoria, where she believes that in the realm of transgender identification ‘youth have created particularly insular echo chambers.’
The writings of young trans men reveal a group of notably sensitive and clever people. The more of their accounts of gender dysphoria I’ve read, with their insightful descriptions of anxiety, dissociation, eating disorders, self-harm and self-hatred, the more I’ve wondered whether, if I’d been born 30 years later, I too might have tried to transition. The allure of escaping womanhood would have been huge. I struggled with severe OCD as a teenager. If I’d found community and sympathy online that I couldn’t find in my immediate environment, I believe I could have been persuaded to turn myself into the son my father had openly said he’d have preferred.
When I read about the theory of gender identity, I remember how mentally sexless I felt in youth. I remember Colette’s description of herself as a ‘mental hermaphrodite’ and Simone de Beauvoir’s words: ‘It is perfectly natural for the future woman to feel indignant at the limitations posed upon her by her sex. The real question is not why she should reject them: the problem is rather to understand why she accepts them.’
The current explosion of trans activism is urging a removal of almost all the robust systems through which candidates for sex reassignment were once required to pass. A man who intends to have no surgery and take no hormones may now secure himself a Gender Recognition Certificate and be a woman in the sight of the law. Many people aren’t aware of this.
We’re living through the most misogynistic period I’ve experienced. Back in the 80s, I imagined that my future daughters, should I have any, would have it far better than I ever did, but between the backlash against feminism and a porn-saturated online culture, I believe things have got significantly worse for girls. Never have I seen women denigrated and dehumanised to the extent they are now. From the leader of the free world’s long history of sexual assault accusations and his proud boast of ‘grabbing them by the pussy’, to the incel (‘involuntarily celibate’) movement that rages against women who won’t give them sex, to the trans activists who declare that TERFs need punching and re-educating, men across the political spectrum seem to agree: women are asking for trouble. Everywhere, women are being told to shut up and sit down, or else.
sed to work for Gary Killdall, and I worked with some of his people from DR. I was Gary's personal electronic engineer, building his custom embedded systems as he was designing the earliest smartphone back in 1987... Called the Intelliphone, people confusingly called it a pbx. I was the hardware designer. What I designed was both the handset of the smartphone, AND the central office switch gear (the switch gear is similar to a PBX, but is was just the support infrastructure for the actual invention, the button-free smartphone, years before apple even had the ipod... Gary had elimited buttons in favor of the "application defined user interface"... rolls right off the tongue... His design sketch looks just like a modern smartphone, only no switches or buttons at all. Prototypes were larger of course, we had to get the design working before the electronics would eventually be crunched into the small package needed to make a phone, we were 90% there when I left the project to go work for IBM...
But the story of Gary out flying the plane when IBM visited isn't actually what happened. 90% of the work Gary did at the time was for IBM. He met with IBM dozens of times, and sold them dozens of operating systems and other software. IBM was Gary's main customer. While it is possible that Gary missed a meeting, why would missing one meeting out of literally thousands he didn't miss doesn't make such a difference? He met with IBM constantly in those years, and he had people on staff who's job it was to manage that. The OS for the PC was not the only business he had with IBM at the time, far from it.
And you missed the whole PC AT story. When you booted the original IBM AT, it said on the screen "IBM Multi-user System". What was the IBM Multi-user System? Why the IBM AT was NOT designed to run msdos, it was designed to run a new multiuser OS. The AT would ship with 16 port serial cards, and Wyse has a PC emulation built into their dumb terminals that allowed a single AT to be used as computers for a whole room of people. It was a multitasking operating system that would have made a really large difference in the computing landscape. What happened? The sad story there is that Intel was having problems with the 286 chips. The prototype chips that IBM was using for development worked fine, but the yields were low for the chips, so Intel had to redesign the CPU die to improve yields for the production runs for the AT. When IBM finally got the redesigned chip, that had been testing their systems using the prototype chips, and didn't spot a problem the new chip created until the warehouse was full of assembled systems. It turns out the new 286 chips had an issue with running protected mode instructions, so in an 11th hour decision, IBM execs decided to open all of the boxes, remove the OS kit, and replace it with a dos disk... In one fatal moment, a spec change caused the new OS to be temporarily pulled. The OS did get used, but it was only used in IBM brand grocery store scanner registers, it never found use as the major advance in dos technology that it was. Eventually DR named the new OS Concurrent Dos and put it up for sale next to DR Dos, but as sad stories goes, the pretty blue box it shipped in probably didn't find very many desktops to grace.
And no story about this would be complete without talking about Microsoft Windows... When Windows came out, it was not much more than a buggy toy OS. However a small number of people discovered that DR DOS running under Windows was a winning combination because DR Dos had a memory manager that made windows much better on the DR Dos platform. Windows 3.1 was shipped with code to detect what OS it was running on, and to create a fake blue screen if the OS was DR Dos.
Gary was a generous educator, Bill was a shrewd business man. Gary's instinct was to share information, and make his fortune from his genius. Bill made his fortune by making the right decisions at the right time. Great engineer VS great business man. Had my own experiences with that, engineers don't make the best business men, too honest and idealistic. Gary died a wealthy man, his house in Austin had a glass garage housing his collection of famous race cars lovingly restored by the original crew... His house in Pebble Beach is where he kept is Lamborghini collection... Big collection, big garage. So yeah he stubbed his toe with the events you mention, but he was well on his way to being a decade early with truly groundbreaking smartphone tech...
But I gloss over so many details... would love to have a conversation about Gary's /actual/ mental state and activity just before his death. He did have burn scars from the unfortunate events you discuss, but his state of mind and what he was doing at the time was so much more complex than the stories out there, and if not for his death, the next chapter would have re-written tech history.
Show less
Ielts
Example: The charts below show the reasons why people travel to work by bicycle or by car. Summarise the information by selecting and reporting the main features, and make comparisons where relevant.
Before 2003 few outside the field of respiratory medicine would have heard the term “coronavirus”. Then came sars—severe acute respiratory syndrome—and suddenly the word became familiar. sars caused a medical panic. It was an unknown illness with a mortality rate of about 10% and there was a brief period when, having escaped from China, where it first appeared, and surfaced in places as far distant as Canada, it seemed to have the potential to cause a global epidemic.
Thankfully, sars was contained, and now seems to have disappeared in the wild. But the bogeyman status of coronaviruses has not diminished. Hence the mini-panic when a new one began infecting people in Wuhan, the capital of Hubei province, in China. As The Economist went to press 42 patients had been confirmed as being ill with the new virus, one of whom had died.
The virus’s symptoms of fever and pneumonia are similar to those of several other infections, so it was not clear to start with what was happening. The person now believed to have been the first patient developed symptoms on December 8th. The most recent case in China presented on January 2nd. On January 8th, however, a Chinese visitor arriving in Thailand from Wuhan was also found to be feverish, and on January 13th her illness was confirmed as being caused by the new virus.
Once China’s health authorities realised what was going on, they acted fast. On January 1st they shut down a market that seemed to be a common factor between the patients. By January 7th they had isolated the new pathogen, showing that it was a coronavirus. And on January 12th they published the new virus’s genetic sequence, enabling doctors in other countries to check for possible cases.
Coronaviruses, so called because they vaguely resemble monarchical crowns when examined under an electron microscope, are a widespread group that infect many species of mammal and bird. The two human examples known of before 2003 both cause colds, but are not regarded as life-threatening. A diligent search after the emergence of sars discovered two others that had been circulating, previously unnoticed, in the human population. Then, in 2012, a sixth human coronavirus was discovered and shown to be responsible for newly described symptoms now called Middle East respiratory syndrome (mers) that kill about a third of those infected. The agent responsible for the outbreak in Wuhan, which has yet to be named formally, appears to be the seventh.
What is not yet clear is whether the Wuhan virus can, like the other six, spread directly from person to person. Novel human viruses are usually pathogens established in another animal that have jumped the species barrier. To be successful, though, they must also have mutated sufficiently to pass between members of their new host. The virus responsible for sars, for example, came from bats, via civets, before infecting people. That responsible for mers came from camels. Which species harboured the Wuhan virus remains unknown. The initial suspicion—hope, almost—was that each of those infected picked the virus up independently from whichever animal reservoir harbours it, rather than from another human being. The now-closed market being a common factor in infections has encouraged this belief, as has the failure of China’s health authorities to find signs of infection in those who had been in contact with patients.
Given the lack of new cases, it looks possible that even if person-to-person transmission has happened, the swift response to the new infection has nipped things in the bud. That is encouraging, as is the fact that the traveller to Thailand was detected by equipment installed for the purpose at Bangkok airport. This picked up her elevated body temperature and alerted the authorities. In a world where a virus could be halfway around the planet before medical science has got its boots on, that is something to be grateful for.■
APRIL
By honest I don’t mean that you only tell what’s true. But you make clear the entire situation. You make clear all the information that is required for somebody else who is intelligent to make up their mind.”
— Richard P. Feynman
Feynman doubt, uncertainty
“I have approximate answers, possible beliefs and different degrees of certainty about different things, but I'm not absolutely sure about anything."
By honest I don't mean that you only tell what's true. But you make clear the entire situation. You make clear all the information that is required for somebody else who is intelligent to make up their mind.”
Feynman
The only way to have real success in science, the field I’m familiar with, is to describe the evidence very carefully without regard to the way you feel it should be. If you have a theory, you must try to explain what’s good and what’s bad about it equally. In science, you learn a kind of standard integrity and honesty.
"Afterthoughts," p. 217-218
Masks
WHO
As of 24 April 2020, no study has evaluated whether the presence of antibodies to SARS-CoV-2 confers immunity to subsequent infection by this virus in humans.
No Studies Have Yet Shown That You’ll Be Immune To The Coronavirus If You've Been Infected Before, The WHO Said
The warning comes as some governments consider "immunity passports" for people who have recovered from COVID-19, allowing them to travel or return to work.
Kristian Andersen, an associate professor of immunology and microbiology at Scripps Research, and his colleagues looked at the genetic template for the spike proteins that protrude from the surface of the virus. The coronavirus uses these spikes to grab the outer walls of its host's cells and then enter those cells. They specifically looked at the gene sequences responsible for two key features of these spike proteins: the grabber, called the receptor-binding domain, that hooks onto host cells; and the so-called cleavage site that allows the virus to open and enter those cells.
That analysis showed that the "hook" part of the spike had evolved to target a receptor on the outside of human cells called ACE2, which is involved in blood pressure regulation. It is so effective at attaching to human cells that the researchers said the spike proteins were the result of natural selection and not genetic engineering.
Here's why: SARS-CoV-2 is very closely related to the virus that causes severe acute respiratory syndrome (SARS), which fanned across the globe nearly 20 years ago. Scientists have studied how SARS-CoV differs from SARS-CoV-2 — with several key letter changes in the genetic code. Yet in computer simulations, the mutations in SARS-CoV-2 don't seem to work very well at helping the virus bind to human cells. If scientists had deliberately engineered this virus, they wouldn't have chosen mutations that computer models suggest won't work. But it turns out, nature is smarter than scientists, and the novel coronavirus found a way to mutate that was better — and completely different— from anything scientists could have created, the study found.
Another nail in the "escaped from evil lab" theory? The overall molecular structure of this virus is distinct from the known coronaviruses and instead most closely resembles viruses found in bats and pangolins that had been little studied and never known to cause humans any harm.
"If someone were seeking to engineer a new coronavirus as a pathogen, they would have constructed it from the backbone of a virus known to cause illness," according to a statement from Scripps.
"There is currently no evidence that people who have recovered from #COVID19 and have antibodies are protected from a second infection," WHO said in a statement.
"People who assume that they are immune to a second infection because they have received a positive test result may ignore public health advice," it said.
MIRROR NEURONS and imitation learning as the driving force behind "the great leap forward" in human evolution
[V.S. RAMACHANDRAN:] The discovery of mirror neurons in the frontal lobes of monkeys, and their potential relevance to human brain evolution — which I speculate on in this essay — is the single most important "unreported" (or at least, unpublicized) story of the decade. I predict that mirror neurons will do for psychology what DNA did for biology: they will provide a unifying framework and help explain a host of mental abilities that have hitherto remained mysterious and inaccessible to experiments.
There are many puzzling questions about the evolution of the human mind and brain:
1) The hominid brain reached almost its present size — and perhaps even its present intellectual capacity about 250,000 years ago . Yet many of the attributes we regard as uniquely human appeared only much later. Why? What was the brain doing during the long "incubation "period? Why did it have all this latent potential for tool use, fire, art music and perhaps even language- that blossomed only considerably later? How did these latent abilities emerge, given that natural selection can only select expressed abilities, not latent ones? I shall call this "Wallace's problem", after the Victorian naturalist Alfred Russell Wallace who first proposed it.
2) Crude "Oldawan" tools — made by just a few blows to a core stone to create an irregular edge — emerged 2.4 million ago and were probably made by Homo Habilis whose brain size was half way (700cc) between modern humans (1300) and chimps (400). After another million years of evolutionary stasis aesthetically pleasing "symmetrical" tools began to appear associated with a standardization of production technique and artifact form. These required switching from a hard hammer to a soft (wooden?) hammer while the tool was being made, in order to ensure a smooth rather than jagged, irregular edge. And lastly, the invention of stereotyped "assembly line" tools (sophisticated symmetrical bifacial tools) that were hafted to a handle, took place only 200,000 years ago. Why was the evolution of the human mind "punctuated" by these relatively sudden upheavals of technological change?
3) Why the sudden explosion (often called the "great leap" ) in technological sophistication, widespread cave art, clothes, stereotyped dwellings, etc. around 40 thousand years ago, even though the brain had achieved its present "modern" size almost a million years earlier?
4) Did language appear completely out of the blue as suggested by Chomsky? Or did it evolve from a more primitive gestural language that was already in place?
5) Humans are often called the "Machiavellian Primate" referring to our ability to "read minds" in order to predict other peoples' behavior and outsmart them. Why are apes and humans so good at reading other individuals' intentions? Do higher primates have a specialized brain center or module for generating a "theory of other minds" as proposed by Nick Humphrey and Simon Baron-Cohen? If so, where is this circuit and how and when did it evolve?
The solution to many of these riddles comes from an unlikely source.. the study of single neurons in the brains of monkeys. I suggest that the questions become less puzzling when you consider Giaccamo Rizzollati's recent discovery of "mirror neurons' in the ventral premotor area of monkeys. This cluster of neurons, I argue, holds the key to understanding many enigmatic aspects of human evolution. Rizzollati and Arbib have already pointed out the relevance of their discovery to language evolution . But I believe the significance of their findings for understanding other equally important aspects of human evolution has been largely overlooked. This, in my view, is the most important unreported "story" in the last decade.
esponding to stupid questions or unanswerable questions, changing your mind, and rape
Tyson trump
Jonathan Haidt, who I think has a question.
25:48
Jonathan Haidt: Thanks, Yuval. So you seem to be a fan of global governance, but when you look at the map of the world from Transparency International, which rates the level of corruption of political institutions, it’s a vast sea of red with little bits of yellow here and therefor those with good institutions. So if we were to have some kind of global governance, what makes you think it would end up being more like Denmark rather than more like Russia or Honduras, and aren’t there alternatives, such as we did with CFCs? There are ways to solve global problems with national governments. What would world government actually look like,and why do you think it would work?
26:22
YNH: Well, I don’t know what it would look like. Nobody still has a model for that. The main reason we need it is because many of these issues are lose-lose situations. When you have a win-win situation like trade, both sides can benefit from a trade agreement, then this is something you can work out. Without some kind of global government, national governments each have an interest in doing it. But when you have a lose-lose situation like with climate change, it’s much more difficult without some overarching authority, real authority.
27:00
Now, how to get there and what would it look like, I don’t know. And certainly there is no obvious reason to think that it would look like Denmark, or that it would be a democracy.Most likely it wouldn’t. We don’t have workable democratic models for a global government.So maybe it would look more like ancient China than like modern Denmark. But still, given the dangers that we are facing, I think the imperative of having some kind of real ability to force through difficult decisions on the global level is more important than almost anything else.
27:47
CA: There’s a question from Facebook here, and then we’ll get the mic to Andrew. So, Kat Hebron on Facebook, calling in from Vail: “How would developed nations manage the millions of climate migrants?”
28:00
YNH: I don’t know.
28:02
CA: That’s your answer, Kat. (Laughter)
28:04
YNH: And I don’t think that they know either. They’ll just deny the problem, maybe.
highlighting a question that’s really been bugging me the last few months more and more. It’s almost a hard question to ask in public, but if any mind has some wisdom to offer in it, maybe it’s yours, so I’m going to ask you: What are humans for?
36:45
YNH: As far as we know, for nothing.
have created — nations and gods and money and corporations — they now control the world. So just to even think, “Oh, this is just all fictional entities that we’ve created,” is very difficult. But reality is there.
42:17
For me the best … There are several tests to tell the difference between fiction and reality. The simplest one, the best one that I can say in short, is the test of suffering. If it can suffer, it’s real. If it can’t suffer, it’s not real. A nation cannot suffer. That’s very, very clear. Even if a nation loses a war, we say, “Germany suffered a defeat in the First World War,” it’s a metaphor. Germany cannot suffer. Germany has no mind. Germany has no consciousness.Germans can suffer, yes, but Germany cannot. Similarly, when a bank goes bust, the bank cannot suffer. When the dollar loses its value, the dollar doesn’t suffer. People can suffer. Animals can suffer. This is real. So I would start, if you really want to see reality, I would go through the door of suffering. If you can really understand what suffering is, this will give you also the key to understand what reality is.
43:16
CA: There’s a Facebook question here that connects to this, from someone around the world in a language that I cannot read.
43:22
YNH: Oh, it’s Hebrew. CA: Hebrew. There you go.
43:24
(Laughter)
43:25
Can you read the name?
43:27
YNH: Or Lauterbach Goren.
43:28
CA: Well, thank you for writing in. The question is: “Is the post-truth era really a brand-new era, or just another climax or moment in a never-ending trend?
43:40
YNH: Personally, I don’t connect with this idea of post-truth. My basic reaction as a historian is: If this is the era of post-truth, when the hell was the era of truth?
43:50
CA: Right.
43:51
(Laughter)
43:53
YNH: Was it the 1980s, the 1950s, the Middle Ages? I mean, we have always lived in an era, in a way, of post-truth.
But I don’t think there is anything essentially new about this disseminating fictions and errors. There is nothing that — I don’t know — Joseph Goebbels, didn’t know about all this idea of fake news and post-truth. He famously said that if you repeat a lie often enough, people will think it’s the truth, and the bigger the lie, the better,because people won’t even think that something so big can be a lie. I think that fake news has been with us for thousands of years. Just think of the Bible.
from Cameron Taylor on Facebook: “At the end of ‘Sapiens,'”you said we should be asking the question, ‘What do we want to want?’ Well, what do you think we should want to want?”
53:56
YNH: I think we should want to want to know the truth, to understand reality. Mostly what we want is to change reality, to fit it to our own desires, to our own wishes, and I think we should first want to understand it. If you look at the long-term trajectory of history, what you see is that for thousands of years we humans have been gaining control of the world outside us and trying to shape it to fit our own desires. And we’ve gained control of the other animals, of the rivers, of the forests, and reshaped them completely, causing an ecological destructionwithout making ourselves satisfied.
https://charlierose.com/videos/14730
wolves.11:13Charlie Rose: But if, in fact, he raped her in that hotel roomregardless of whether she came there, you think that he shouldhave been convicted and then should have gone to the slammer?11:20Donald Trump: He to this day denies it. I don’t know that it happened. I think that as they said if he didn’t testify, he would have been exonerated totally. The jury said that. Mike was arrogant. He was a horrible witness from what I understand.I’m not surprised. I would say that generally speaking, you don’t put Mike on as a witness but he was a horrible witness. To get 4, 5, or 6 years, I think that there was just too many circumstances. Again, she was in a beauty contest. She was dancing with a big smile on her face at 8:00AM.11:48Charlie Rose: Yeah but the jury sat there. They listened to her too. They had an opportunity to hear her and test her credibility as they heard it and also to face questions. This guy’s not a bad lawyer. He might have handled this case bad but he’s the same man that represented John Hinckley and others and had an extraordinary reputation in a very good Washington firm.12:02Donald Trump: I watched Mike. I’ve been with Mike. I’ve seen him. People really take advantage of this man. I want to tell you something. I think this is one of those examples. Now I know we have a system of juries. We have a system where if you’re found guilty, you’re guilty but somebody like me and maybe who has a little bit more independent streak can say, “Hey, Mike Tyson in my opinion should really be given another break.” They put him in jail before he was even guilty as far as I was concerned.12:26Charlie Rose: Do you believe he’ll fight again? Do you believe he’ll ever be the heavyweight champ again?12:31Donald Trump: I think he’ll fight again. I don’t know that he’ll be the heavyweight champ again. In the prison that he’s in, they don’t allow boxing. That’s a long way off. Some of the young fighters that are coming up in the heavyweight division are great.12:41Charlie Rose: But Ali came back from years (crosstalk ).12:42Donald Trump: Ali came back. He was totally unique. He was a unique man. Maybe Mike will come back. I think Mike probably will be the champion again but you have some young fighters coming up, heavyweight fighters like Llenox Lewis who is absolutely phenomenal.12:55Charlie Rose: Do you think Holyfield’s going to lose.12:57Donald Trump: I think Holyfield .. I’m not sure if he’s going tolose now but I think the next champion’s going to be Llenox Lewis.13:03Charlie Rose: He sure did a number on —13:04Donald Trump: I know. He was incredible.13:07Charlie Rose: — in London.13:09Donald Trump: He knocked out –13:10Charlie Rose: First round, wasn’t it?13:12Donald Trump: Second round.13:13Charlie Rose: Or second round.13:15Donald Trump: This gentleman went 18 or 20 rounds with Mike.13:17Charlie Rose: But that was his claim to fame, that he survivedbeing in the ring with Tyson.13:20Donald Trump: Llenox Lewis is probably the real thing. He could be the first real thing since Mike. It will be interesting.He’s younger. He’s this and that.13:27Charlie Rose: What is your fascination? Are you an athlete?13:31Donald Trump: I am pretty much of an athlete.13:33Charlie Rose: A scratch golfer or close —13:34Donald Trump: Scratch golfer.13:35Charlie Rose: You mean like you do par 72, 73?13:37Donald Trump: Yeah.13:39Charlie Rose: On good courses?13:40Donald Trump: On good courses.13:42Charlie Rose: Up against good players?13:43Donald Trump: Up against good players.13:45Charlie Rose: For money or not for money?13:46Donald Trump: I like playing for money because it gives you an interest. It really does. Golf was something that really helped me through a period. When I was when I was really – There’s a point at which you can’t push. You have to sit back and wait and see how the chips are falling.13:58Charlie Rose: Duri
Data analysisOn the other hands https://www.economist.com/news/science-and-technology/21672076-honest-disagreement-about-methods-may-explain-irreproducible-results-other
It sounds like an easy question for any half-competent scientist to answer. Do dark-skinned footballers get given red cards more often than light-skinned ones? But, as Raphael Silberzahn of IESE, a Spanish business school, and Eric Uhlmann of INSEAD, an international one (he works in the branch in Singapore), illustrate in this week’s Nature, it is not. The answer depends on whom you ask, and the methods they use.
Dr Silberzahn and Dr Uhlmann sought their answers from 29 research teams. They gave their volunteers the same wodge of data (covering 2,000 male footballers for a single season in the top divisions of the leagues of England, France, Germany and Spain) and waited to see what would come back.
The consensus was that dark-skinned players were about 1.3 times more likely to be sent off than were their light-skinned confrères. But there was a lot of variation. Nine of the research teams found no significant relationship between a player’s skin colour and the likelihood of his receiving a red card. Of the 20 that did find a difference, two groups reported that dark-skinned players were less, rather than more, likely to receive red cards than their paler counterparts (only 89% as likely, to be precise). At the other extreme, another group claimed that dark-skinned players were nearly three times as likely to be sent off.
Dr Uhlmann and Dr Silberzahn are less interested in football than in the way science works. Their study may shed light on a problem that has quite a few scientists worried: the difficulty of reproducing many results published in journals.
Fraud, unconscious bias and the cherry-picking of data have all been blamed at one time or another—and all, no doubt, contribute. But Dr Uhlmann’s and Dr Silberzahn’s work offers another explanation: that even scrupulously honest scientists may disagree about how best to attack a data set. Their 29 volunteer teams used a variety of statistical models (“everything from Bayesian clustering to logistic regression and linear modelling”, since you ask) and made different decisions about which variables within the data set were deemed relevant. (Should a player’s playing position on the field be taken into account? Or the country he was playing in?) It was these decisions, the authors reckon, that explain why different teams came up with different results.
How to get around this is a puzzle. But when important questions are being considered—when science is informing government decisions, for instance—asking several different researchers to do the analysis, and then comparing their results, is probably a good idea.
We are grateful to The Washington Post, The New York Times, Time magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. … It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the world is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.
Purported remarks at a Bilderberg Group meeting in Baden-Baden, Germany in June 1991, as quoted in Programming, Pitfalls and Puppy-Dog Tales (1993) by Gyeorgos C. Hatonn, p. 65 and various nationalist tracts. The ultimate source for the quotation (i.e. the person who passed it on to the public) is never identified.
Honest disagreement about methods may explain irreproducible results
Print edition | Science and technology
Oct 10th 2015
Michelle Simmons
sandel http://www.justiceharvard.org/
Jordan Peterson rules http://highexistence.com/jordan-peterson-rules-living/
David Holmgren explains how you can change the world with permaculture
David Holmgren tells Robyn Rosenfeldt, editor of Pip Magazine how we can use permaculture to change the world. Pip Magazine is a showcase of all the great …
Peter Thiel: ‘My own answer to the contrarian question is that most people think the future of the world will be defined by globalization, but the truth is that technology matters more. Without technological change, if China doubles its energy production over the next two decades, it will also double its air pollution. If every one of India’s hundreds of millions of households were to live the way Americans already do— using only today’s tools— the result would be environmentally catastrophic. Spreading old ways to create wealth around the world will result in devastation, not riches. In a world of scarce resources, globalization without new technology is unsustainable.’
Stop Coddling the Super-Rich
By WARREN E. BUFFETT AUG. 14, 2011
Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
The second approach balances the system by levelling up: making interest taxable on the same basis as shareholders’ profits. This would hugely expand the tax base, allowing a drop in the headline tax rate. Robert Pozen of Harvard Business School reckons that if firms could only deduct two-thirds of their interest costs, the headline rate of corporate tax in America could be cut from 35% to 25% while keeping tax revenues stable. Using his figures, were interest-deductibility to end completely, the tax rate could fall to about 15%.
A neutral tax system would also lead to more efficient choices by savers and lenders. Today 60% of bank lending in rich countries is for mortgages. Without a tax break, people would borrow less to buy houses and banks would lend less against property. Investment in new ideas and businesses that enhance productivity would become relatively more attractive, in turn boosting economic growth.
Removing the advantages that debt enjoys would also lead to a fairer system. Relief on mortgage payments is a subsidy that flows to people who need it least: studies show that the richest 20% of American households by income gain the most. Mortgages would become costlier. But new instruments would emerge to allow individuals to bridge the gap between current savings and future income that debt alone now closes—for example, shared-equity mortgages that divide the gains and losses from house-price movements between banks and homeowners.
“The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” and follow that statement with a call for “a graduated inheritance tax on big fortunes … increasing rapidly in amount with the size of the estate.”
Economist’s View: Paul Krugman: America’s Taxation Tradition
economistsview.typepad.com
“Confiscatory taxation” was an “American invention”: America’s Taxation Tradition, by Paul Krugman, Commentary, NY Times: …Some conservatives argue …
The great distortion | The Economist
www.economist.com
Tax-free debt The great distortion Subsidies that make borrowing irresistible need to be phased out May 16th 2015 | From the print edition
Nick Hanauer
An economic arrangement that pays a Wall Street worker tens of millions of dollars per year to do high-frequency trading and pays just tens of thousands to workers who grow or serve our food, build our homes, educate our children, or risk their lives to protect us isn’t an expression of the true value or economic necessity of these jobs. It simply reflects a difference in bargaining power and status.
A Wealthy Capitalist on Why Money Doesn’t Trickle Down …
billmoyers.com
This post first appeared at YES! Magazine. A McDonalds in New York’s Financial District. (Credit: Charina Nadura/Moyers & Company) The fundamental law of capitalism …
outrageousness of the tax loophole that allows hedge-fund and private-equity managers to pay 15% “capital gains” taxes while you and I pay much-higher “ordinary income” rates.
This loophole, which some think is one reason GOP front-runner Mitt Romney is scared to release his tax returns, is absurd.
To be clear:
There is no theoretical justification for it.
None.
The fact that the loophole exists is merely a function of the enormous power the financial industry has over Washington.
CRAMER IS RIGHT: The Hedge-Fund Tax Loophole Is Outrageous
www.businessinsider.com
No wonder Romney’s terrified of releasing his tax returns.
This translates into a huge savings for the fund managers. If their earnings were taxed as normal income they would pay a 39.6 percent tax rate, compared to just a 20 percent capital gains tax rate. For a successful manager earning $10 million, the savings come to $1,960,000. If they earned $100 million, the savings would be equal to $19,600,000.
Charles Murray | Peter Thiel: College Education is a Disaster
Peter Andreas Thiel is an American entrepreneur, political activist, and author. He was ranked No. 4 on the Forbes Midas List of 2014, with a net worth of $2.2 …
Gender
romer mirror salaries
The type of number that often surfaces in discussions about gender equality:
77%–the overall ratio at the Bank of women’s wages to men’s
The surprising number from a new working paper by Jishnu Das, Clement Jobert, (both from DECRG) and Sander Florian Tordoir (from HR):
96%–the ratio of women’s wages to men’s among staff who entered the Bank at grade GF and have worked here for 15 years
http://wb-ce.org/
On Economics and Management
wb-ce.org
This Mirror Site (updated) (29 May 2017) This is a mirror of a blog that I have been updating periodically to communicate with World Bank insiders.
principles- hedge funders, red cross, fbi best truth
The white stripes. Meg’s drumming skills. Jack downplayed criticisms of her style, insisting:
“I never thought ‘God, I wish Neil Peart was in this band.’ It’s kind of funny: When people critique hip hop, they’re scared to open up, for fear of being called racist. But they’re not scared to open up on female musicians, out of pure sexism. Meg is the best part of this band. It never would have worked with anybody else, because it would have been too complicated… It was my doorway to playing the blues.”[7]
It’s admirable that Americans’ first instinct when disaster occurs is to open their wallets and volunteer their time. Since this has never been a nation that relies wholly on government to take care of those in need, citizens’ first impulse is to pitch in, whatever their politics or faith.
As the first images of suffering emerged from Houston, the flow of cash, food, clothing and rescue equipment into Texas seemed to rise in tandem with the floodwaters. Yet it’s inevitable that not all this largess will reach Harvey’s victims, or be well spent. For that reason, it is important for Americans to be as discerning with their money as they are philanthropic, avoiding scams and asking for greater accountability from trusted charities like the American Red Cross.
The Red Cross is the flagship of charitable institutions. It is also a master of promotion. After every disaster, its ads, celebrity testimonials and distinctive logo are everywhere, beseeching Americans to donate blood and money. This week Barack Obama became the Red Cross’s latest Twitter pitchman, urging Americans to make a $10 donation by texting “HARVEY.” During President Trump’s televised update on the response in Texas on Tuesday, a Red Cross representative sat front and center. Corporations find donations to the Red Cross a ready way to demonstrate they care: The organization has already raised millions from JPMorgan, Exxon Mobil, Chevron, Dow Chemical and others for its Harvey efforts.
This is all to the good, assuming the money flows to the right places. But after years of media reports documenting the Red Cross’s disaster relief failures — including after the Sept. 11, 2001, terrorist attacks, Hurricane Katrina, Hurricane Sandy and the Haiti earthquake — some Americans instead are giving to smaller, local charities with a track record in Texas.
A 2015 investigation by ProPublica and NPR documented the Red Cross’s glaring failure to account for how it spent the $488 million it raised in the aftermath of the Haiti earthquake in 2010, including such basics as how many people were assisted and how much money was spent on overhead.
In the aftermath of Hurricanes Sandy and Isaac, Red Cross officials in Washington “compounded the charity’s inability to provide relief by ‘diverting assets for public relations purposes,’” ProPublica and NPR reported in 2014, citing an internal Red Cross report. During Isaac, a Red Cross relief truck driver named Jim Dunham described how supervisors ordered trucks usually laden with aid to drive around empty, for appearance’s sake. Mr. Dunham characterized the Red Cross’s relief effort as “worse than the storm.” During Hurricanes Katrina and Rita in 2005, the organization was plagued by delays in distributing aid, amid profound disorganization on the ground.
The Red Cross is working to provide shelter and other aid in Texas; it is too early to gauge how well it is doing. The Red Cross is not, however, saying what specific steps it has taken to make sure that this time around donors can be certain that a vast majority of their contributions will go to the people whose plight moved them to give.
In response to multiple questions on Tuesday, including about what new accountability measures it has put in place, it issued only a brief statement that it was not “seeing any backlash” from donors.
Despite the Red Cross’s enormous size and revenues ($2.7 billion in 2015), most of the disasters it responds to are relatively small, like single-structure fires. Its record on large-scale operations is spotty, and given the enormous amount it collects from Americans, the scope of its ambitions and the fact that a chunk of its budget comes from government agencies, there has been less accountability than Americans might expect emanating from its grand marble headquarters in Washington. In its most recent assessment, Charity Navigator, a nonprofit organization that evaluates charities based on their Internal Revenue Service filings, gives Red Cross three of four possible stars based on its 2015 filings, but only two stars for financial performance.
Everyone who responds to a disaster learns invaluable lessons that can or at least should be carried forward to the next one. Emergency crews fine-tune their operations; governments reassess funding priorities; home and business owners better protect their property. So it should be for charities, too. Groups like the Red Cross are stewards not only of enormous budgets, but of a more precious commodity: Americans’ willingness to give.
Scott Thornbury
‘The numbers speak for themselves: the IELTS test, for example, was taken by nearly 3 million candidates in 2016 – at around $200 a go, this is big business. It is also a nice little earner for language schools, with the result that many teachers feel that they are now simply in the business of test preparation.
‘Teaching-for-the-test’ has also seen the rise of standards-based, or competency-based teaching (also known as mastery learning), where the syllabus consists of an inventory of bite-sized ‘competencies’, each one taught and tested in isolation, on the assumption that all these bits will magically coalesce into a whole. (These bite-sized learning chunks also lend themselves to [teacher-less] online delivery). This has led to a culture of testing that is the despair of many educationalists, Diane Ravitch (2010, p. 16) being one of the more vocal: ‘How did testing and accountability become the main levers of school reform? … What was once an effort to improve the quality of education turned into an accounting strategy’. And she adds, ‘Tests should follow the curriculum. They should not replace it or precede it.’
Will the tide turn? Will teaching and learning reassert their rightful place in the curriculum? Don’t hold your breath.’
Britain, America’s putative best friend in Europe, was already reading the president’s telegrams and much more. So were the other major European powers, to whatever extent they could manage. Britain’s military code-breaking operation, Room 40, helped usher the United States into the war, without American leaders having any idea of its precise role. The unit made copies of every message that went over America’s trans-Atlantic telegraph cable by tapping into all traffic that passed through a relay station at Porthcurno, on the western edge of England, before they travelled across the ocean.
In January 1917 Room 40 intercepted a coded telegram sent by Arthur Zimmermann, the German foreign secretary, promising support for Mexico to take three American states in exchange for allying with Germany against the United States. In a telling indication of how little was thought of America’s intelligence prowess, Germany had trusted that a hostile telegram sent over America’s own communications lines would be secure; it was indeed safe from American eyes but not from Room 40. British officials handed the “Zimmermann telegram” to the American government, inventing a cover story about how they had got it. Its publication caused a national furore, and the United States was finally jolted out of its neutrality and into the Great War.
The report, called Finding Shelter, cites statistics showing that 85% of prime London property purchases in 2012 were made with overseas money. Estate agent Savills found that last year £7bn of international money was spent on “high-end” London homes, with just 20% of that spent by UK citizens. Two-thirds of homes bought by people from overseas were not purchased for owner-occupation but as investments.
Civitas says the problem is not confined to the top end of the market and that overseas buyers are also acquiring less expensive newbuild homes. It says that over the past two years only 27% of new homes in central London went to UK buyers, while more than half were sold to residents of Singapore, Hong Kong, China, Malaysia and Russia.
“The UK property market is being used as an investment vehicle by the global super-rich – and increasingly the simply well-to-do,” the report says. “The inflationary impact of this extra cash is good news for property owners – until they want to trade up the housing ladder.
“It is good news for estate agents on commission, who report with glee every pulse and surge in the market. But it is not good for those already being priced out at the bottom.”
Overseas investment, it adds, is also “distorting housebuilding priorities, with developers disproportionately attracted to high-value developments while ignoring the undersupply at lower levels of the market.”
Oligarchs including Abramovich and former Yukos Oil vice-president Konstantin Kagalovsky have bought London properties, with Belgravia, Knightsbridge, Kensington and Chelsea their favourite hunting grounds.
Stop rich overseas investors from buying up UK homes …
www.theguardian.com
Radical plans to stop rich overseas residents who live outside the EU buying British houses – as well as tight restrictions on them acquiring “newbuild” properties …
UK’s 60-year property boom: House prices ‘have risen more than 100 times’ since Coronation
By HARRY GLASS
Climbing onto the property ladder required just £1,520 that year.
And in the Silver Jubilee in 1977, the average price was still only £9,737 – today’s £160,000 average is 16 times higher than that.
Terraced housing: Property has proved a sound long-term investment according to these figures
Terraced housing: Property has proved a sound long-term investment according to these figures
At a time when the nation is gearing up for a weekend of street parties and celebration, research from Hamptons International also found that the average price of a home in London has risen 134-fold since 1952 and 21-fold since 1977.
In 1952, the average price of a London home was £2,650, and in 1977 it had risen to £16,493, compared with the average price of £354,300 today.
‘This profit is inflated even more in London, where price growth represents £16 a day over a 60 year period, representing a rather healthy return on investment.’
Soaring: Over the 60 years the Queen has reigned, house prices have rocketed, but most of that has come since 1980. This chart plots Nationwide's figures of how they have risen.
Soaring: Over the 60 years the Queen has reigned, house prices have rocketed, but most of that has come since 1980. This chart plots Nationwide’s figures of how they have risen.
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UK Housing Market Stats and Graphs | Economics Help
www.economicshelp.org
A look at the main UK housing market data. House prices; Affordability of housing; Interest rates; Supply of housing; House price inflation. Nationwide data
Education spending: how does the UK compare? | News | The …
www.theguardian.com
Students in Madrid attend a demonstration against government cuts to education spending in Madrid. Protests have taken place across Europe after similar measures.
UK Central Government and Local Authority Spending in 2016 – Charts
www.ukpublicspending.co.uk
Table of Public Spending in the United Kingdom by function , including Central Government and Local Authorities, from HM Treasury data.
In 2016, the three biggest government programs are health care (i.e, the NHS), state pensions, and welfare.
UK government expenditure 2016 – Pie Charts Tables
www.ukpublicspending.co.uk
Charts and Tables of Government Expenditure in the United Kingdom, including Central Government and Local Authorities, from HM Treasury data..
On Friday, a team of researchers led by Stanford economist Raj Chetty released a paper on how growing up in poverty affects boys and girls differently. Their core …
Reform taxes: not to punish the rich but to raise money more efficiently and progressively. In poorer economies, where tax avoidance is rife, the focus should be on lower rates and better enforcement. In rich ones the main gains should come from eliminating deductions that particularly benefit the wealthy (such as America’s mortgage-interest deduction); narrowing the gap between tax rates on wages and capital income; and relying more on efficient taxes that are paid disproportionately by the rich, such as some property taxes.
http://www.economist.com/node/21564556
* In two columns published by the New York Times in 2012, James B. Stewart, a Pulitzer Prize-winning professor of journalism at Columbia University,[46] wrote:
What’s abundantly clear, both from Mr. Romney’s 2010 returns and from the returns of the top 400, is that at the very pinnacle of taxpayers, the United States has a regressive tax system.[47]
[W]hat I’d already discovered about the ultrarich also holds true for people who are far from the million-dollar bracket: our tax code isn’t progressive. It’s not even flat. For people like me — and I assume there are millions of us — it’s regressive. For many people, the more you make, the lower the rate you pay.[48]
Observe the Buffett Rule. No household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay. As Warren Buffett has pointed out, his effective tax rate is lower than his secretary’s. No household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay. This rule will be achieved as part of an overall reform that increases the progressivity of the tax code.[71]
http://www.justfacts.com/taxes.asp
Taxes – Just Facts
www.justfacts.com
Comprehensive and meticulously documented facts about taxes. Learn about the various types of taxes, the distribution of the tax burden, economic effects, hidden …
True Progressivism | The Economist
www.economist.com
Inequality and the world economy True Progressivism A new form of radical centrist politics is needed to tackle inequality without hurting economic growth
The claim that only rich people pay taxes is a zombie lie — something that keeps coming back no matter how many times it’s killed by evidence.
So, let’s try another shot to the head.
Yes, high-income people pay the bulk of the federal income tax. But that’s not the only tax! And while the income tax is quite progressive, the payroll tax — the other major federal tax — isn’t; and state and local taxes are strongly regressive.
The claim that only rich people pay taxes is a zombie lie — something that keeps coming back no matter how many times it’s killed by evidence.
Both the soaring cost of a college education and the shortcomings of America’s schools system played a part. In the 1970s a year’s tuition at a public university cost 4% of a typical household’s annual income; at a private university it took about 20%. By 2009 tuition fees had jumped to over 10% of median income for a public university and around 45% for a private one. Even with the surge in subsidised student loans, many potential graduates were priced out or dropped out early without a degree.
In primary and secondary schools the problems are partly financial but mainly organisational. America spends a lot on its schools, but that funding comes largely from state and local governments. Richer neighbourhoods can afford better schools, which reinforces the growing geographical gap between different social groups. According to the OECD, America is one of only three advanced countries which spends less on the education of poorer children than richer ones. And unlike most OECD countries, America does not put better teachers in poorly performing schools, where teachers’ unions often obstruct reform efforts.
Tax and benefit changes have also had an effect, but a subtle one. Most Americans below the median income level pay no federal income tax (and, thanks to the Earned Income Tax Credit, the working poor get substantial rebates). Poorer Americans are hit disproportionately by payroll taxes, which are regressive and have grown in importance. But the biggest hit is on the benefit side. Although America’s social spending has rocketed (it is now worth some 16% of GDP), it is becoming less redistributive as Medicare, the universal health plan for the elderly, swallows up ever more (see article). According to the Congressional Budget Office, in 1979 over half of all federal social spending went to the poorest fifth of households. Now it is only 36%.
A disproportionate, and growing, chunk of the very rich, however, have made their money in Wall Street rather than Main Street. An analysis by Mr Kaplan and Joshua Rauh, now of Stanford University, shows that the share of investment bankers among the top 0.1% is larger than the share of senior executives. America’s top 25 hedge-fund managers make more than all the CEOs of the S&P 500 combined. The financial industry’s outsize pay partly reflects its growth. For good or ill, finance’s share of American GDP soared between 1980 and 2007. Capital markets have globalised faster and more comprehensively than any other part of the economy, enabling hedge funds and other asset managers to deploy ever bigger pools of funds. According to Thomas Philippon of New York University and Ariell Reshef of the University of Virginia, financiers also have higher skill levels than they did a generation ago.
Financiers have also been among the biggest winners from changes to America’s tax code. The country’s top rate of income tax has been repeatedly slashed since 1980, from 70% to 35%. By itself, that reduction has not greatly affected average tax burdens at the top (since there have been enough loopholes to ensure that few people paid the top rate). America’s richest have gained more from reductions in the capital-gains tax, which is now only 15%. Private-equity moguls have done particularly well, since the tax code allows them to classify their income as capital gains.
since the Supreme Court’s 2010 “Citizens United” decision lifted any restrictions on political spending by individuals or firms. That opened the way for the rise of “super-PACs”, privately funded organisations set up to influence election outcomes. These have now raised hundreds of millions of dollars. The sources of this money are highly concentrated: one analysis suggests that 80% of the total comes from fewer than 200 donors. America is still a long way from the first Gilded Age, when the robber barons openly bought unelected senators’ loyalty by giving them shares in their companies. But it is hard to believe that this surge of cash from the richest will have no impact at all.
http://www.economist.com/node/21564418
The key point is that if wealth is concentrated (as it is increasingly becoming) and if the return on capital is high enough, then the wealth becomes self-perpetuating. Another way of looking at the data, provided by Mr Piketty, is to see what fraction of each birth cohort will receive a sum in the form of inherited wealth that is larger than the lifetime income earned by the bottom 50% of the population. Around 10% of those born in 1830 (who inherited in the late 19th century) acheived this feat. Only 2% of those born in 1910 (whose parents thus died in the 1950s) did so. The ratio is climbing again; Mr Piketty estimates that 12% of those born in 1970 may cross this threshold.
WHILE Downton Abbey may be a popular TV series, not many people see it as a model for how society should function. The age of aristocracy, along with …
The rich and the rest | The Economist
www.economist.com
THE HAMPTONS, A string of small towns on the south shore of Long Island, have long been a playground for America’s affluent. Nowadays the merely rich are …
Paul Krugman says poorest 40 percent of Texans pay more in Texas than national average
By W. Gardner Selby on Monday, March 14th, 2011 at 6:00 a.m.
New York Times columnist Paul Krugman sees Texas as a model for how things might be going wrong across the nation and in his latest blast, posted online Feb. 27, he pokes at the state’s reputedly low taxes.
Texas taxes “are low, at least if you’re in the upper part of the income distribution,” Krugman writes. He adds, parenthetically, that “taxes on the bottom 40 percent of the population are actually above the national average.”
Paul Krugman says poorest 40 percent of Texans pay more in …
www.politifact.com
Paul Krugman says poorest 40 percent of Texans pay more in Texas than national average. By W. Gardner Selby on Monday, March 14th, 2011 at 6:00 a.m.
eliminate “tax relief benefiting millions of middle-class families” by scrapping the mortgage interest deduction.
Please. If you must defend a tax break, find a different one. The mortgage interest deduction (MID) is truly one of the worst, most pernicious features of our income tax code. Not only does it encourage excessive investment in homes, it encourages doing it with debt. The MID didn’t cause our crisis—after all, it’s been around since 1986 when the deductibility of almost all other types of interest was eliminated. But it is symptomatic of our fondness for endless subsidies and distortions to promote home ownership, which did ultimately produce our crisis.
The MID is almost impossible to defend on distributional grounds. It only goes to people whose income is high enough to merit itemising deductions, and its value rises with their tax bracket. A study for the Urban Institute and Tax Policy Center by Eric Toder, Margery Austin Turner, Katherine Lim and Liza Getsinger estimates that its elimination would cost the average household an average of $559 more per year in tax. But the impact is highly progressive: for bottom quintile the average increase would be just $2 or 0.01% of after tax income; for the middle quintile, $215 or 0.49% of income; and for those in the top quintile minus the very richest 1%, it would average $1,723 to $4,234, or 1.59% to 1.63%. Only for the richest 1% does its relative importance decline.
Redistribution in Britain: Why Britain is not so unequal …
www.economist.com
A new paper from the Institute of Fiscal Studies presents some interesting conclusions about Britain’s tax and benefits system
More than 70 percent of tax filers don’t get any benefit from the deduction at all. O.K., many of them are renters. But even among homeowners, only about half claim the deduction. And for the 37 million individuals and couples who do, the rewards, at least on average, are surprisingly modest — just under $2,000 per return. (Figure it like this: the median home, as computed by the Bureau of the Census in 2003, is valued at $140,000. If you finance 80 percent of it with a 6 percent mortgage, your interest bill is $6,720 a year. A taxpayer in the 25 percent bracket would save one quarter, or $1,680.)
But cumulatively, the deduction is a big deal. This year, it is expected to cost the Treasury $76 billion. And the rewards are greatly skewed in favor of the moderately to the conspicuously rich. On a million-dollar mortgage (the people with those really need help, right?), the tax benefit is worth approximately $21,000 a year. And according to the Joint Committee on Taxation, a little over half of the benefit is taken by just 12 percent of taxpayers, or those with incomes of $100,000 or more.
The tax code currently helps (in no particular order) veterans, the disabled and Americans living abroad; it gives a break to science research, oil and gas developers, alcohol-fuel blenders and biodiesel blenders; it helps agriculture and dairy farms; it helps Blue Cross and Blue Shield; it helps film companies and railroads; it helps students and teachers; it assists New Yorkers and District of Columbians and Native Americans and many, many others. The interest deduction is one of the biggest breaks, right behind health-care premiums paid by corporations, which are tax-free to the employees. A slightly different type of exemption protects corporate retirement plans. In all, such foregone tax collections, or tax expenditures, amount to more than half of the income tax that the Treasury does collect.
In the panel’s view, though many or most of the deductions help some worthy individual or group, they come at a large total cost to everyone else. And so, last November, the panel did what had been asked of it: it proposed a simplified tax code with fewer deductions and, in return, lower individual and corporate rates and an end to the A.M.T. The proposal included a thunderbolt: the U.S. should scrap the mortgage-interest deduction and replace it with a smaller tax credit, available to every homeowner.
Under the panel’s scheme, taxpayers would receive a credit equal to 15 percent of their mortgage interest. However, the credit would be capped at a level at which the owner of an above-average-sized home could take full advantage. The maximum break would be several thousand dollars a year, and only principal residences — not ski condos — would qualify.
The panel’s courage was met with predictable howls of protest. Real-estate agents screamed that ending the sacred interest deduction would set off a slump in the housing market — a pillar in an otherwise weak economy and so forth.Donald Trump, who knows everything, said that eliminating the deduction would result in “a total catastrophe” for the U.S. economy. “It will lead to a major recession, if not a depression.”
The panel considered this. It also debated the uniqueness of the deduction — a tax provision that has become embedded in mainstream culture — but in the end, according to James Poterba, an economist from the Massachusetts Institute of Technology, “We wanted to wipe the slate clean.” The package, he and the others surely hoped, would be judged on its overall equity, not on a provision-by-provision basis.
Since 1986, there have been some 15,000 amendments to the tax code, always to help some interest or other but each time distorting free-market incentives. To an economist, when someone invests for profit, that’s good. When they invest to take advantage of a tax break, that’s bad. “It’s a standard canon of economics,” Poterba says. It means that capital is being diverted from its best use, and the economy suffers as a result.
You can think of the mortgage deduction as a distortion that has helped potential home sellers — not buyers or owners — and this is why the housing industry is so agitated. Research suggests that without the deduction, people would still buy the houses they do now; they would just cost a little less. In effect, the market would adjust downward to reflect some of the decrease in buyers’ purchasing power. Though no one knows, a plausible estimate is that prices at the upper end of the housing spectrum would fall by 10 to 15 percent. Prices of less expensive houses would probably rise a bit, because people who don’t get a break now would get the tax credit and thus could spend a little more.
The world’s top hedge fund managers are getting paid like it’s doomsday 2008 again
www.businessinsider.com
The highest-earning manager took home $1.3 billion.
Not all income, however, is taxed at the same marginal rates. Investment income from capital gains has generally been taxed at a lower rate than income from labor. Dividend income used to be taxed at the same marginal rate as labor income but the Jobs and Growth Act of 2003 also taxes dividends at the lower capital gains rate. While the top marginal rate on labor income in 2003 was 35%, the top rate on capital gains and dividend income was only 15%. Given that the vast majority of investment income is earned by wealthy taxpayers, the lower rates on investment income has important implications for the progressivity of the federal income tax.
http://www.eoearth.org/view/article/156426/
Taxation in the United States – Encyclopedia of Earth
www.eoearth.org
Introduction Taxes are complicated. The U.S. federal tax code contains over three million words about 6,000 pages. A casual browsing of the tax codes
Is the French tax-benefit system really redistributive? – OFCE
www.ofce.sciences-po.fr
By Henri Sterdyniak France has set up benefits such as RSA income support, PPE in-work negative income tax, CMU universal health care, the minimum pension, housing …
The highly regressive nature of indirect taxes would make the whole tax system regressive: the poorest pay more than the rich. According to the figures from Landais, Saez and Piketty (2011), indirect taxation is definitely regressive (15% of the disposable income of the poorest, and 10% for the richest), but the gap is only 5%. According to the INSEE [7], the weight of indirect taxes in disposable income is 22% for the poorest, 16% in the middle income range and 10% for the richest. This difference comes from the structure of consumption (the poorest consume relatively more tobacco and petroleum products), and especially the savings rate, which increases as households earn more. In fact, the difference is undoubtedly overstated in an inter-temporal perspective: some households will consume today’s savings tomorrow, so it is then that they will be hit by indirect taxation. In fact, the Crédoc study heavily overestimates the weight of indirect taxes by using an extravagant estimate of the household savings rate [8]: the overall French household savings rate is -26.5%; only decile D10 (the richest 10%) have a positive savings rate; decile D1 has a negative savings rate of -110%, that is to say, it consumes 2.1 times its income. The poorest decile is thus hit hard by the burden of indirect taxes. But how likely is this savings rate?
National tax-benefit systems are complex and different. Comparisons between them need to be made with caution and rigour. To judge how redistributive the French system actually is, it is still more relevant to use the work of the INSEE, the OECD or Euromod than this (too) unusual study.
The first income decile spends 4.3% of its income on these taxes; the last decile just 1.3%
However, federal income taxes account for just 27% of total government revenue collected in America. And the remaining three-quarters of the tax pie is quite regressive. The middle class may not pay much federal income tax. But they sure pay the payroll tax for Social Security and Medicare, which the rich can mostly skip out on since it only applies to the first $110,000 of wage income. (The Medicare levy, unlike its bigger Social Security counterpart, is not capped). The masses also pay a much greater share of their income in sales and excise taxes than the rich do, because they cannot afford to save.
The fact of the matter is that the American tax code as a whole is almost perfectly flat. The bottom 20% of earners make 3% of the income and pay 2% of the taxes; the middle 20% make 11% and pay 10%; and the top 1% make 21% and pay 22%. Steve Forbes couldn’t have drawn it up any better.
Now to your killer question. “What incentive does anyone have to work harder if they only get to keep 25% of the fruits of their labor?”When that 25% is about five times the median income, a substantial incentive I would say. But the question is meaningless. Because when you are beyond the € 1 million per year income, your decisions are not about working more – they are about making others work more, at very little additional personal involvement on your part. I say this without the least bitterness or prejudice, as an obvious fact. And then the factors of the decision are entirely another kettle of fish – any positive result will be incentive enough.
Now, a terminological remark. How is it that people on your side of the intellectual divide always harp about the well-to-do’s “hard-earned money” and “hard work”, thus implying that the hoi polloi only have to pluck banknotes from the trees? I’d be glad to share with you some recent reports on occupational diseases. Even concurring that much wealth is somehow deserved, you only have to look around to spot parasitism on a macroscopic scale.
So please enough with that characterisation, which sounds too defensive to be sincere.”
sttkhoff, the really galling thing to me as a small businessperson is that taxes tend to maximize at $110K, which is the amount that many small business owners earn. After you get past $110K the employer/employer combo rate for Social Security goes away and that 12% of taxes stops. The person who earns $200K from a small business is taxed at a lower marginal rate than the person who earns $100K. I think a lot of small business people get “stuck” in the $110K range and never get past it because the taxes don’t allow them capital to grow the business any further.
Langostain reply to rstrukhoffJul 21st 2012, 02:59DuckdodgerJul 24th 2012, 17:33
How about an article on “Looking at all the tax breaks” instead? An assessment of the cost of subsidies and loopholes for special interests in America that are not typically available in other countries might provide the reason why the USA is breaking its budget. What is the total tax loss from carried interest that the hedge fund moguls made their lackeys in congress pass? How much does mortgage interest deductibility cost? Wouldn’t America be better off if homeowners had an incentive to pay off their mortgage because the interest could not be claimed because it isn’t paid for the purpose of earning income. What’s the cost of all the agricultural tax subsidy programs, and specifically corn for ethanol that robs food production to feed automobiles? Nobody ever wants to talk about the problem with the clear facts in front of them … America might not have a spending problem or an income tax problem, it might simply have a deduction/exemption/tax credit problem.
Taxes and the rich: Looking at all the taxes | The Economist
www.economist.com
MY COLLEAGUE suggests that America’s wealthy already pay at least their fair share of the cost for the public goods they depend on to prosper.
I think it’s pretty clear that VAT is generally regressive. More of an issue is that, linked to reduced government spending, it is a pretty direct way to reduce the …
The council tax system is grossly unfair for single occupancies. If you were to table a typical council tax charge for a band D property based on the number of adults …
the site is not my own work, it’s a list of articles and links. Please type a word in the search, such as Libor, Krugman, gdp, convergence, bilderberg, insider trading, to access the info.
This bit is my work. Insider trading-god’s work. (outline)
(the title refers to the claim by Lloyd Blankfein that he’s “doing god’s work”)
‘Later he wrote me a letter. It was quite unlike him. Its tone was, if I can try a crazy sort of description, as if he were roaring with laughter while he was telling me about an accident in which his family had been killed. The letter said that he had made a bet with a friend that he could start a riot or demonstration in any highly educated audience (such as a university) by the simple means of describing how the banking system worked, or a mortgage, or an insurance company, or even reading them portions out of that old socialist book, The Ragged Trousered Philanthropists. It would have to be a middle-class audience. His point was that the education of middle-class people was always a blank about the mechanics of their own country – increasingly so under this government. A working-class audience would say something like: Teach your grandmother to suck eggs. The educated audience would riot not because of their anger at suddenly exposed wrongs, but because of their anger at having been made fools of: this moment in such a person’s life was always explosive. Having made the bet he proved it, in Sussex. Essex, and Reading. Then he was charged with assaulting the police with violence and given five years. I went to see him. I couldn’t recognize him.’
The Nobel prize sometimes seems to go to economists who show something which seems fairly obvious already to the rest of the world, eg markets aren’t fully efficient. It seems to be that insider trading is ripe for this approach and a paper on it should get a big reward.
The only estimate we have of how much insider trading is going on comes from this paper.
The authors claim as many as 25 per cent of all M and A trades could be illegal. Looking wider, it’s impossible to say how much insider trading is going on, although Preet Bharara seems in little doubt.
“The scope of the insider trading problem generally, I think we’ve discovered, has been quite broad and quite deep. Fair to say that insider trading has been for a while, on Wall Street and elsewhere, rampant.”
But, as with tax havens, it’s impossible to know, as it’s secret and illegal so we only find out when the traders are caught. The OECD is finally making progress on tax havens. The initial push came largely from Richard Murphy, who assessed or estimated the size of the problem at 11 trillion dollars. So to take action over insider trading we have to assess the size of the problem.
Rather than try to estimate it with economic tools, we can use psychological tools. We will compile a questionnaire asking people to judge actions, eg receiving information from a friend, soliciting information, committing ‘victimless’ crimes where there is an extremely low risk of being caught. The results will show, I believe, that the perception and therefore the probability of the amount of insider trading is closer to 100 per cent than 25 per cent.
We also have social scientists such as Robert Jackall, who in Moral Mazes, showed that it is the logic of the situation which determines our actions rather than our moral code. We also have the study of politicians’ investment returns, the recent study on Scandinavian tax avoidance and the LIBOR scandal, where the expectation was that everyone would agree to bend the rules. We would also look at Paul Romer’s treatment of the argument that if everyone else is doing it, it must be ok.
We will then examine why the traders caught often come from a certain ethnic group rather than the white traders who are the vast majority of the big earners. The obvious answer would seem to be that they don’t have the right connections.
Our ‘solution’ is to legalize insider trading (hardly a new idea, I admit) but then to make it a business rather than an investment so that the tax would go from around 20 per cent to around 40 per cent. We would also ask for an amnesty for traders such as Zvi Goffer, Hafiz Muhammad Zubair Naseem, and Raj Rajaratnam, as the crimes they were convicted of would no longer be a crime. It may be that in return for our lobbying, these individuals could be encouraged to offer evidence of how widespread the problem actually is, to support this paper.
____________________________________
ok that’s my proposal. Here are the articles which support it (in my view). I think it’s clear where they’re from. If not, I’ll try to be more specific.
http://danariely.com/tag/behavioral-economics-2/
Neoclassical economics is built on very strong assumptions that, over time, have become “established facts.” Most famous among these are that all economic agents (consumers, companies, etc., are fully rational, and that the so-called invisible hand works to create market efficiency). To rational economists, these assumptions seem so basic, logical, and self-evident that they do not need any empirical scrutiny.
Building on these basic assumptions, rational economists make recommendations regarding the ideal way to design health insurance, retirement funds, and operating principles for financial institutions. This is, of course, the source of the basic belief in the wisdom of deregulation: if people always make the right decisions, and if the “invisible hand” and market forces always lead to efficiency, shouldn’t we just let go of any regulations and allow the financial markets to operate at their full potential?
On the other hand, scientists in fields ranging from chemistry to physics to psychology are trained to be suspicious of “established facts.” In these fields, assumptions and theories are tested empirically and repeatedly. In testing them, scientists have learned over and over that many ideas accepted as true can end up being wrong; this is the natural progression of science. Accordingly, nearly all scientists have a stronger belief in data than in their own theories. If empirical observation is incompatible with a model, the model must be trashed or amended, even if it is conceptually beautiful, logically appealing, or mathematically convenient.
Unfortunately, such healthy scientific skepticism and empiricism have not yet taken hold in rational economics, where initial assumptions about human nature have solidified into dogma. Blind faith in human rationality and the forces of the market would not be so bad if they were limited to a few university professors and the students taking their classes. The real problem, however, is that economists have been very successful in convincing the world, including politicians, businesspeople, and everyday Joes not only that economics has something important to say about how the world around us functions (which it does), but that economics is a sufficient explanation of everything around us (which it is not). In essence, the economic dogma is that once we take rational economics into account, nothing else is needed.
I believe that relying too heavily on our capacity for rationality when we design our policies and institutions, coupled with a belief in the completeness of economics, can lead us to expose ourselves to substantial risks.
Here’s one way of thinking about this. Imagine that you’re in charge of designing highways, and you plan them under the assumption that all people drive perfectly. What would such rational road designs look like? Certainly, there would be no paved margins on the side of the road. Why would we lay concrete and asphalt on a part of the road where no one is supposed to drive on? Second, we would not have cut lines on the side of the road that make a brrrrrr sound when you drive over them, because all people are expected to drive perfectly straight down the middle of the lane. We would also make the width of the lanes much closer to the width of the car, eliminate all speed limits, and fill traffic lanes to 100 percent of their capacity. There is no question that this would be a more rational way to build roads, but is this a system that you would like to drive in? Of course not.
When it comes to designing things in our physical world, we all understand how flawed we are and design the physical world around us accordingly. We realize that we can’t run very fast or far, so we invent cars and design public transportation. We understand our physical limitations, and we design steps, electric lights, heating, cooling, etc., to overcome these deficiencies. Sure, it would be nice to be able to run very fast, leap tall buildings in a single bound, see in the dark, and adjust to every temperature, but this is not how we are built. So we expend a lot of effort trying to take these limitations into account, and use technologies to overcome them.
What I find amazing is that when it comes to designing the mental and cognitive realm, we somehow assume that human beings are without bounds. We cling to the idea that we are fully rational beings, and that, like mental Supermen, we can figure out anything. Why are we so readily willing to admit to our physical limitations but are unwilling to take our cognitive limitations into account? To start with, our physical limitations stare us in the face all the time; but our cognitive limitations are not as obvious. A second reason is that we have a desire to see ourselves as perfectly capable — an impossibility in the physical domain. And perhaps a final reason why we don’t see our cognitive limitations is that maybe we have all bought into standard economics a little too much.
Don’t misunderstand me, I value standard economics and I think it provides important and useful insights into human endeavors. But I also think that it is incomplete, and that accepting all economic principles on faith is ill-advised and even dangerous. If we’re going to try to understand human behavior and use this knowledge to design the world around us—including institutions such as taxes, education systems, and financial markets—we need to use additional tools and other disciplines, including psychology, sociology, and philosophy. Rational economics is useful, but it offers just one type of input into our understanding of human behavior, and relying on it alone is unlikely to help us maximize our long-term welfare.
In the end, I do hope that the debate between standard and behavioral economics will not take the shape of an ideological battle. We would make little progress if the behavioral economists took the position that we have to throw standard economics—invisible hands, trickle-downs, and the rest of it—out with the bathwater. Likewise, it would be a shame if rational economists continue to ignore the accumulating data from research into human behavior and decision making. Instead, I think that we need to approach the big questions of society (such as how to create better educational systems, how to design tax systems, how to model retirement and health-care systems, and how to build a more robust stock market) with the dispassion of science; we should explore different hypotheses and possible mechanisms and submit them to rigorous empirical testing.
For instance, in my ideal world, before implementing any public policy—such as No Child Left Behind or a $130 billion tax rebate or a $700 billion bailout for Wall Street—we would first get a panel of experts from different fields to propose their best educated guess as to what approach would achieve the policy’s objectives. Next, instead of implementing the idea proposed by the most vocal or prestigious person in this group, we would conduct a pilot study of the different ideas. Maybe we could take a small state like Rhode Island (or other places interested in participating in such programs) and try a few different approaches for a year or two to see which one works best; we could then confidently adopt the best plan on a large scale. As in all experiments, the volunteering municipalities would end up with some conditions providing worse outcomes than others, but on the plus side there would also be those who would achieve better outcomes, and of course the real benefit of these experiments would be the long-term adoption of better programs for the whole country.
I realize that this is not an elegant solution because conducting rigorous experiments in public policy, in business, or even in our personal lives is not simple, nor will it provide simple answers to all of our problems. But given the complexity of life and the speed at which our world is changing, I don’t see any other way to truly learn the best ways to improve our human lot.
Three questions on Behavioral Economics
Jul10
1.) What is behavioral economics? How is it different from standard economics?
In general, both standard and behavioral economics are interested in the same questions and topics. The choices people make, the effects on incentives, the role of information etc. However, unlike standard economics, behavioral economics does not assume that people are rational. Instead, behavioral economists start by figuring out how people actually behave, often in a controlled lab environment in which we can understand behavior better, and use this as a starting point for building our understanding of human nature. As a consequence of this different starting point, behavioral economists usually come to different conclusions about the logic and efficacy of almost anything, ranging from mortgages to savings to healthcare in both the personal and business realms.
2.) Even if consumers make mistakes from time to time, wouldn’t the market fix these?
I always found the appeal to the market gods a bit odd. Why would the market fix mistakes instead of aggravating them? When the Chicago economists sometimes (reluctantly) admits that people make mistakes, they claim that people make different types of mistakes that will eventually cancel each other out in the market. Behavioral economics argues that, instead, people will often make the same mistake, and the individual mistakes can aggregate in the market. Let’s take the subprime mortgage crisis, which I think is a great example (but a very sad reality) of the market working to make the aggregation of mistakes worse. It is not as if some people made one kind of mistake and others made another kind. It was the fact that so many people made the same mistakes, and the market for these mistakes is what got us to where we are now.
3.) Isn’t behavioral economics a depressing view of human nature?
It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches!
Take the physical world for example. We build products that work with our physical limitations. Chairs, shoes, and cars are all designed to complement and enhance our physical capabilities. If we take some of the same lessons we’ve learned from working with our physical limitations and apply them to things that are affected by our cognitive limitations—insurance policies, retirement plans, and healthcare—we’ll be able to design more effective policies and tools, that are more useful in the world. This is the promise of behavioral economics – once we understand where we are weak or wrong we can try to fix it and build a better world.
Take again the sub-prime mortgage crisis. Imagine that we understood how difficult it is for people to calculate the correct amount of mortgage that they should take, and instead of creating a calculator that told us the maximum that we can borrow, it helped us figure out what we should be borrowing. I suspect that if we had this type of calculator (and if people used it) much of the sub-prime mortgage catastrophe could have been avoided. This of course is one idea to fix one problem, and there are many ways to think about how to improve our lives along many of the decisions we make every day. This is why I think that behavioral economics is so optimistic, useful, and important for our personal life and for society.
The Signal and the Noise: Why So Many Predictions Fail — but Some Don’t. by Nate Silver
The problem with the statistical approach, according to Silver, is that it is susceptible to identifying variables as significant by coincidence alone. This is because correlation does not necessarily imply causation, while a statistical model simply does not pick up on this. In the field of statistics, the misleading variables that are churned out as a result of this error are called false positives. A (once) famous false positive relating to the economy was the winner of the Super Bowl. As Silver explains, “from Super Bowl I in 1967 through Super Bowl XXXI in 1997, the stock market gained an average of 14 percent for the rest of the year when a team from the original National Football League (NFL) won the game. But it fell by almost 10 percent when a team from the original American Football League (AFL) won instead. Through 1997, this indicator had correctly ‘predicted’ the direction of the stock market in twenty-eight of thirty-one years. A standard test of statistical significance, if taken literally, would have implied that there was only about a 1-in-4,700,000 possibility that the relationship had emerged from chance alone” (loc. 3137).
As you might well imagine, breakdowns in prediction not only plague economic forecasting, they can also plague the economy itself. The housing and financial crash of 2008 is a good case in point. Silver outlines 4 key breakdowns in prediction that contributed to the crash and the length and depth of the resulting Great Recession.
To begin with, there was the housing bubble itself, which was caused by the overoptimistic belief that the price of real estate would continue to keep on rising. This despite clear evidence that the meteoric rise of housing prices experienced in the US on the run up to the crash (in conjunction with the record low savings [loc. 567]) had historically led to “results [that] had been uniformly disastrous” (loc. 571). Of course, it is difficult to listen to history when your pockets are being lined. As Silver observes, “prices had become untethered from supply and demand, as lenders, brokers, and the ratings agencies—all of whom profited in one way or another from every home sale—strove to keep the party going” (loc. 571).
“Standard & Poor’s, for instance, told investors that when it rated a particularly complex type of security known as a collateralized debt obligation… at AAA, there was only a 0.12 percent probability—about 1 chance in 850—that it would fail to pay out over the next five years… In fact, around 28 percent of the AAA-rated CDOs defaulted, according to S&P’s internal figures… This is just about as complete a failure as it is possible to make in a prediction: trillions of dollars in investments that were rated as being almost completely safe instead turned out to be almost completely unsafe” (loc. 379).
For Silver, there are two factors in particular that led to this egregious miscalculation. For one, CDOs were completely new, and the ratings agencies had no track record of them (loc. 388). This being the case, the ratings agencies had to rely on statistical models alone to determine their level of security (loc. 392). Second, the statistical models that the ratings agencies developed to help rate the CDOs assumed that each mortgage debt was completely independent from the others; and therefore, the chance of all of the debts in a package defaulting at the same time would be very low (loc. 520). It is this that allowed the ratings agencies to rate the CDO’s so highly (loc. 520). What this assumption failed to account for, though, was the possibility of a major housing crash in which real estate prices would drop across the board, and in which many home owners would be forced to default on their mortgages all at once—which is precisely what occurred (loc. 520). Now, while the possibility of a housing crash had apparently failed to dawn on the ratings agencies, it was not something that had missed the attention of other observers. Indeed, as Silver points out, “discussion of the bubble was remarkably widespread. Instances of the two-word phrase ‘housing bubble’ had appeared in just eight news accounts in 2001 but jumped to 3,447 references by 2005. The housing bubble was discussed about ten times per day in reputable newspapers and periodicals” (loc. 413).
How could the ratings agencies—“whose job it is to measure risk in financial markets” (loc. 417)—have failed to account for the possibility of a housing crash? Well, when you consider how much money these agencies were making off of their ratings (loc. 445-66), the whole conundrum becomes a little easier to unravel. As Silver puts it, “the possibility of a housing bubble, and that it might burst… represented a threat to the ratings agencies’ gravy train. Human being have an extraordinary capacity to ignore risks that threaten their livelihood, as though this will make them go away” (loc. 466).
Compounding the danger in this scenario was the fact that American financial institutions were, at the time, very highly leveraged. As Silver notes, “Lehman Brothers, in 2007, had a leverage ratio of about 33 to 1, meaning that it had about $1 in capital for every $33 in financial positions that it held. This meant that if there was just a 3 to 4 percent decline in the value of its portfolio, Lehman Brothers would have negative equity and would potentially face bankruptcy. Lehman was not alone in being highly levered: the leverage ratio for other major U.S. banks was about 30 and had been increasing steadily in the run up to the financial crisis” (loc. 633). In maintaining this amount of leverage, these financial institutions were essentially banking on the idea that a recession simply was not possible. More or less the same idea that the ratings agencies were banking on. History would suggest otherwise. Again, though, financial institutions were making a killing, so it is perhaps understandable why they weren’t so interested in looking in the rear-view mirror.
As you may have surmised, there is something that connects each of the aforementioned breakdowns in prediction. Essentially, the key characters played their predictions as though the world was the way they wanted it to be, rather than the way it really was. According to Silver, “the most calamitous failures of prediction usually have a lot in common” (loc. 360), and the factor of self-deception heads the list (loc. 360).
While the Great Recession fooled many, it didn’t fool everyone. And one of the heroes here is Jan Hatzius, chief economist at Goldman Sachs (loc. 3109). Hatzius has a very good track record with his analysis, and in fact, foresaw both the recession (in 2007), and its depth and severity (in 2009) (loc. 3112). What’s Hatzius’ secret?
Bayes Thomas Bayes was an English minister who lived in the 18th century. Though Bayes was elected as a Fellow of the Royal Society and did publish during his lifetime, he did not achieve a good deal of influence until after his death; and today his influence is stronger than ever. Bayes’ influence comes mainly from a paper of his that was published after his death called ‘An Essay toward Solving a Problem in the Doctrine of Chances,’ which “concerned how we formulate probabilistic beliefs about the world when we encounter new data” (loc. 4123).
The paper was intended as a response to the famous philosopher and skeptic David Hume, who argued that we could not truly predict anything with any amount of certainty. This is the case, according to Hume, because all of our information about the world comes from past experience, and just because something happened in the past (even with great frequency) does not mean we can logically deduce that it will happen again in the future. For instance, our knowledge that the sun rises in the morning is derived from the fact that on all previous occasions the sun has risen in the morning. However, because our sample size is necessarily limited, we have no way of knowing whether this is a matter of necessity or simply chance (loc. 4135). This being the case, Hume “argued that since we could not be certain that the sun would rise again, a prediction that it would was inherently no more rational than one that it wouldn’t” (loc. 4135).
Bayes agreed with Hume that we can never predict anything with absolute certainty. However, he disagreed that this effectively made all prediction an irrational process. Instead, Bayes contended that prediction could be made rational by way of treating it as a matter of probability rather than certainty (loc. 4135). For instance, when it comes to the sun rising in the morning, we may never be able to predict with certainty that it will, but the more it happens, the more we are justified in raising the probability that it will: “Gradually, through this purely statistical form of inference, the probability [we] assign[] to [our] prediction that the sun will rise again tomorrow approaches (although never exactly reaches) 100 percent” (loc. 4128).
A famous example here is one involving breast cancer. About 1.4% of women develop breast cancer when they are in their 40’s (loc. 4196). One way to detect breast cancer is with a mammogram, but these tests are not foolproof. Specifically, if a woman has breast cancer, a mammogram will detect it about 75% of the time. If, on the other hand, she does not have breast cancer, a mammogram will still come up positive 10% of the time (loc. 4199). Let’s say a woman in her 40’s has a mammogram and it comes up positive. What are the chances that she has breast cancer? The answer is a lot less that what you might think. It’s actually 10% (a number that Bayes’ theorem accurately comes up with [loc. 4201]).
If you badly misjudged the probability here, you’re not alone. As Silver explains, “a recent study that polled the statistical literacy of Americans presented this breast cancer example to them—and found that just 3 percent of them came up with the right probability estimate” (loc. 4204). The reason why most of us tend to get problems like this wrong is because most of just aren’t very good at intuitively recognizing how new information interacts with previously established probabilities to yield new probabilities. Our problem is that we tend to “focus on the newest or most immediately available information, and the bigger picture gets lost” (loc. 4210). Applying Bayes’ theorem prevents us from falling prey to this tendency, so this is one reason why approaching life through the lens of the theorem can be helpful. However, the benefits do not stop here.
In order to get at this little something extra, Silver points to the work of the psychology and political science professor Philip Tetlock. As Silver explains, “beginning in 1987, Tetlock started collecting predictions from a broad array of experts in academia and government on a variety of topics in domestic politics, economics, and international relations” (loc. 905). While Tetlock found that, on aggregate, the predictions of the experts were quite poor, he also found that some experts did better than others. When Tetlock looked into the cognitive styles and personality traits of the various experts he found that a clear pattern (we might call it a signal) emerged. Specifically, the more accurate predictors tended to have a particular set of cognitive strategies and personality traits that differed from the less accurate ones.
Tetlock organized his subjects along a spectrum with what he called ‘foxes’ on one end, and ‘hedgehogs’ on the other. The difference between foxes and hedgehogs can be summed up in the following way: “‘the fox knows many little things, but the hedgehog knows one big thing’” (loc. 949). More specifically, “hedgehogs are type A personalities who believe in Big Ideas—in governing principles about the world that behave as though they were physical laws and undergird virtually every interaction in society. Think Karl Marx and class struggle, or Sigmund Freud and the unconscious. Or Malcolm Gladwell and the ‘tipping point’” (loc. 955). Foxes, by contrast, “are scrappy creatures who believe in a plethora of little ideas and in taking a multitude of approaches toward a problem. They tend to be more tolerant of nuance, uncertainty, complexity, and dissenting opinion. If hedgehogs are hunters, always looking out for the big kill, then foxes are gatherers” (loc. 958).
While hedgehogs tend to be bold and brash, and express singular confidence in their predictions, foxes are much more cautious, as they consider numerous perspectives, carefully weighing their pros and cons. This being the case, foxes can often seem dithering and unsure of themselves (loc. 1006). As you might expect, then, hedgehogs make for much better television than foxes; and indeed, Tetlock found that the former garnered a lot more media attention than the latter (loc. 991-1006). However, when it came to the quality of their predictions, the hedgehogs were well outperformed by their foxier counterparts. As Silver notes, Tetlock found that “whereas the hedgehogs’ forecasts were barely any better than random chance, the foxes’ demonstrated predictive skill” (loc. 962).
Aside from being less susceptible to black and white thinking, and also overconfidence, the foxes had one other quality that allowed them to make better predictions than the hedgehogs. This was the fact that they tended to be less ideological in outlook, and to rely more on empirical evidence to help shape their opinions (loc. 980). Again, this harkens back to the fact that bias (here in the form of ideology) tends to interfere with the activity of formulating accurate predictions.
An algorithm brought him his first fame. His Pecota model, which stands for “Player Empirical Comparison and Optimisation Test Algorithm”, compared baseball players with other similar individuals in major-league history. Silver’s model looked past the commonly watched stats, such as batting average, and assigned greater weight to less-quoted ones, such as how often a batter gets on base, which correlated more to teams winning games.
Similarly, FiveThirtyEight’s model weighs up factors, from pollsters’ past accuracy to the religious and economic make-up of each state, then simulates the election 10,000 times to provide a probabilistic assessment of likely outcomes, based on polls going back to 1952. “We know that we’re going to get some of them wrong,” Silver cautions. The probability of any election victory is almost never 100 per cent. “You have a 70-30 bet, you’re supposed to get that wrong 30 per cent of the time.”
He is frustrated by people who prefer simple blue-or-red forecasts to such numerate nuance. “In baseball, it’s reached a healthy equilibrium where numbers-driven analysis is used in an appropriate way.” But politics is still far behind, he says: “I feel like we’re still fighting the Moneyball wars of 2003 and it might take another 10 years, if at all.”
The problem with political commentary is that it favours ideologues. CNN, stuck between Fox News on the right and MSNBC on the left, is struggling to revive its ratings because “the energy in politics is on the extremes,” Silver observes.
If most people struggle to interpret simple polls, will companies fare any better with the “big data” they are excitedly crunching? “I don’t think we’re on the edge of a singularity in terms of people becoming much more productive,” he says. In many cases, when he explores a new field and discovers how people misread the data about it, “it just kind of becomes depressing”.
Silver says he does not get on well with political reporters but is friends with media entrepreneurs such as Gawker’s Denton and Andrew Sullivan, the prominent blogger. His generation shares that entrepreneurial ambition, he says. “It used to be that you would idolise the guy who graduated at the top of his class from Harvard, and now you idolise the guy who drops out of Harvard to run a business,” he smiles. “I think these newspapers have a lot in common with Ivy League universities.” There is the prestige and the bright people “but there’s lots of internal politics. There are pockets of amazing things that are happening, but also pudgy bureaucratic cultures in other respects.”
Silver is not exactly dropping out; ESPN is a corporate giant with the resources to commercialise FiveThirtyEight more than ever. “I’m still pretty hungry,” he says, explaining that moving to ESPN was a decision to work “really, really hard for four more years” instead of coasting. “You could take a more relaxed route and kind of write now and then and travel a lot. That’s great, but I can do that in my fifties or sixties or seventies. Right now I want to build something while I’m still young.”
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Andrew Edgecliffe-Johnson is the FT’s media editor
We need more babies if we’re to bounce back
Charles Moore reviews When the Money Runs Out by Stephen D King (Yale)
By Charles Moore
9:51PM BST 23 Jun 2013
484 Comments
Often the obvious is the hardest thing for people to accept. For example, it is obvious that we shall all die, but most of us spend the great bulk of our lives acting as if this were not so. In the first decade of the 21st century, it was obvious that the governments and citizens of the Western world were borrowing too much money, yet almost all the finest minds in banking, central banking, economics and politics devoted their energies to proving the opposite.
Stephen D King is group chief economist and global head of economics and asset allocation at HSBC, so he is painfully conscious of this fact. He is not the same person as Stephen King, the novelist, but he tells a good horror story. He has harsh words for his own trade. Economists, with their “precision-engineered mathematical models”, “thought they had finally solved the world’s economic problems”. So they disregarded the dangers of systemic collapse. “They also disregarded history.”
This book therefore contains no mathematical models whatever, and not even a single graph. It is written in clear, lively English, and it constantly draws on history to trace cause, effect and likely catastrophe. You could accuse it of being wise after the event, but can history be anything else? It is certainly better than being foolish.
To King, the obvious thing now staring the West so fiercely in the face that we refuse to look at it is that we might not recover. He does not mean that the whole of our civilisation will suddenly collapse (although the “dull” years of stagnation are tempting people to fight over the diminished spoils). He means that our basic expectation, since 1945, that the West will always bounce back from economic difficulties may now be false.
Our financial crisis has now been going on for longer than the Second World War. Real wages have fallen for a longer period than any since the Twenties. Neither austerity nor its opposite seems to have won us victory. As King points out, you might think that low interest rates would encourage more risk-taking, and therefore more economic activity, but our persistently rock-bottom rates make everyone realise how bad things are. They “corroborate our collective gloom”.
This gloom feels justified by factors that are longer-term than current policy errors. Perhaps the most important of these is the refusal of the West to breed. The baby boomers – reacting to the fact that there were (as their name suggests) so many of them – convinced themselves that over-population threatened the health and wealth of the world. Almost the opposite is the case. By failing to reproduce themselves in adequate numbers, the baby boomers have laid enormous burdens on those few children whom they have produced. You can borrow and spend hugely if you know that the generation that will end up with the bill is much larger than your own. If it is much smaller, you can’t; but we have. As a result, Europe is a dying business. Most of the rest of the world is not. So it is winning.
I would pursue King’s point. For 50 years now, European culture has developed the idea that the problem is too many people. Without quite realising, it has developed attitudes that work against the future of the human race. In cultural terms, the celebration of contraception, homosexuality and euthanasia all represent this trend. In economics, the idea of spending rather than saving does the same. So do the Greens, who see the productions of mankind as the enemy of the earth, and attack economic growth without seeming to realise that they are thus advocating impoverishment.
The whole of electoral politics in the Western world still revolves around the idea of promising voters more public services. At the last election, the Conservatives said that they would “ring-fence” spending on health and overseas aid, thus implying that higher spending was essentially good, and that these two areas were essentially the best. No political party feels that it can win an election by saying that government spending, especially on welfare, will have to be permanently lower, yet it is the case.
This is why our current politics feels so unreal. It is the peddling of illusion to people who, though not yet ready to face the whole truth, know that they are being lied to. There is, as King says, no “narrative” of recovery in the West because “the political debate… still assumes that recovery lies just around the corner”. There is little basis for that assumption.
Given the fundamental difficulty of our situation, it is not surprising that King’s analysis is more striking than his remedies. He has the curious idea, for instance, that a “fiscal club” of eurozone states, with members losing fiscal autonomy when enjoying bail-outs, would calm everything down. He seeks a state “contract” to look after the interest of the young. He wants the Bank of England to target nominal GDP rather than inflation (isn’t this already, semi-secretly, taking place?). The sombre truth is that his assessment of the situation is as bleak as anyone dare be who wants to hold down a job in a bank. If he lost that job, he would walk round the streets with a sandwich board saying “The end of the world is nigh: flee from the wrath to come.”
It is it alarmingly difficult to disagree with Stephen King. All one can say, perhaps, is that one of the great errors of human nature – strongly displayed before the credit crunch – is the belief that a prevailing trend will continue indefinitely. The crunch is surely a reminder that what goes up must come down. It presumably follows that what comes down will one day go up. Meanwhile, get breeding.
Factbox: How Goldman’s ABACUS deal worked http://www.reuters.com/article/2010/04/16/us-goldmansachs-abacus-factbox-idUSTRE63F5CZ20100416
Sun, Apr 18 2010
NEW YORK | Fri Apr 16, 2010 4:30pm EDT
(Reuters) – The U.S. Securities and Exchange Commission is accusing Goldman Sachs Group Inc of committing fraud in a complicated transaction involving securities known as collateralized debt obligations.
The particular deal that Goldman entered into with Paulson and others was called ABACUS 2007-AC1.
Here’s how the deal worked, according to the SEC’s complaint:
1) Hedge fund manager John Paulson tells Goldman Sachs in late 2006 he wants to bet against risky subprime mortgages using derivatives. The risky mortgage bonds that Paulson wanted to short were essentially subprime home loans that had been repackaged into bonds. The bonds were rated “BBB,” meaning that as the home loans defaulted, these bonds would be among the first to feel the pain.
2) Goldman Sachs knows that German bank IKB would potentially buy the exposure that Paulson was looking to short. But IKB would only do so if the mortgage securities were selected by an outsider.
3) Goldman Sachs knows that not every asset manager would be willing to work with Paulson, according to the complaint. In January 2007, Goldman approaches ACA Management LLC, a unit of a bond insurer.
ACA agrees to be the manager in a deal, and to help select the securities for the deal with Paulson. In January and February 2007, Paulson and ACA work on the portfolio, coming to an agreement in late February.
Goldman never tells ACA or other investors that Paulson is shorting the securities, and ACA believes that Paulson in fact wanted to own some of the riskiest parts of the securities, according to the complaint.
4) Goldman puts together a deal known as a “synthetic collateralized debt obligation” designed to help IKB and Paulson get the exposure they want. IKB takes $150 million of the risk from subprime mortgage bonds in late April 2007. ABN Amro takes some $909 million of exposure as well, and buys protection on its exposure from ACA Management affiliate ACA Financial Guaranty Corp in May 2007.
Goldman’s marketing materials for the deal never mention Paulson’s having shorted more than $1 billion of securities. Goldman receives about $15 million in fees.
5) Months later, IKB loses almost all of its $150 million investment. In late 2007, ABN is acquired by a consortium of banks including Royal Bank of Scotland. In August 2008, RBS unwinds ABN’s position in ABACUS by paying Goldman $840.1 million. Most of that money goes to Paulson, who made about $1 billion total.
(Reporting by Dan Wilchins and Karen Brettell; Editing by Richard Chang)
Goldman Sachs, Fabrice Tourre and the complex Abacus of toxic mortgages
At the centre of the US regulators’ fraud charges against Goldman Sachs and employee Fabrice Tourre is a CDO – a parcel of sub-prime mortgages – called Abacus 2007-AC1.
Fabrice Tourre, Goldman Sachs vice president
By James Quinn, US Business Editor, in New York
11:41PM BST 16 Apr 2010
Comment
On January 23, 2007, Fabrice Tourre sat down to write what is likely to go down in the annals of the financial crisis as one of the most memorable emails to have found its way out of Wall Street.
Typing in French and in English to a friend who may never be named, the Goldman Sachs banker shared his apparently true feelings on the state of the US housing market: “More and more leverage in the system. The whole building is about to collapse anytime now … Only potential survivor, the fabulous Fab[rice Tourre] … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implication of those monstruosities [sic]!!!”
But a month later, on February 26, French-born Tourre produced another document, a 65-page “flip book” that contained details of a $1bn investment fund, designed to be given to potential investors.
The fund was no ordinary fund, however, but a synthetic collateralised debt obligation (CDO) – a parcel of sub-prime mortgages – to be called Abacus 2007-AC1.
In other words, it was jam-packed with the types of “highly leveraged, exotic trades” he had previously criticised.
Tourre’s role in Goldman Sachs’ scandal – which yesterday saw the bank and Tourre charged with two civil counts of securities fraud – is central to understanding what exactly happened in the marketing of the Abacus fund, and why the world’s biggest bank is now effectively on public trial.
The Securities and Exchange Commission’s 22-page court filingdetails what it portrays as an orchestrated attempt by Goldman and its junior employee to allegedly deceive clients in order to profit twice – once from structuring the Abacus fund, for which it earned $15m, and once from Paulson & Co, the New York based hedge fund run by John Paulson, for which its profits are not known.
Under the SEC’s version of events, Paulson came to Goldman in January 2007, asking it to help buy protection against what it believed would be a fall in US residential mortgage-backed securities, and then “discussed with Goldman possible transactions in which counterparties to its short position might be found.” Those counterparties were to be “found” in Abacus 2007 AC-1 – a new CDO which was part of a wider programme of CDOs structured by Goldman.
Unlike other CDOs, however, the SEC allege that this one had been constructed under the influence of Paulson – which is not itself accused of any wrongdoing.
Having decided to create a CDO to allow investors to invest in a potential increase in the value of sub-prime mortgages – which Paulson would then short – Goldman needed independent validation that what it was selling was kosher. Step forward ACA Management, a specialist in analysing credit risk owned by ABN Amro, the Dutch investment bank.
But although ACA was recruited as the ultimate “portfolio selection agent” of the mortgages within the Abacus derivative for its “credibility”, unbeknown to it – or future investors – Paulson is alleged by the SEC to have initially handed Goldman a list of 123 residential mortgage-backed securities (RMBS) to be considered for inclusion.
The 123 RMBS were based on Paulson’s selection criteria of those most likely to default – and so included mortgages from borrowers with low credit scores, and from states which had seen high rates of house price appreciation, states like Arizona and Florida which have since seen high repossession levels.
After discussion with ACA, the SEC alleges that ACA and Paulson together selected 90 RMBS in which Abacus would invest, but only after Paulson allegedly “kicked out” a number of Wells Fargo mortgages which were “generally perceived” to be of higher quality.
Paulson, in a statement, points out that ACA had “sole authority” over the selection of RMBS in the CDO, and stresses that it did not market Abacus to investors.
Of course, once Abacus had been constructed, it was up to Tourre to market the issue, and market he did.
The SEC alleges Tourre misled ACA into believing Paulson invested up to $200m in the equity of Abacus, and told IKB, the German bank which invested $150m, that the mortgages were selected by ACA, as the bank had previously informed Goldman it was not interested in investing in CDOs that hadn’t been selected by a third party.
But Tourre also allegedly misled investors by not telling them – either verbally or in the CDO’s marketing documents – that Paulson was all the while shorting the RMBS within Abacus.
Goldman for its part categorically denies any wrongdoing, pointing out that it lost more than $90m in Abacus, that investors knew the risks, and that it did “not structure a portfolio that was designed to lose money.”
Some six months after Abacus’s fundraising closed on April 26, 83pc of the mortgages within had been downgraded.
On January 29 – a year and six days after Tourre wrote his original prescient email, and ten days after his 29th birthday – 99pc of the portfolio had been downgraded, leading investors to lose more than $1bn, and Goldman – and Tourre’s – reputation to be left open to question.
Investors Are Again In Love With An Apple Product Nathan Vardi Forbes Staff
Paging David Einhorn: Apple Pads Buyback Steve Schaefer Forbes Staff
The company reportedly raised $17 billion in a heavily-oversubscribed offering, with all six tranches at narrow spreads to their benchmarks: three-month Libor for three and five-year floating rate notes and the similar-maturity Treasuries for three, five, 10 and 30-year fixed-rate notes.
In fact, at a reported 75 bps above the corresponding Treasury, Apple’s 10-year unsecured notes would carry a lower rate than the stock’s dividend yield (~2.40% vs. 2.75%). That might seem surprising, but it shouldn’t in a world where 280 members of the S&P 500 carry dividend yields above the current rate on the 10-year Treasury. And Apple is hardly the only company that has borrowed extremely cheaply — IBM IBM -0.53% and Microsoft MSFT -0.87% issued 10-year paper last year at 1.875% and 2.125%, respectively.
Apple has not yet confirmed the results of the debt offering. The company is borrowing to fund an upsized capital return program intended to deliver $100 billion to shareholders by the end of 2015, and to do so without having to repatriate cash held overseas and pay the requisite taxes. (See “Paging David Einhorn: Apple Superzies Buyback.”)
Scott Rostan, founder of TrainingTheStreet and an adjunct professor at the UNC’s Kenan-Flager Business School, said the incredible demand for Apple’s offering “dramatically highlights the new reality of this low interest rate environment.”
Even in that environment, with the rates on Apple bonds so low isn’t the stock a better bet?
It could very well be says Rostan, but after a months-long stretch where it yo-yoed from $705 to $385 back up to the current level near $450, he’s more confident in the bonds as a safe parking spot than the stock as a guaranteed winner.
So who might be buying the Apple offering? Well there is probably no shortage of investment-grade managers interested in diversifying their holdings, and adding a blue-chip name like Apple to the portfolio probably looks attractive, even at just an incrementally higher yield than the relatively few AAA-rated issuers out there. (S&P and Moody’s assigned Apple the equivalent of a AA+ rating, while Fitch said it merited a rating at the high end of the A range.)
“This could be a trade up,” Rostan says, “the risk of capital loss is close to zero and you get another few basis points, which in this market can be meaningful.” And don’t underestimate the inclination to stick with the crowd.
“For a professional fund manager owning Apple’s bonds won’t make you look stupid, because everyone will own it,” Rostan says. More importantly, there won’t be any real concern of getting stuck in Apple’s debt, given that the size of this offering should lead to an extremely liquid market at a time when the toxic asset lessons of 2008 are still fresh in the minds of many fixed-income investors.
For those concerned that the proceeds of the bond offering are going to fund a share repurchase program that the company recently increased by $50 billion, it’s worth remembering that even amid concerns that its dominance in consumer technology has eroded Apple still throws off billions in cash every quarter, adding nearly another $8 billion to its cash pile in the first three months of 2013 alone.
At $17 billion, Tuesday’s deal, led by Goldman Sachs Group GS -1.38% and Deutsche Bank , is the largest non-financial corporate offering on record, ahead of last year’s $14.7 billion deal from AbbVie ABBV -2.38% — in connection with its spinoff from Abbott Laboratories ABT -2.16% — and a $16.5 billion bond sales by Roche Holdings in 2009.
France Government Bond 10Y
France’s Government Bond Yield for 10 Year Notes declined 9 basis points during the last 30 days which means it became less expensive for France to borrow money from investors. During the last 12 months, France government bond yield advanced 0.10 percent. From 1985 until 2013, France Government Bond 10Y averaged 5.9 Percent reaching an all time high of 11.8 Percent in February of 1985 and a record low of 1.7 Percent in May of 2013. Generally, a government bond is issued by a national government and is denominated in the country`s own currency. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds. The yield required by investors to loan funds to governments reflects inflation expectations and the likelihood that the debt will be repaid. This page contains – France Government Bond 10Y – actual values, historical data, forecast, chart, statistics, economic calendar and news. 2013-09-25
Cost-Benefit Analysis
One of the tools that Ford used to argue for the delay was a “cost-benefit analysis” of altering the fuel tanks. According to Ford’s estimates, the unsafe tanks would cause 180 burn deaths, 180 serious burn injuries, and 2,100 burned vehicles each year. It calculated that it would have to pay $200,000 per death, $67,000 per injury, and $700 per vehicle, for a total of $49.5 million. However, the cost of saving lives and injuries ran even higher: alterations would cost $11 per car or truck, which added up to $137 million per year. Essentially, Ford argued before the government that it would be cheaper just to let their customers burn!
The other side of the equation, the alleged $11 cost of a fire-prevention device, is also a misleading estimation. One document that was not sent to Washington by Ford was a “Confidential” cost analysis Mother Jones has managed to obtain, showing that crash fires could be largely prevented for considerably less than $11 a car. The cheapest method involves placing a heavy rubber bladder inside the gas tank to keep the fuel from spilling if the tank ruptures. Goodyear had developed the bladder and had demonstrated it to the automotive industry. Ford Motor Company ran a rear-end crash test on a car with the rubber bladder in the gas tank. The tank ruptured, but no fuel leaked. On January 15, 1971, Ford again tested the bladder and again it worked. The total purchase and installation cost of the bladder would have been $5.08 per car. That $5.08 could have saved the lives several hundred people.
In February of 1978, a California jury created a nationwide sensation when it awarded the record-breaking sum of $128 million in a lawsuit stemming from a into accident (Weinberger Romeo, 45). This one lawsuit was three times what Ford executives and engineers had estimated their final cost would be.
“The Pinto was not to weigh an ounce over 2,000 pounds and not cost a cent over $2,000.”
During design and production, however, crash tests revealed a serious defect in the gas tank. In crashes over 25 miles per hour, the gas tank always ruptured. To correct it would have required changing and strengthening the design.
Many studies of reports and documents done by Mother Jones on rear-end collisions involving Pintos reveal that if you ran into that Pinto you were following at over 30 miles per hour, the rear end of the car would buckle like an accordion, right up to the back seat. The tube leading to the gas-tank cap would be ripped away from the tank itself, and gas would immediately begin sloshing onto the road around the car. The buckled gas tank would be jammed up against the differential housing (that big bulge in the middle of your rear axle), which contains four sharp, protruding bolts likely to gash holes in the tank and spill still more gas. Now all you need is a spark from a cigarette, ignition, or scraping metal, and both cars would be engulfed in flames. If you gave that Pinto a really good whack?say, at 40 mph – chances are excellent that its doors would jam and you would have to stand by and watch its trapped passengers burn to death.
In pre-production planning, engineers seriously considered using in the Pinto the same kind of gas tank Ford uses in the Capri. The Capri tank rides over the rear axle and differential housing. It has been so successful in over 50 crash tests that Ford used it in its Experimental Safety Vehicle, which withstood rear-end impacts of 60 mph. So why wasn’t the Capri tank used in the Pinto? Or, why wasn’t that plastic baffle placed between the tank and the axle – something that would have saved the life’s hundreds of people.
President Semon “Bunky” Knudsen, whom Henry Ford II had hired away from General Motors, and Lee Iacocca, a spunky Young Turk who had risen fast within the company on the enormous success of the Mustang. Iacocca saying was that the Japanese were going to capture the entire American subcompact market unless Ford put out its own alternative to the VW Beetle. Bunky Knudsen said let them have the small-car market, but he lost the battle and later resigned. Iacocca became president and almost immediately began a rush program to produce the Pinto.
Lee Iococca wanted that little car in the showrooms of America with the 1971 models. So he ordered his engineering vice president, Bob Alexander, to oversee what was probably the shortest production planning period in modern automotive history. The normal time span from conception to production of a new car model is about 43 months. The Pinto schedule was set at just under 25.
When it was discovered the gas tank was unsafe, did anyone go to Iacocca and tell him? “Hell no,” replied an engineer who worked on the Pinto, a high company official for many years, who, unlike several others at Ford, maintains a necessarily clandestine concern for safety. “That person would have been fired. Safety wasn’t a popular subject around Ford in those days. Whenever a problem was raised that meant a delay on the Pinto, Lee would chomp on his cigar, look out the window and say ‘Read the product objectives and get back to work.”
The product objectives are clearly stated in the Pinto “green book.” This is a thick, top-secret manual in green covers containing a step-by-step production plan for the model, detailing the metallurgy, weight, strength and quality of every part in the car. The product objectives for the Pinto are repeated in an article by Ford executive F.G. Olsen published by the Society of Automotive Engineers. He lists these product objectives as follows:
A Ford engineer, who doesn’t want his name used, comments: “This company is run by salesmen, not engineers; so the priority is styling, not safety.” He goes on to tell a story about gas-tank safety at Ford: Lou Tubben is one of the most popular engineers at Ford. He’s a friendly, outgoing guy with a genuine concern for safety. By 1971 he had grown so concerned about gas-tank integrity that he asked his boss if he could prepare a presentation on safer tank design. Tubben and his boss had both worked on the Pinto and shared a concern for its safety. His boss gave him the go-ahead, scheduled a date for the presentation and invited all company engineers and key production planning personnel. When time came for the meeting, a grand total of two people showed up – Lou Tubben and his boss. “So you see,” continued the anonymous Ford engineer ironically, “there are a few of us here at Ford who are concerned about fire safety.” He adds: “They are mostly engineers who have to study a lot of accident reports and look at pictures of burned people. But we don’t talk about it much. It isn’t a popular subject.
Bitcoin
Monetarists Anonymous
After a spectacular crash, an online currency makes a surprising comeback
Sep 29th 2012 |From the print edition
“GIVE me control of a nation’s money supply, and I care not who makes its laws.” So said Mayer Amschel Rothschild, founder of the Rothschild banking dynasty. What would he make of Bitcoin, an online currency with no issuing authority whatsoever? Despite being written off following a speculative bubble and crash last year, the online cryptocurrency is still going strong, not least thanks to its ability to circumnavigate the law.
Bitcoin was devised in 2009 by a mysterious figure known as Satoshi Nakomoto. It is the world’s first, and so far only, decentralised online currency. Instead of a central bank, Bitcoins can be issued by anyone with a powerful personal computer: it mints them by solving extremely difficult mathematical problems. The problems are automatically made harder to ensure that the overall supply of Bitcoins cannot grow too fast. They are traded online, with transactions cryptographically authenticated.
These curious capabilities make Bitcoins a combination of a commodity and a fiat currency (creating the coins is referred to as “mining” and they have value only because people accept them). But boosters inflated a Bitcoin bubble. Shortly after the currency launched, articles spread around the internet arguing that Bitcoins would protect wealth from hyperinflation and that early adopters would make a fortune. The dollar price of a Bitcoin currency unit climbed from a few cents in 2010 to a peak of nearly $30 in June 2011 (see chart), according to data compiled by Mt Gox, a popular online Bitcoin exchange. Inevitably, the currency then crashed back down, bottoming out at $2 in November 2011.
But in the nine months since, Bitcoin has recovered. One unit now costs $12, and the volume of transactions is increasing. Though the price still fluctuates against the dollar, it is less volatile than it was, which makes it a better store of value. Its use as a means of exchange is also getting easier: an increasing number of online retailers take the currency, and new smartphone apps make Bitcoins almost as easy to use as cash. A proliferation of exchanges means that it is relatively easy to swap Bitcoins for conventional currencies.
Tony Gallippi, the boss of Bitpay, which processes Bitcoin payments for retailers, says that his client list has increased from around 100 in March to 1,100 now. These are mostly e-commerce businesses, selling things like domain names and web hosting. But the list also includes a taxi-driver in Chicago and a dentist in Finland. “Credit cards weren’t designed for the internet,” he says. Bitcoin transactions cost less and cannot be reversed in the way credit-card transactions can be. This is important for firms selling to customers in countries known for credit-card fraud, such as Russia or Belarus.
But another big reason for the currency’s success is its role in dodgy online markets. Although tracing Bitcoin transactions to real people is not impossible, the currency’s relative anonymity and ease of use makes it a natural conduit for criminal funds. On the website Silk Road, a sort of eBay for drugs hidden in a dark corner of the web known as Tor, Bitcoins are the only means of transaction. Buyers transfer their Bitcoins into an escrow account where they sit until receipt of the goods is confirmed. Bitcoin transactions on Silk Road are now worth $1.9m per month, estimates Nicolas Christin, a researcher at Carnegie Mellon University.
This may explain why users put up with a big drawback. Bitcoins tend not to be very secure, says Richard Booth, a consultant at RSA, a cyber-security firm. As some users have found to their cost, hackers can sometimes steal Bitcoins from users’ online vaults. In the latest raid, on September 5th, hackers stole $250,000 in Bitcoins from Bitfloor, a large American exchange, causing it to shut down its operation. But although the raid caused a dip in the price of Bitcoins, it soon recovered. It turns out that a currency can thrive even when no one is making laws for it.
From the print edition: Finance and economics
Computer trading blamed for erratic swings on NYSE
The New York Stock Exchange is examining swings in almost 150 share prices after a volatile session reignited fears that America’s stock market has become too dependent on computer–based trading.
The error evoked memories of the so–called “flash crash” of May 2010 in which $862bn (£552bn) was wiped from US stock markets in less than 20 minutes. Photo: Bloomberg News
By Richard Blackden
6:45AM BST 02 Aug 2012
7 Comments
Dozens of seemingly unconnected shares saw major price swings after trading began on Wall Street on Wednesday. Shares in at least six companies were suspended amid speculation that a computer–generated trade was behind the problem.
Attention was focused on Knight Capital, a US–based company that helps make a market in hundreds of the shares traded every day in New York. The company warned of a “technology issue” and advised customers to route their orders to other market makers. Shares in the New Jersey–based broker tumbled more than 20pc.
Although the turmoil did not send the broader stock market down, it evoked memories of the so–called “flash crash” of May 2010 in which $862bn (£552bn) was wiped from US stock markets in less than 20 minutes.
An investigation by US authorities blamed a computer–based algorithm. Last month the Securities and Exchange Commission asked America’s stock exchanges to construct a single monitoring system for all share trading.
Speculation yesterday focused on whether a trade designed for execution over a number of days was instead condensed into a few minutes between 9.30am and 10.15am New York time.
Related Articles
Now we know the truth. The financial meltdown wasn’t a mistake – it was a con
Hiding behind the complexities of our financial system, banks and other institutions are being accused of fraud and deception, with Goldman Sachs just the latest in the spotlight.
Will Hutton
The Observer,Sunday 18 April 2010
Goldman Sachs was in the spotlight last November when demonstrators protested outside its Washington offices against executive bonuses. Photograph: Andrew Harrer/Bloomberg via Getty Images
The global financial crisis, it is now clear, was caused not just by the bankers’ colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud. Friday’s announcement that the world’s most famous investment bank, Goldman Sachs, is to face civil charges for fraud brought by the American regulator is but the latest of a series of investigations that have been launched, arrests made and charges made against financial institutions around the world. Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet levelled charges against any bank; all that we’ve seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government. We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves.
Just consider the roll call beyond Goldman Sachs. In Ireland Sean FitzPatrick, the ex-chair of the Anglo Irish bank was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks – huge lenders in Britain – was handed to its public prosecution service. A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was – accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters. In Switzerland UBS has been defending itself from the US’s Internal Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come – except in saintly Britain.
Beneath the complexity, the charges are all rooted in the same phenomenon – deception. Somebody, somewhere, was knowingly fooled by banks and bankers – sometimes governments over tax, sometimes regulators and investors over the probity of balance sheets and profits and sometimes, as the Securities and Exchange Commission (SEC) says in Goldman’s case, by creating a scheme to enrich one favoured investor at the expense of others – including, via RBS, the British taxpayer. Along the way there is a long list of so-called “entrepreneurs” and “innovators” who were offered loans that should never have been made. Lloyd Blankfein, Goldman’s CEO, remarked only semi-ironically that his bank was doing God’s work. He must wake up every day bitterly regretting the words ever emerged from his mouth.
For the Goldmans case is in some ways the most damaging. The Icelandic banks, Anglo Irish bank and Lehman were all involved in opaque deals and rank bad lending decisions – but Goldman allegedly went one step further, according to the SEC actively creating a financial instrument that transferred wealth to one favoured client from others less favoured. If the Securities and Exchange Commission’s case is proved – and it is aggressively rebutted by Goldman – the charge is that Goldman’s vice-president Fabrice Tourre created a dud financial instrument packed with valueless sub- prime mortgages at the instruction of hedge fund client Paulson, sold it to investors knowing it was valueless, and then allowed Paulson to profit from the dud financial instrument. Goldman says the buyers were “among the most sophisticated mortgage investors” in the world. But this is a used car salesman flogging a broken car he’s got from some wide-boy pal to some driver who can’t get access to the log-book. Except it was lionised as financial innovation.
The investors who bought the collateralised debt obligation (CDO) were not complete innocents. They had asked for the bond to be validated by an independent expert into residential mortgage-backed securities – a company called ACA management. ACA gave the bond the thumbs-up on the understanding from Fabrice Tourre that the hedge fund Paulson were investing in it. But the SEC says Tourre misled them, a pivotal claim that Goldman denies. The reality was that Paulson was frantically buying credit default swaps in the CDO that would go up in price the more valueless it became – a trade that would make more than $1 billion. Worse, Paulson had identified some of the dud sub-prime mortgages that he wanted Tourre to put into the CDO. If the SEC case is true, this was a scam – nothing more, nothing less.
Tourre could see what was coming. In one email in January 2007 he wrote: “More and more leverage in the system. The whole building is about to collapse anytime now… only potential survivor, the fabulous Fab[rice Tourre] .. standing in the middle of all these complex highly leveraged exotic trades he created without necessarily understanding all of the implications of those monstrosities”. Fabulous Fab, like his boss, will not be feeling very fab today.
The cases not only have a lot in common – using financial complexity allegedly to deceive and then using so-called independent experts to validate the deception (lawyers, accountants, credit rating agencies, “portfolio selection agents,” etc etc ) – but they also show how interconnected the financial system is. In Iceland Citigroup and Deutsche Bank covered the margin calls of distressed Icelandic business borrowers, deepening the crisis. Lehman uses the lightly regulated London markets and two independent British experts to validate that their “Repo 105s” were “genuine” trades and not their own in-house liability. The American authorities pursued a Swiss bank over aiding and abetting US nationals to evade tax.
Bankers will complain these cases all involve one or two misguided individuals, but that most banking is above board and was just the victim of irrational exuberance, misguided belief in free market economics and faulty risk management techniques. Obviously that is true – but, sadly, there is much more to the crisis. Andrew Haldane, executive director of the Bank of England, highlights the remarkable reduction in the risk weighting of bank assets between 1997 and 2007. Put simply, Europe’s and the US’s large banks exploited the weak international agreement on bank capital requirements in the so-called Basel agreement in 2004 to reclassify the risk of their loans and trading instruments. They did not just reduce the risk by 5 or 10%. Breathtakingly, they claimed their new risk management techniques were so wonderful that the riskiness of their assets was up to half of what it had been – despite property and share prices cresting to new all-time highs.
Brutally, the banks knowingly gamed the system to grow their balance sheets ever faster and with even less capital underpinning them in the full knowledge that everything rested on the bogus claim that their lending was now much less risky. That was not all they were doing. As Michael Lewis describes in The Big Short, credit default swaps had been deliberately created as an asset class by the big investment banks to allow hedge funds to speculate against collateralised debt obligations. The banks were gaming the regulators and investors alike – and they knew full well what they were doing. Simon Johnson’s 13 Bankers shows how the major American banks deployed vast political lobbying power and money to create the relaxed regulatory environment in which all this could take place. In Britain no money changed hands. Gordon Brown offered light-touch regulation for free – egged on by the Tories, who wanted to go further.
This was the context in which Goldman’s Fabulous Fab created the disputed CDOs, Sean FitzPatrick allegedly moved loans between banks and Lehman created its Repo 105s along with the entire “debt mule” structure revealed this weekend of inter-related companies to shuffle debt around its empire. London and New York had become the centre of an international financial system in which the purpose of banking became making money from money – and where the complexity of the “innovations” allowed extensive fraud and deception.
Now it has all collapsed, to be bailed out by western taxpayers. The banks are resisting reform – and want to cling on to the business practices and business model that has so appallingly failed. It is obvious why: it makes them very rich. The politicians tread carefully, only proposing what the bankers say is congruent with their definition of what banking should be. Labour and Tories alike are united in opposing improved EU regulation of hedge funds, buying the propaganda those operations had nothing to do with the crisis. Perhaps Paulson’s trades at Goldman, and the hedge funds’ appetite for speculating in credit default swaps, may disabuse them.
It is time to reframe the question. Banks and financial institutions should do what economy and society want them to do – support enterprise, direct credit to where it is needed and be part of the system that generates investment and innovation. Andrew Haldane – and the governor of the Bank of England – are right. We need to break up our banks, limit their capacity to speculate and bring them back to earth. Britain should also launch an official investigation into what went wrong – and hand the findings to the Serious Fraud Office. This needs to become this election campaign’s number one issue – not one which either a compromised Labour party or a temporising Conservative party will relish. The Lib Dems, the fiercest critics of the banks, have begun to get very lucky.
Crisis timetable
September 2007 Funding problems at Northern Rock triggers the first run on a British bank. It is nationalised in February 2008.
April 2008 Bear Stern faces bankruptcy after a run on the company wipes out cash reserves in less than two days. Backed by the Federal Reserve, JPMorgan buys up shares at far below market value.
September 2008 Lehman Brothers files for bankruptcy protection, becoming the first major bank to collapse since the start of the credit crisis.
December 2008 Bernard Madoff arrested for operating the largest Ponzi scheme in history.
January 2009 The Bank of England launches £200bn quantitative easing.
March 2010 Former chairman of Anglo Irish bank Sean Fitzpatrick is arrested in Dublin after failing to disclose details of loans worth millions from the bank.
April 2010 Northern Rock former directors, David Baker and Richard Barclay, are fined £504,000 and £140,000 for deliberately misleading analysts prior to nationalisation.
April 2010 The US Securities and Exchange Commission accuses Goldman Sachs of “defrauding investors by misstating and omitting key facts”.
Joanna Aniel Bidar
This article was amended on Monday 19 April and Tuesday 20 April. A reference to Anglo Irish looking after the Post Office’s financial services was removed. Bank of Ireland is the Post Office’s financial services provider. The original also referred to the US Inland Revenue Service. This has been corrected.
economist
Raj Rajaratnam’s insider trading
Away with you
Oct 13th 2011, 17:25 by A.E.S. | NEW YORK
NOBODY likes a know-it-all. But that’s exactly what Raj Rajaratnam, the former boss of the hedge fund Galleon, was. He made it his business to know about corporate events before they happened, tapping his wide network of tipsters and coworkers for details, and then buying or selling short the stocks. In May he was found guilty of 14 counts of securities fraud and conspiracy. Today a judge sentenced him to 11 years in jail.
That is the longest sentence ever handed out for insider trading. Previously, the record was ten years—held by another Galleon employee, Zvi Goffer, and Hafiz Muhammad Zubair Naseem, a former Credit Suisse banker sentenced in 2008. Government prosecutors alleged that Mr Rajaratnam “is arguably the most egregious insider trader to face sentencing in a federal courthouse in the United States.” It’s the biggest insider-trading ring that regulators have ever uncovered, involving at least 20 people and $72m in gains and losses avoided.
The government was hoping to see Mr Rajaratnam go to jail for at least 20 years, but his team of well-paid defence lawyers fought fiercely to reduce the sentence he was handed, apparently to some success. They stressed that significant jail-time would be “tantamount to murder” for the 54-year-old Mr Rajaratnam, since he has advanced diabetes. They also said the generous cheques he wrote to charities in New York and his native Sri Lanka should be taken into account. The judge was sympathetic to these points, and factored them into his sentence—a lesson, perhaps, to anyone considering insider trading that they give away much of their gains.
Still, Mr Rajaratnam’s demise is a boon for regulators’ campaign to root out market abuse and prove the markets are welcoming of ordinary investors. At one point Galleon was one of the largest hedge funds in the world. But now it is an example of Wall Street’s misguided hubris and greed. Mr Rajaratnam’s crimes, the judge said, “reflect the virus in our business culture that needs to be eradicated.”
Mr Rajaratnam’s sentencing highlighted a central issue for insider trading: how you calculate the victims. Mr Rajaratnam’s defence lawyers tried to argue that insider trading doesn’t have the tangible impact that a fraud like Bernie Madoff’s or even a violent crime do, so it shouldn’t be punished like one. But prosecutors rightly pointed out that investors who didn’t have Mr Rajaratnam’s rolodex or tips paid more than they should have for stocks. Companies, too, have been injured by his actions. According to one of the prosecutors, the boss of McKinsey wrote a letter to the judge saying the firm’s “reputation has suffered greatly” as a result of this insider trading case. (A senior executive at McKinsey was one of Mr Rajaratnam’s tippers; the firm’s former boss has also been dragged into the mess.) Companies have an interest in seeing Mr Rajaratnam and his type go to jail.
Q
Galleon Group LLC co-founder Raj Rajaratnam’s conviction for directing the most extensive insider-trading scheme in U.S. history was upheld by an appeals court, which ruled the government’s use of wiretaps was proper.
The U.S. Court of Appeals in Manhattan, in a decision issued today, affirmed Rajaratnam’s 2011 conviction for conspiracy and securities fraud and rejected his challenge to the use of wiretaps in a securities-fraud case.
Enlarge image
A file photo shows former Galleon Group LLC co-founder Raj Rajaratnam exiting federal court in New York on April 28, 2011. Photographer: Peter Foley/Bloomberg
5:41
June 24 (Bloomberg) — Former Assistant U.S. Attorney Reed Brodsky, who was the lead prosecutor in the insider-trading case against Galleon Management LP co-founder Raj Rajaratnam, talks about today’s U.S. Appeals Court ruling upholding Rajaratnam’s conviction and the implications for similar cases. He speaks with Scarlet Fu on Bloomberg Television’s “Money Moves.” (Source: Bloomberg)
“Rajaratnam’s arguments are not persuasive,” U.S. Circuit judges Jose Cabranes, Robert Sack and Susan Carney said in a 29-page ruling. “The record does not support the finding that the omission of the SEC investigation in the Title III wiretap application was made with ‘reckless disregard for the truth.’”acated because prosecutors misled the lower court judge who authorized the wiretaps in 2008. Rajaratnam, 56, claimed prosecutors and Federal Bureau of Investigation agents omitted key facts from their request for the secret recordings, called Title III wiretaps, including the existence of an insider-trading investigation by the U.S. Securities and Exchange Commission.
Telephone Conversations
The case was the first to focus exclusively on insider trading in which U.S. investigators wiretapped their targets’ telephone conversations, a tactic used in organized-crime probes. Jurors listened to more than 45 wiretap recordings, on some of which Rajaratnam can be heard gathering nonpublic information from his sources.
“Rajaratnam had been careful to exchange nearly all of his inside information by telephone,” the panel said, quoting U.S. District Judge Richard Holwell’s earlier ruling that allowed the wiretaps to be used during Rajaratnam’s trial.
“Wiretapping is particularly appropriate when the telephone is routinely relied on to conduct the criminal enterprise under investigation,” the panel said. “The district court made the point explicitly in discussing whether the government should have pursued additional ‘normal investigative procedures’ before seeking a Title III wiretap.’”
‘Reckless Disregard’
Benjamin Harris, a spokesman for Akin Gump Strauss Hauer & Feld LLP, the law firm that represented Rajaratnam at trial, declined to comment on the panel’s decision.
While Holwell, who presided over the trial, found that prosecutors may have acted with “reckless disregard” in omitting information from the wiretap applications, he allowed prosecutors to use the wiretaps. The appeals court today concluded that prosecutors and agents acted properly and the omitted information “would have only strengthened” the request.
The ruling comes as one of the sources of Rajaratnam’s illicit tips, former Goldman Sachs Group Inc. director Rajat Gupta, waits to hear from the same appeals court in his bid to overturn his insider-trading conviction based on the legality of the wiretaps.
Gupta, who was Rajaratnam’s former business partner, argues that prosecutors shouldn’t have been allowed at his trial to use wiretapped calls in which he wasn’t a participant. Gupta was sentenced to two years in prison for insider trading and is free pending his appeal.
Zvi Goffer, a former Galleon trader who worked for Rajaratnam and was also recorded on FBI wiretaps, has also challenged the government’s use of wiretaps. Goffer is serving 10 years at a federal prison in Lewisburg, Pennsylvania, after being convicted at a trial in New York in 2011.
More on bubble spotting
Jan 15th 2010, 16:08 by The Economist | WASHINGTON
SCOTT SUMNER has written a long post defending Eugene Fama and the efficient markets hypothesis. In a nutshell, he thinks that I’m gravely mistaken if I believe that bubbles can be spotted ahead of time, that The Economist‘s correct calls of the tech and housing bubbles were just a magnificent stroke of luck, and that if we’re so bloody confident in our ability to predict bubbles why aren’t we making billions running mutual funds?
I feel like this is the sort of critique that sounds lovely so long as one remains comfortably in the realm of abstract intellectualism. The price-to-income ratio has risen above its long-term trend, but how can we know that it’s a bubble? Fundamentals? Well, perhaps they’ve shifted. And if you’re so confident, why aren’t you ringing up your trader and telling him to short housing?
In The Economist‘s recent Briefing on bubbles, the author of the Briefing outlined a few key signs that a bubble may be growing. One is high asset values relative to historical trends. If price-to-income and price-to-rent ratios are well above trend levels, that is a sign that things may be amiss. At the very least, you ought to be able to tell a compelling story about why things have changed. These markets are, after all, grounded in physical supply and the demand for housing. What story about massive increases in price-to-rent levels was available to explain the shift, its development around the world, and most importantly, its sustainability?
Secondly, the author warned that bubbles typically involve rapid private credit growth and market enthusiasm. If this were all a matter of making predictions based on big upward swings in a set of asset values, well, Mr Sumner might have a point. But it’s a little strange, is it not, that writers at The Economist and elsewhere didn’t just identify the bubble but correctly pointed out the specific dynamics that were creating this unsustainable state—a heedless expansion of the credit available to those willing to buy homes? It’s one thing to be right about a guess that it may rain tomorrow. It’s another to identify the approaching low pressure system and specify the moisture content of the airmass and then make the prediction on that basis.
But then there’s the billion dollar question—can you reliably make money on it? In theory, you should be able to, if what I’m saying is true. But in theory, you have complete markets. You have the ability to borrow as much as you like for as long as you like. You have a range of financial products availabe that don’t actually exist.
As Robert Shiller has pointed out a number of times, it’s difficult to short housing markets. It’s not impossible, but it’s not easy. But for a real sense of what it’s like to trade against an inflating bubble, it’s worth reading this, from Felix Salmon:
[A]ny hedge fund manager playing a version of the negative-carry trade has it much worse than most of his peers. Warren Buffett says that the first rule of running other people’s money is don’t lose it; the second rule is “don’t forget the first rule”. One of the reasons Taleb gave for giving up running money day-to-day was precisely the incredible toll it takes when you’re losing money almost every day. Andrew Lahde, another huge winner from the subprime crisis, also quit the business, citing the way in which the stress of the job destroyed his health…
Paulson was not actively trying to burst the bubble, in the way that George Soros pushed the pound out of the European exchange-rate mechanism with his legendary1992 negative-carry trade. Instead, he was just the biggest of a long line of investors who saw that there was a housing bubble and tried to find a way to go short. Those who were right but too early disappeared into the footnotes of finance — if they were lucky to get even that. They learned the hard way that “the market can stay irrational longer than you can stay solvent”. Paulson was like them: he felt certain that the bubble was going to burst, but he didn’t — couldn’t — know when, and he simply had to pr—ay that it would happen before his investors deserted him.
What’s more, there was no guarantee that even if the housing bubble did burst, that Paulson was going to make lots of money. To be sure, he had a lovely model, put together by his colleague Paolo Pellegrini, showing that if house prices stopped rising, subprime mortgages were going to suffer enormous losses. But on the other hand, all the banks and credit-rating agencies also had models, showing that the bonds that Paulson was betting against had almost no chance of defaulting. When your model shows one thing, and everybody else’s models show something else entirely, there’s a very good chance that your model is flawed.
Markets are efficient in the sense that it’s hard to make an easy buck off of them, particularly when they’re rushing maniacally up the skin of an inflating bubble. But are they efficient in the sense that prices are right? Tens of thousands of empty homes say no. And despite the great extent to which markets depart from the theoretician’s ideal, people did manage to put together models predicting the fall, bet on those models, and make a great deal of money off of those bets.
And now we find ourselves in a situation where these people, having set up a model explaining what would happen which was subsequently verified by events, are being told that they suffer from cognitive illusion. That in fact, this testable hypothesis, which passed a test against real world events, is no good.
from https://www.economist.com/free-exchange/2010/01/15/more-on-bubble-spotting
The LIBOR Scandal
Law of the lend
A federal judge throws out much, but not all, of the rate-setting case
Apr 6th 2013 | NEW YORK |From the print edition
FEW financial scandals have had more implications than the one tied to the London Interbank Offered Rate (LIBOR). A number used in the pricing of at least $300 trillion in securities was found to have been manipulated for years. Three banks have paid serious fines: RBS, UBS and Barclays. Careers have been shattered. Yet an unresolved question remains: was there a violation of law?
The answer is, largely, no, according to a 161-page opinion released on March 29th by Naomi Reice Buchwald, a federal judge in the southern district of New York. Most of the American civil litigation has been consolidated in her court and the sheer scope of the opinion is an implicit acknowledgment that the conclusions will be carefully reviewed. In part, this is because it encompasses so much: the structure of an international component of domestic financial markets, the limits of American law and the time constraints for filing claims. But a larger factor is simply the size of the potential claims, which are substantial.
Ms Buchwald’s most important ruling was to dismiss claims that banks conspired to manipulate rates, violating competition law. That may seem surprising. Traders acknowledge submitting false prices; they had financial incentives to do so. But nothing is entirely obvious when it comes to LIBOR because of the odd way it is set.
During the period between August 2007 and May 2010 covered in the litigation, 16 banks participated in a panel under the auspices of the British Bankers’ Association, providing daily estimates of what their own borrowing costs would be, even if they never borrowed. The highest and lowest sets of prices were thrown out; the rest averaged. This was not, Ms Buchwald wrote, a competitive market—the price was not a bid and nothing was bought. It was a co-operative process and thus competition laws did not apply.
With that decision, Ms Buchwald in effect dismissed claims brought by three of the four core groups of plaintiffs: holders of LIBOR-linked bonds, of mutual funds and of over-the-counter securities. That left only those who traded LIBOR-linked contracts on the Chicago Mercantile Exchange as the focal point for litigation. Retaining even these claims was no sure thing. Ms Buchwald rejected the notion that LIBOR manipulation occurring in London was covered by American law. But she accepted that LIBOR alleged to have been used to manipulate prices of contracts traded in Chicago was. This is the second big case to touch on the issue of how American law affects financial products traded elsewhere, and more are coming.
Still, even these plaintiffs did not fare particularly well, as Ms Buchwald dismissed many claims for having been filed beyond the two-year limit from when news reports of LIBOR problems first appeared. “We recognise”, she wrote, “that it might be unexpected that we are dismissing a substantial portion of plaintiffs’ claims, given that several of the defendants have already paid penalties to government regulatory agencies reaching into the billions of dollars.”
The reason, she says, is that public and private enforcement can differ, with the government actions tied to “broad public interests” such as the integrity of the market and competition, and private actions hinging on whether a particular plaintiff deserves compensation. Her exoneration of the defendants rests in large part on the premise that the real problem was not in fake data but in a fake market. Maybe in the next go-round plaintiffs should take a crack at whoever promoted such a market in the first place.
From the print edition: Finance and economics
Unemployment is rising – or is that statistical noise?
Ben Goldacre The Guardian, Friday 19 August 2011 20.30 BST
What do all these numbers mean? “‘Worrying’ jobless rise needs urgent action – Labour” was the BBC headline. It explained the problem in its own words: “The number of people out of work rose by 38,000 to 2.49 million in the three months to June, official figures show.”
Now there are dozens of different ways to quantify the jobs market – I’m not going to summarise them all here. The claimant count and the labour force survey are commonly used, and number of hours worked is informative, too: you can fight among yourselves for which is best, and get distracted by party politics to your heart’s content. But in claiming this figure for the number of people out of work has risen, the BBC is just wrong.
Here’s why. The “labour market” figures come through the Office for National Statistics, and it has published the latest numbers in a PDF document. On page 13, top table, 4th row, you will find the figures the BBC is citing. Unemployment aged 16 and above is at 2,494,000, and has risen by 38,000 in a quarter (32,000 in a year). But you will also see some other figures, after the symbol “±”, in a column marked “sampling variability of change”.
Those figures are called “95% confidence intervals”, and are one of the most useful inventions of modern life.
We can’t do a full census of the whole population every time we want some data, because they’re too expensive and time-consuming. Instead, we take what we hope is a representative sample.
This can fail in two interesting ways. Firstly, a sample can be systematically unrepresentative: if you want to know about the health of the population as a whole, but you survey people in a GP’s waiting room, then you’re an idiot.
But a sample can also be unrepresentative by chance, via sampling error. This is not caused by idiocy. Imagine a large bubblegum vending machine containing thousands of blue and yellow bubblegum balls. You know that exactly 40% of those balls are yellow. When you take a sample of 100 balls, you might get 40 yellow ones, but in fact, as you intuitively know already, sometimes you get 32, sometimes 48, or 37, or 43, or whatever. This is sampling error.
Now, normally, you’re at the other end of the telescope. You take your sample of 100 balls, but you don’t know the true proportion of yellow balls in the jar – you’re trying to estimate that – so you calculate a 95% confidence interval around whatever proportion of yellow you get in your sample of 100 balls, using a formula (in this case, 1.96 x √ ((0.6×0.4) ÷ 100)).
What does this mean? Strictly (it still makes my head hurt), this means that if you repeatedly took samples of 100, then on 95% of those attempts, the true proportion in the jar would lie somewhere between the upper and lower limits of the 95% confidence intervals of your samples. That’s all we can say.
So, if we look at these employment figures, you can see that the changes reported are clearly not statistically significant: the estimated change over the past quarter is 38,000, but the 95% confidence interval is ± 87,000, running from -49,000 to 125,000. That wide range clearly includes zero, no change at all. The annual change is 32,000, but again, that’s ± 111,000.
I don’t know what’s happening to the economy; it’s probably not great. But these specific numbers tell us nothing, and there is an equallyimportant problem arising from that, which is frankly more enduring for meaningful political engagement. We are barraged, every day, with a vast quantity of numerical data, presented with absolute certainty and fetishistic precision. In reality, many of these numbers amount to nothing more than statistical noise, the gentle static fuzz of random variation and sampling error, making figures drift up and down, following no pattern at all, like the changing roll of a dice. This, I confidently predict, will never change.
Thoughts on @bengoldacre’s article this morning: I think Ben makes a very good point in pointing out that unemployment statistics are subject to sampling error, and that in many months, the change in unemployment is not statistically distinguishable for this reason.
However, I think Ben somewhat overstates this particular point. It’s not right to say, as he does in his final paragraph, that these statistics “tell us nothing”. We can’t dismiss all data that fails to pass the (entirely arbitrary) test of statistical significance. Non-statistically significant data contribute to our knowledge, but we shouldn’t put too much weight on them. (Ben knows this, of course: he pulled back a bit from this in a tweet to me, saying that what he really wanted was for economics reporters to acknowledge the lack of statistical significance, which would indeed be nice to see.)
But I liked Ben’s final point, and he could have made more of it. There’s a lot of economic data out there that is noisy but for which sampling error bars are not appropriate. GDP data, for instance, is initially reported based on partial data (and not a random sample) and we gradually close in on a view of what GDP actually was. Sometimes we revise our views dramatically: Greece’s GDP (actual GDP, not GDP growth rate) jumped suddenly by 25 per cent late in 2006 thanks to a statistical revision, although I’ll admit Greece’s data is hardly the best in the world.
And what of the data that get far more airtime than every other economic variable put together – the movements of the stock markets? There is no sampling error here at all: the reporters really are able to tell us, minute by minute if they wish to, exactly what the stock markets are doing. As a consequence they do exactly that, producing reports that are full of sound and fury, signifying… well not nothing, but not a lot either. Stock market movements are extremely noisy, big money bets on the future of the economy. They can be reported with absolute precision. That doesn’t mean they should be.
Tim Harford
TIM HARFORDTHE UNDERCOVER ECONOMIST
Look out for No. 1
In the late 1990s, eurozone wannabes squeezed and stretched to meet the criteria for accession, including low inflation and government deficits, and moderate levels of debt. The criteria were somewhat irksome, especially for an economy such as Greece, but nevertheless the Greeks seemed to comply.
Eventually, it became clear that the Greek numbers did not quite add up. Eurostat, the European statistics agency, has complained about “widespread misreporting of deficit and debt data” from the Greek authorities. In 2006, eyebrows were raised when Greece’s GDP jumped 25 per cent overnight thanks to a statistical revision that sought to incorporate prostitution and money laundering, among other industries. In late 2009, the incoming prime minister announced that the deficit was more like 12.5 per cent of GDP than 3.7 per cent.
Had its economic statistics been more rigorously reported, it seems unlikely that Greece would have made it into the eurozone. But could the anomalies have been spotted at the time? Perhaps so.
I’ve written about Benford’s Law before: it’s a statistical regularity that often occurs in “real” data but not in manipulated numbers. Now four researchers have published a paper using Benford’s Law to examine Greek macroeconomic data. (Perhaps the origin of the paper should not be a surprise: it’s by Bernhard Rauch, Max Göttsche, Gernot Brähler and Stefan Engel, and it’s published in the German Economic Review.)
Benford’s Law was discovered in 1881 by the astronomer Simon Newcomb, and then again by Frank Benford, a physicist at General Electric, in 1938. The law is a curious one: it predicts the frequency of the first digits of a collection of numbers. For example, measure the lengths of the world’s rivers, and see how many of the digits begin with “one” (184 miles; 1,543 miles) versus “three” (3,022 miles) or “nine” (985 miles). Newcomb and Benford discovered that the first digit is usually a “one” – fully 30 per cent of the time, over six times more common than an initial “nine”. And the result is true whether one counts the numbers on the front page of The New York Times or leafs through baseball statistics.
Nobody seems sure why so much data has the Benford distribution. We do know that exponential growth produces it. To move from a GDP of one billion Flainian Pobble Beads (a unit of currency in The Hitchhiker’s Guide to the Galaxy) to two billion Flainian Pobble Beads requires cumulative growth of 100 per cent, which will take a while. But to move from a GDP of 9 billion to 10 billion Flainian Pobble Beads requires only 10 per cent growth. Benford distributions are, uniquely, scale-invariant – in other words, if one measures GDP in dollars instead of Pobble Beads, the Benford property remains.
Manipulated data often fail to satisfy Benford’s Law. A manager who must submit receipts for expenses over £20 may end up filing claims for lots of £18 and £19 expenses – and the data will then contain too many ones, eights and nines. A forensic accountant can easily check this, and while not an infallible check (fraudster Bernard Madoff filed Benford-compatible monthly returns), it’s an indicator of possible trouble.
Which brings us back to the data Greece submitted to the European statistics agency. According to Rauch and his colleagues, Greek data are further from the Benford distribution than that of any other European Union member state. Romania, Latvia and Belgium also have abnormally distributed data, while Portugal, Italy and Spain have a clean bill of health.
Would a Benford-style analysis have helped spot Greece’s problems? In principle, yes. In practice, one wonders whether politics would have trumped statistics. A shame: according to Benford’s Law, Greece’s data were particularly odd in 2000, just before it joined the euro.
Also published at ft.com.
http://timharford.com/2011/09/look-out-for-no-1/
http://testingbenfordslaw.com/
Why GDP Will Rise (Not What You Think)
STEPHEN J. DUBNER
07/22/2013 | 9:02 am
In Bloomberg BusinessWeek, Peter Coy writes an excellent piece on the Bureau of Economic Analysis’s upcoming revision of Gross Domestic Product measurement. That may not sound very interesting but Coy does a great job showing the macro and micro angles.
“On July 31, the U.S. Bureau of Economic Analysis will rewrite history on a grand scale by restating the size and composition of the gross domestic product, all the way back to the first year it was recorded, 1929. The biggest change will be the reclassification—nay, the elevation—of research and development. R&D will no longer be treated as a mere expense, like the electricity bill or food for the company cafeteria. It will be categorized on the government’s books as an investment, akin to constructing a factory or digging a mine. In another victory for intellectual property, original works of art such as films, music, and books will be treated for the first time as long-lived assets.”
Even in good financial times, development aid budgets are hardly overflowing. Government leaders and donors must make hard decisions about where to focus their limited resources. How do you decide which countries should get low-cost loans or cheaper vaccines, and which can afford to fund their own development programs? The answer depends, in part, on how we measure growth and improvements in people’s lives. Traditionally, one of the guiding factors has been per capita GDP – the value of goods and services produced by a country in a year divided by the country’s population. Yet GDP may be an inaccurate indicator in the poorest countries, which is a concern not only for policymakers or people like me who read lots of World Bank reports, but also for anyone who wants to use statistics to make the case for helping the world’s poorest people.
I have long believed that GDP understates growth even in rich countries, where its measurement is quite sophisticated, because it is very difficult to compare the value of baskets of goods across different time periods. In the United States, for example, a set of encyclopedias in 1960 was expensive but held great value for families with studious kids. (I can speak from experience, having spent many hours poring over the multi-volume World Book Encyclopedia that my parents bought for my sisters and me.) Now, thanks to the Internet, kids have access to far more information for free. How do you factor that into GDP? The challenges of calculating GDP are particularly acute in Sub-Saharan Africa, owing to weak national statistics offices and historical biases that muddy crucial measurements. Bothered by what he regarded as problems in Zambia’s national statistics, Morten Jerven, an assistant professor at Simon Fraser University, spent four years examining how African countries obtain their data and the challenges they face in turning them into GDP estimates. His new book, Poor Numbers: How We Are Misled by African Development Statistics and What to Do about It, makes a strong case that a lot of GDP measurements that we thought were accurate are far from it.
Jerven notes that many African countries have trouble measuring the size of their relatively large subsistence economies and unrecorded economic activity. How do you account for the production of a farmer who grows and eats his own food? If subsistence farming is systematically underestimated, some of what looks like growth as an economy moves out of subsistence may merely reflect a shift to something that is easier to capture statistically. There are other problems with poor countries’ GDP data. For example, many countries in Sub-Saharan Africa do not update their reporting often enough, so their GDP numbers may miss large and fast-growing economic sectors, like cell phones. When Ghana updated its reporting a few years ago, its GDP jumped by 60%. But many people didn’t understand that this was just a statistical anomaly, not an actual change in Ghanaians’ standard of living.
In addition, there are several ways to calculate GDP, and they can produce wildly different results. Jerven mentions three: the World Development Indicators, published by the World Bank (by far the most commonly used dataset); the Penn World Table, released by the University of Pennsylvania; and the Maddison Project at the University of Groningen, which is based on work by the late economist Angus Maddison. These sources rely on the same basic data, but they modify it in different ways to account for inflation and other factors. As a result, their rankings of different countries’ economies can vary widely. Liberia is Sub-Saharan Africa’s second-poorest, seventh-poorest, or 22nd-poorest country in terms of GDP, depending on which authority you consult. It is not only the relative rankings that differ. Sometimes, one source will show a country growing by several percentage points, and another source will show it shrinking over the same time period.
Jerven cites these discrepancies to argue that we cannot be certain whether one poor country’s GDP is higher than another’s, and that we should not use GDP alone to make judgments about which economic policies lead to growth. Does that mean that we really don’t know anything about what works (and what doesn’t) in development? Not at all. Researchers have long used techniques like periodic household surveys to collect data. For example, the Demographic and Health Survey is conducted regularly to determine things like childhood and maternal death rates. Moreover, economists are using new techniques like satellite mapping of light sources to inform their estimates of economic growth. Although such methods are not perfect, they also are not susceptible to the same problems as GDP.
Other ways to measure overall living standards in a country are similarly imperfect; but they nonetheless provide additional ways to understand poverty. One, called the Human Development Index, uses health and education statistics in addition to GDP. Another, the Multidimensional Poverty Index, uses ten indicators, including nutrition, sanitation, and access to cooking fuel and water. And, by using purchasing power parity, which measures the cost of the same basket of goods and services in different countries, economists can adjust GDP to gain better insight into living standards. Yet it is clear to me that we need to devote greater resources to getting basic GDP numbers right. As Jerven argues, national statistics offices across Africa need more support so that they can obtain and report timelier and more accurate data. Donor governments and international organizations such as the World Bank need to do more to help African authorities produce a clearer picture of their economies. And African policymakers need to be more consistent about demanding better statistics and using them to inform decisions. I’m a big advocate for investing in health and development around the world. The better tools we have for measuring progress, the more we can ensure that those investments reach the people who need them the most.
Read more at http://www.project-syndicate.org/commentary/poor-countries-need-more-accurate-gdp-data-by-bill-gates#1wZutBJE5BYj1uye.99
Boundary problems Aug 3rd 2013 | The economist
ECONOMICS is a messy discipline: too fluid to be a science, too rigorous to be an art. Perhaps it is fitting that economists’ most-used metric, gross domestic product (GDP), is a tangle too. GDP measures the total value of output in an economic territory. Its apparent simplicity explains why it is scrutinised down to tenths of a percentage point every month. But as a foundation for analysis it is highly subjective: it rests on difficult decisions about what counts as a territory, what counts as output and how to value it. Indeed, economists are still tweaking it. This week America’s GDP rose by $560 billion, or 3.6%, mainly because the “boundary” that defines what counts as an economic asset was moved.
The modern history of GDP starts with America’s Depression. The set of measures available to those battling the slump that started in 1929 was scarily narrow. Policymakers used stock prices, industrial production and transport data, and little else. The detail needed to diagnose economic problems properly was provided in a 1934 report by Simon Kuznets. The new national-income and product accounts that resulted measured income by industry and production by sector; they also introduced lots of new metrics, including GDP. Richard Stone of Cambridge University developed a similar system for Britain, adopted by the UN in 1947 as the first “System of National Accounts” (SNA), a set of international standards for measuring economic activity.
Since these first big steps to make GDP measurement systematic and international, improvements have been more gradual. The big problems are what to measure and how to measure it. Answering the first question involves defining a set of “boundaries”: activities inside the ropes are included, those outside are not. Even the geographical boundary—how to define a nation—can be thorny. A country’s territorial waters are within its national boundary, but foreign crews of ships working in those waters contribute to their home country’s output. Smugglers, whose activity crosses borders and is hard to track, are a real headache.
Defining other boundaries is even harder. Since investment (activity that creates assets) is part of GDP, it is vital to define “assets”. Here practicalities can trump principles. Economists have long thought of spending on research and development, or on making artwork, as types of investment. These efforts create things—patents, for example—that are a lot like fixed assets. They are durable, they give rise to a future stream of income and they help generate future output. But the previous SNA system, set up in 1993, regarded such assets as too difficult to measure. For this reason they were set outside the asset boundary. And so spending to produce them did not count as investment, part of GDP.
But the latest SNA system, agreed upon in 2008, shifted the asset boundary to include these innovative activities, prompting the changes to America’s statistics this week. A new investment class called “intellectual-property products” has been created by America’s Bureau of Economic Analysis (BEA). Ideally, the value of private firms’ R&D would be based on the future income it generates, discounted to today’s values. But since future products, and their related prices, are unobservable, those calculations are tricky. So the BEA is measuring R&D investment using firms’ innovation-related costs. Government R&D, mainly spending on health, defence and aerospace, is now measured in the same way.
The BEA faces an even fiddlier task with original artwork, a category that includes films, books, music and TV shows. (Newspaper articles have no lasting value, according to the BEA, but what do they know?) The problem is that there is scant information on investment costs. Moreover, the asset—the right to the music, manuscript or TV format—is rarely sold. Rather it is used to create a future stream of products, like books and TV shows. So the BEA must estimate likely future royalty fees, and translate them into today’s money to value the investment. Since artistic assets can last a long time (“The Simpsons” has been running since 1989) that is a tough task.
In the short term America’s new GDP measure makes international comparisons more difficult. The BEA is not the first mover: Australia made the change in 2009, leapfrogging Canada in the OECD’s country rankings of GDP per person. Canada switched in 2012, making back some of the ground. For the moment, America, Australia and Canada are the only G20 countries on the new system. By 2014 many other countries, including those in the EU, will have joined them.
But GDP is still far from perfect. One problem is how to treat goods and services that are produced and consumed in the home. To do this the SNA defines another boundary. All goods produced and consumed at home are included in GDP: if more fruit and vegetables are grown in the garden the economy gets bigger. The logic is that home-grown produce could be sold at a market, obtain a price and be measurable. But services—cleaning a home, caring for a relative—are excluded from GDP. The logic is that services are produced as they are consumed: since they could not be sold they are outside the market.
But the assumption that there are no market prices for services delivered at home is 1940s thinking. It is easy to put a price on cleaning and caring—far simpler than working out how to price future film royalties. And excluding home-provided health care and education creates an ever-widening faultline under GDP. The market values of these services are rising much more quickly than the general rate of inflation. That means the value of the activity outside the boundary is changing rapidly over time. To stay relevant national accounts may have to change again.
Sarkozy attacks focus on economic growth Lizzy Davies
The Guardian, Monday 14 September 2009 17.40 BST
Nicolas Sarkozy called for a “great revolution” in the way national wealth is measured today, throwing his weight behind a report which criticises “GDP fetishism” and prioritises quality of life over financial growth.
Speaking days before the G20 summit in Pittsburgh, France’s president urged the rest of the world to follow his example as he ordered a shake-up in research methods aimed at providing a more balanced reading of countries’ performance.
Endorsing the recommendations of a report given to him by Nobel prize winners Joseph Stiglitz and Amartya Sen, he said governments should do away with the “religion of statistics” in which financial prowess was the sole indicator of a country’s state of health.
“For years statistics have registered an increasingly strong economic growth as a victory over shortage until it emerged that this growth was destroying more than it was creating,” said Sarkozy in a speech at the Sorbonne. “The crisis doesn’t only make us free to imagine other models, another future, another world. It obliges us to do so.”
Arguing that gross domestic product (GDP) – the standard means of measuring a country’s economic growth – ignores other factors vital to the well-being of its population, the report proposes a new indicator which would be calculated with GDP but take into account a broader view.
A new indicator would look at issues such as environmental protection and work/life balance as well as economic output to rate a country’s ability to maintain the “sustainable” happiness of its inhabitants.
“Our economy is supposed to increase our well-being; it is not an end in itself,” said Stiglitz at the launch of the report, commissioned by Sarkozy last year. “GDP statistics were introduced to measure market economic activity. But they are increasingly thought of as a measure of societal well-being, which they are not.”
Asking France’s national statistics body, Insee, to update its methods in accordance with the report’s recommendations, Sarkozy said he would use future summits such as next week’s G20 to persuade other countries follow suit. “France will put this report on the agenda of all international meetings,” he said.
France, whose economic output has fallen in the decades since the end of the prosperous “trente glorieuses” (1945-1975) prides itself on other aspects of life. Its healthcare system has been ranked the world’s best by the World Health Organisation, its comparatively short working week is legendary, and its fertility levels are the highest in Europe, along with Ireland’s.
“Economic resources are not all that matter in people’s lives,” said Angel Gurría, secretary general of the Organisation for Economic Cooperation and Development. “We need better measures of people’s expectations and levels of satisfaction, of how they spend their time, of their relations with other people in their community.”
Using the traditional measure, the European commission today forecast that the eurozone will grow by 0.2% in the third quarter as the continent’s biggest economies recover from the worst recession in decades. In its latest economic outlook, the commission predicted the economy would grow by 0.2% between July and September and by 0.1% in the final quarter of the year.
However, it did not change its forecast that the eurozone’s GDP would fall by 4% in 2009 as a whole because the economy fared worse at the end of 2008 and the beginning of this year.
European monetary union was agreed at Maastricht, the Netherlands, in December 1991. The EU heads of state and government set a fixed timetable for implementation of a single currency and agreed on five criteria how countries could qualify for Emu. They are:
Countries should have an inflation rate within 1.5% of the three EU countries with the lowest rate. This will push down inflation rates and lead to more stable prices.
Long-term interest rates must be within 2% of the three lowest interest rates in EU.
Exchange rates must be kept within “normal” fluctuation margins of Europe’s exchange-rate mechanism.
The amount of money owed by a government for 1997, known as the budget deficit, has to be below 3% of Gross Domestic Product (GDP – the total output of the economy). In exceptional circumstances a country can be above 3% and still qualify.
The total amount of money owed by a government, known as the public debt, has to be less than 60% of GDP.
Of the 12 countries wanting to join Emu, only Luxembourg and Finland have fully met the currency criteria.
However, the convergence criteria are somewhat flexible so that Austria, Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal and Spain will be able join up too.
Only Greece failed to qualify: Its public debt is too high and the Greek drachma has only recently joined the European exchange-rate mechanism.
The United Kingdom would technically qualify for Emu, but has decided not to join with the first wave of countries. Denmark and Sweden would meet the Maastricht criteria, but have not joined the European exchange-rate mechanism yet.
urse we are talking about convergence criteria, so they do not apply in the same sense after you have joined. Luckily, plenty of new rules are in the process of being approved, e.g. the so called fiscal pact. In light of history, one should not be too surprised to see also these rules breached in the future.
Not a single Euro-zone country currently meeting all the convergence criteria
The convergence criteria are formally defined as a set of macroeconomic indicators which measure:
Price stability, to show inflation is controlled;
Soundness and sustainability of public finances, through limits on government borrowing and national debt to avoid excessive deficit;
Exchange-rate stability, through participation in the Exchange Rate Mechanism (ERM II) for at least two years without strong deviations from the ERM II central rate;
Long-term interest rates, to assess the durability of the convergence achieved by fulfilling the other criteria.
They consist of five criteria, laid out in the Maastricht Treaty:
The amount of money owed by a government – known as the budget deficit, has to be below 3% of Gross Domestic Product (GDP) – the total output of the economy.
The total amount of money owed by a government, known as the public debt, has to be less than 60% of GDP. The public debt is the cumulative total of each year’s budget deficit.
Countries should have an inflation rate within 1.5% of the three EU countries with the lowest rate. This was supposed to push down inflation rates and lead to more stable prices.
Long-term interest rates must be within 2% of the three lowest interest rates in EU.
Exchange rates must be kept within “normal” fluctuation margins of Europe’s exchange-rate mechanism.
There was a great deal of disagreement between countries about how strictly these criteria should be interpreted.
But when decision day eventually came, only Greece was told it was not ready to join the single currency with the first wave of countries in 1999. It joined Eurozone at the beginning of 2001.
Denmark, Sweden and the UK all opted to keep their national currencies.
China
http://www.economist.com/node/21560259
Countries by 2011 GDP (PPP) per capita, based on World Bank figures; if no IMF/World Bank figure was available for a country, the CIA figure was used.
This article includes several lists of countries by gross domestic product at purchasing power parity per capita, the value of all final goods and servicesproduced within a country in a given year, divided by the average (or mid-year) population for the same year.
Gross domestic product (GDP) dollar estimates are derived from purchasing power parity (PPP) calculations, per capita. Such calculations are prepared by various organizations, including the International Monetary Fund and the World Bank. As estimates and assumptions have to be made, the results produced by different organizations for the same country tend to differ, sometimes substantially. PPP figures are estimates rather than hard facts, and should be used with caution.
Comparisons of national wealth are also frequently made on the basis of nominal GDP, which does not reflect differences in the cost of living in different countries)Using a PPP basis is arguably more useful when comparing generalized differences in living standards on the whole between nations because PPP takes into account the relative cost of living and the inflation rates of the countries, rather than using just exchange rates which may distort the real differences in income.
Other figures include savings (not just income), such as national wealth. GDP per capita is often considered an indicator of a country’s standard of living;[1][2] although this can be problematic because GDP per capita is not a measure of personal income (See Standard of living and GDP).
Several economies, which are not considered to be countries (i.e. the world, the European Union and some dependent territories), are included in the list because they appear in the sources. These economies are not ranked in the charts here, but are listed in sequence by GDP for comparison. Non-sovereign entities, former countries or other special groupings are marked in italics.All figures are in current international dollars (Int$).
AT ABOUT 11am London time, Jacques Attali, the beleaguered president of the Bank for
European Reconstruction and Development, picked up the telephone in his office in
Broadgate and rang a number in Sweden. He spoke for several minutes to Anne Wibble, the
Swedish finance minister and chairman of the bank’s governors, who was away from her
office on Sweden’s summer solstice holiday. By the time he put down the phone, he had
resigned from his post.
Later that morning, he walked into a meeting of the bank’s board in the large boardroom
overlooking the City, with the dome of St Pauls in the distance, and passed around copies of
his resignation letter. In explanation of his move, it said: ‘The Bank has come under
increasing negative press attention in recent months. I know of no action that I have taken
that in any way could be worthy of reproach. Unfortunately this attention has begun to have a
detrimental effect on the bank’s work, and on its staff, and it is with the interests of the Bank
in mind that I have taken this decision.’
The 23 directors were surprised but not shocked. Attali, 49, had taken the decision to resign
unprompted by the board, so the timing was somewhat unexpected. But everyone in the bank
had become increasingly certain over the last few weeks that Attali would have to go. There
was relief when he finally resigned.
Although Attali saw nothing wrong in his behaviour, too many other people did. The trigger
to his resignation decision were two press reports on Friday morning. One in the
Independent said there could be an exodus of senior staff unless Attali was replaced. It
reflected the fact that political infighting was bringing the bank to a standstill. The
Financial Times reported that Attali had been
reimbursed twice for the same first-class air fare to
Tokyo and had collected dollars 30,000 (pounds
20,000) for a speech there, even though bank staff
were not supposed to be paid by anyone but the
EBRD.
But it was only the culmination of nearly three
months of damaging disclosures about Attali and
the EBRD. In April, the FT disclosed that the bank
had spent pounds 55.5m on refurbishing its new
headquarters in Broadgate, the second set of
offices it had occupied in London since its
establishment in 1990. The expenditure swallowed
the whole of the pounds 45m grant that the British
had given the bank. Of that, pounds 750,000 went
on exchanging the red Travertine marble in the
bank’s lobby for pale Carrara marble. Works of art
and carpets specially woven to even out the light in
the bank’s offices also swallowed money.
Senior staff were, in many cases, more highly paid
than in other multinational organisations such as
the World Bank. (Attali was on four-year contract
with a tax-free salary of around pounds 250,000 a
year.) The EBRD’s expenditure on itself was twice
as much as the bank’s actual lending in 1991 and
1992, its first two years of operation.
The bank also blundered, as far as its public image
was concerned, by spending pounds 600,000 on
hiring executive jets to fly Attali and his staff
around Europe. He would go on lightening visits to meet top politicians in
former Soviet republics and Eastern European countries, spending only a few hours in each.
Some trips cost considerably more than they might have done because the bank paid for him
to stop over for the night in Paris with the meter, as it were, still running.
As the furore mounted over the way Attali was running the bank, the Group of Seven
industrial country shareholders stepped in. In disgust, the US – a 10 per cent shareholder –
cut off its funding for the bank. The G7 tried to rope in Ernest Stern, the number two at the
World Bank, to help out at the EBRD. Attali incorporated this into a reorganisation plan of
his own, which duly angered existing bank staff. Many were already fed up with his autocratic
style. Ronald Freeman, Attali’s deputy, threatened to resign if he was demoted under the
restructuring. Others grew restive. Morale in the chic Broadgate offices slumped.
Coopers & Lybrand were sent in by the shareholders to investigate the expenditure. Their
report is expected on July 15, but a draft will be considered by the Group of Seven countries
at their meeting in Tokyo in 10 days’ time. It could have proved the end of Attali’s reign at the
EBRD had he not resigned two days ago.
Attali, showing signs of stress, had tried to fight back by claiming that the money for the
speech had been given to charity; that the air fares were an administrative muddle; and that,
in any case, he was too well paid to need to fiddle his expenses. The damage to his reputation,
however, had already been done. He also denied any involvement in the decision to replace
the marble. In the end, it did him no good.
The truth is that he had always been on a sticky wicket, because many of the EBRD
shareholders had never liked his style. Unquestionably a man of immense energy and
intelligence as well as considerable charm, the idea for an East European development bank had been his. He managed to set up the EBRD in only two years but never won the confidence
of his backers.
Attali comes from a wealthy Jewish family based in Algeria, where his father was a perfume
retailer. He received a high-flyer’s education as an economist. In 1972, he met Francois
Mitterrand (in a nightclub, it is said) and the two developed a close relatioship. For seven
years while Mitterrand was President of France, Attali sat outside his office and controlled
who went in to see his master.
He is also the author of at least 15 books. He had immense self-confidence, was frankly
immodest about his own abilities, but had no practical banking
experience. He was, however, appointed to the
EBRD with French political backing as part of a
compromise with the British, under which the
EBRD would be based in London.
Many of the shareholders, such as the US, had never really wanted him, and the sniping
began almost immediately. He was notorious for being late for meetings, for agreeing to
initiatives and then doing little about them; few dispute that he lacked the ability to put his
vision into effect and provided ineffectual leadership at the bank. And he had a remarkable
ability for rubbing people up the wrong way.
The US, however, made his job harder by insisting that most of the EBRD’s lending – 60 per
cent of it – should go to the private sector in Eastern Europe rather than to public
infrastructure projects. In ruined economies with little experience of private enterprise, this
was a tall order.
It has been able to lend very little, for example, in the former Soviet Union, Romania or
Bulgaria. So it is not entirely surprising the EBRD has taken so long to build up its loan
portfolio. Nevertheless, Attali took the flak.
While Mitterrand was still at the height of his political power, his former protege was safe.
But with the election of a right-wing government in France earlier this year, his political clout
waned and Attali became more exposed.
Mrs Wibble will call a meeting of the bank’s shareholders before the G7 meeting in Tokyo on
July 7 to choose a successor to Attali. Ernest Stern must be considered out of the race,
because the Europeans would not accept a US head of a European bank. Onno Ruding, the
former Dutch finance minister who was Attali’s main competitor for the presidency two years
ago, is likely to be a contender this time. So too is Karl Otto Pohl, the highly respected former
chairman of the Bundesbank, and Jean-Claude Trichet, the head of the French Treasury. But
the former Franco-British alliance that got Attali appointed in the first place no longer exists.
Whoever is chosen, the bank’s basic policy of funding private sector investments looks certain
to remain. But the shareholders, the bank’s staff and the East European economies will be
praying that whoever takes over will get the bank moving and repair its reputation.
In the meantime, Attali will certainly move back to Paris – he never liked London which he
regarded as inhospitable. No doubt, we can expect a book from him shortly explaining how
he was misunderstood and hounded out of his own creation by hostile Anglo-Saxons. And he
Extremists, notes Jon Ronson, don’t like being called extremists. They prefer to say that it is members of “the western liberal cosmopolitan establishment” who are the real extremists. “I like it when they say this,” he remarks, “because it makes me feel I have a belief system.” The whole book is captured in that thought — wry, paradoxical, mocking, ambivalent, uneasy, self-aware and deprecating. The postmodern liberal aspires to accept everything and yet believe nothing. But then he finds himself confronted by people — extremists — who believe one thing and can accept nothing else. To them, the liberal is tyrannical and his tolerance is thinly disguised oppression. The liberal posture being, by definition, weak, he does not fight back. Instead, sadomasochistically, he muses on the possibility of being comforted by faith. Because they hate me, he reasons, I must believe. But in what?
One way to confront this conundrum is to think about it; another, better way is to act upon it. Ronson acts. The result is a funny, superbly controlled account of his wanderings through the wonderland of fanaticism and delusion. This may be one more example of the “cool hack meets weird people” genre, which was already looking jaded in the late 1960s. But it is lifted out of the ordinary: first, by the quality of Ronson’s writing; second, by the carefully disguised seriousness of his intent; and third, by his Jewish identity.
http://www.jonronson.com/them_fave.html
Bryan Appleyard
http://www.jonronson.com/them_fave.html
ronson from .29
jim tucker
from 3.05 120 people from sport/Hollywood…
you’d bust your butt
P 23 ronson calls British Embassy
P 31 Rockefeller
P32 Conrad Black
P 40 Thatcher
Vicki Weaver
he next day, August 22, 1992, HRT sniper/observer teams were deployed on the north ridge overlooking the cabin. Randy Weaver, Harris, and Weaver’s 16-year-old daughter Sara were seen outside the cabin. Weaver went to view the body of Sammy Weaver,[8] which had been placed in a shed after being recovered the previous day. Weaver’s back was to FBI HRT sniper Lon Horiuchi. Horiuchi aimed to sever Weaver’s spine for an instant kill. Weaver moved in the last split second as Horiuchi fired and the bullet entered Weaver’s right shoulder and exited the armpit.[11] As the three ran back to the house, Horiuchi fired again at Kevin Harris as he ran away, but this time hit Weaver’s wife Vicki in the head as she held their 10-month-old daughter Elishiba at the door.[12] Vicki Weaver collapsed on the floor, dying instantly with her bloody but uninjured daughter in her arms. Harris was hit in the chest by the same bullet. A Justice Department review later found this second shot was unconstitutional and the lack of a request to surrender was “inexcusable”, since Harris and the two Weavers were running for cover and could not pose an imminent threat. The task force also specifically blamed Horiuchi for firing at the door, not knowing whether someone was on the other side of it, and criticized those who had decided on the special rules of engagement allowing shots to be fired with no previous request for surrender.[8] Much later, a robot vehicle approached the cabin and announced the presence of law enforcement. According to the Weavers, this was the first announcement of the source of the violence.[citation nee
A stand-off ensued for 10 days as several hundred federal agents surrounded the house, in which Weaver and his three surviving children remained with Harris and the body of Vicki Weaver, under a blood-soaked blanket.[3] During the stand-off, the government force, which numbered 350 to 400 men, had named their temporary camp “Camp Vicki”.[13] The negotiators who later claimed they did not know Vicki was dead would call out in the morning ‘Vicki, we have blueberry pancakes.’ To Sara Weaver inside with her dead mother’s body, they were deliberately taunting the survivors.[14][15][16] A vigil was maintained at the Ruby Creek Bridge by protesters who believed the government actions were heavy-handed. James “Bo” Gritz, then a third-party presidential candidate who had formerly been Weaver’s commanding officer during the Vietnam War, served as a mediator between Weaver and the government. Eventually, Weaver elected to abandon the stand-off and surrender.
Weaver was charged with multiple crimes relating to the Ruby Ridge incident, a total of ten counts including the original firearms charges and murder. Attorney Gerry Spence handled Weaver’s defense, and argued successfully that Weaver’s actions were justifiable as self-defense. The judge dismissed two counts after hearing prosecution witness testimony. The jury acquitted Weaver of all remaining charges except two, one of which the judge set aside. Weaver was found guilty of one count, failure to appear, for which Weaver was fined $10,000 and sentenced to 18 months in prison. He was credited with time served plus an additional three months, and was then released. Kevin Harris was acquitted of all criminal charges.[17]
In August 1995, the US government avoided trial on a civil lawsuit filed by the Weavers, by awarding the three surviving daughters $1,000,000 each, and Randy Weaver $100,000 over the deaths of Sammy and Vicki Weaver.
Bbc
We don’t do god
1. en charge du fonctionnement de l’ordre mondial, ce n’est pas …
The ATF attempted to execute their search warrant on a Sunday morning, February 28, 1993. Any advantage of surprise was lost when a reporter who had been tipped off about the raid asked for directions from a U.S. Postal Service mail carrier who was coincidentally Koresh’s brother-in-law.[22] Koresh then told undercover ATF agent Robert Rodriguez that they knew a raid was imminent. Rodriguez had infiltrated the Branch Davidians and was astonished to find that his cover had been blown. The agent made an excuse and left the compound. When asked later what the Branch Davidians had been doing when he left the compound, Rodriguez replied, “They were praying.” Branch Davidian survivors have written that Koresh ordered selected male followers to begin arming and taking up defensive positions, while the women and children were told to take cover in their rooms.[22] Koresh told them he would try to speak to the agents, and what happened next would depend on the agents’ intentions.
Despite being informed that the Branch Davidians knew a raid was coming, the ATF commander ordered that the raid go ahead, even though their plan depended on reaching the compound without the Branch Davidians being armed and prepared.[22]While not standard procedure, ATF agents had their blood type written on their arms or neck after leaving the staging area and before the raid, because it was recommended by the military to facilitate speedy blood transfusions in the case of injury.[40][41] Agents approached the site in cattle trailers pulled by pickup trucks owned by individual ATF agents.
ATF agents stated they heard shots coming from within the compound, while Branch Davidian survivors claimed that the first shots came from the ATF agents outside. A suggested reason may have been an accidental discharge of a weapon, possibly by an ATF agent, causing the ATF to respond with fire from automatic weapons.[42] Other reports claim the first shots were fired by the ATF “dog team” sent to kill the dogs in the Branch Davidian kennel.[43] Three National Guard helicopters were used as aerial distraction and all took incoming fire, but they did not return fire.[44] During the first shots, Koresh was wounded, shot in the wrist.[45] Within a minute of the raid starting, Branch Davidian Wayne Martin called emergency services, pleading for them to stop shooting. The resident asked for a ceasefire, and audiotapes record him saying, “Here they come again!” and, “That’s them shooting! That’s not us!”
The PPD was sued and forced to pay $1.5 million to a survivor and relatives, due to using excessive force and unlawful search and seizure.
Ramiro Martinez and Houston McCoy flanked Whitman, and Martinez emptied his revolver at him, wounding him. McCoy then fired two rounds of 12-ga 00 buckshot into the head, neck and left side of Whitman, killing him instantly.
Martinez then grabbed the shotgun from McCoy, ran up to Whitman’s body, and shot him again in the upper left arm, point blank. There is a photo of Whitman’s dead body on Wikipedia. He was subsequently found to have a glioblastoma, a brain tumor that could have caused his erratic mentality, as he had not always been homicidal.
After graduating from high school, William Cooper joined the U.S. Air Force and later the U.S. Navy. He served in the Vietnam War and then worked for Naval Security and Intelligence. Cooper gained notoriety after publishing a book titled Behold a Pale Horse. The text documents various UFO and paranormal activities he encountered while serving for Naval Intelligence. It examines government corruption, secret societies, and a collection of conspiracy theories. In the 1990s, William Cooper became a popular speaker on the UFO lecture circuit. He was the host of a worldwide shortwave radio show named Hour of the Time.
William Cooper was the first person to provide evidence of explosive material inside the Murrah Building in Oklahoma City on April 19, 1995. He publicly identified the type of explosives used in the Oklahoma City bombing. In his early writings, Cooper was convinced that the United States was hiding evidence of alien technology. Towards the end of his life Cooper turned his attention towards covert government programs and the militia movement. He became an outspoken critic of U.S. government abuses. William Cooper felt that the UFO phenomenon was a misinformation campaign organized to hide secret military operations. He asserted that the Internal Revenue Service (IRS) is actually the same organization as the Bureau of Alcohol, Tobacco and Firearms. Cooper felt the two organizations were involved in a broad, premeditated conspiracy to defraud the Citizens of the United States of America.
In June 2001, three months before 9/11, William Cooper warned publicly about an important terrorist attack on United States, that would be blamed on Osama Bin Laden. During his June 28 broadcast, William Cooper said “I’m telling you be prepared for a major attack. But it won’t be Osama Bin Laden. It will be those behind the New World Order.” On 9/11 Cooper said “what we’re witnessing today is most probably the herald of the, at least, the redefinition of freedom, and probably its death.”
William Cooper was charged with various crimes in his lifetime, including tax evasion from 1992 to 1994, and bank fraud for giving false information on a loan application. In July and September 2001, Cooper was accused of brandishing a handgun near his home in Eagar, Arizona. On November 6, 2001, two months after September 11, William Cooper was fatally shot by a large collection of Arizona deputies who were attempting to serve him an arrest warrant. According to police accounts, Cooper, who was physically disabled, fled officers and pulled out a weapon. A gun fight ensued and William Cooper was killed. A deputy was critically injured in the incident.
Kenny Johannemann worked as a part-time janitor in the World Trade Center when it was attacked and destroyed on September 11, 2001. He was in the North Tower waiting for an elevator when the first explosion occurred. The blast created a fireball that engulfed the elevator shaft. Johannemann responded by saving the life of a man that was badly burned in the event. He was in a similar position as William Rodriguez, who was also a janitor in the WTC North Tower, and who became internationally recognized for his heroic efforts on September 11. Rodriguez was the last person to leave the collapsing North Tower alive.
Following the events of September 11, 2001, Kenneth Johannemann and William Rodriguez provided a detailed account of their experience. One aspect of their stories is similar, but contradicts the official report presented by the 9/11 commission. Both men reported that they heard loud explosions in the basement of the North Tower immediately before and after the plane impacted. Kenneth Johannemann was adamant about the fact that he heard explosions not associated with the crash. William Rodriguez also claimed to have heard a massive rumble in the basement of the North Tower, seconds before the plane hit.
On August 31, 2008, Kenneth Johannemann committed suicide by way of a gunshot wound to the head. Mr Johannemann’s suicide note stated that he was depressed after being evicted from his residence. The testimony given by Kenneth Johannemann and William Rodriguez are identical in the fact that they describe large explosions in the WTC towers. Before his death, Johannemann regularly told his story to public crowds. His death was a surprise to everyone and instantly raised suspicion amongst 9/11 researchers.
An undercover police officer posing for years as an environmental activist co-wrote a libellous leaflet that was highly critical of McDonald’s, and which led to the longest civil trial in English history, costing the fast-food chain millions of pounds in fees.
The true identity of one of the authors of the “McLibel leaflet” is Bob Lambert, a police officer who used the alias Bob Robinson in his five years infiltrating the London Greenpeace group, is revealed in a new book about undercover policing of protest, published next week.
McDonald’s famously sued green campaigners over the roughly typed leaflet, in a landmark three-year high court case, that was widely believed to have been a public relations disaster for the corporation. Ultimately the company won a libel battle in which it spent millions on lawyers.
Lambert was deployed by the special demonstration squad (SDS) – a top-secret Metropolitan police unit that targeted political activists between 1968 until 2008, when it was disbanded. He co-wrote the defamatory six-page leaflet in 1986 – and his role in its production has been the subject of an internal Scotland Yard investigation for several months.
At no stage during the civil legal proceedings brought by McDonald’s in the 1990s was it disclosed that a police infiltrator helped author the leaflet.
Lambert, who rose through the ranks to become a spymaster in the SDS, is also under investigation for sexual relationships he had with four women while undercover, one of whom he fathered a child with before vanishing from their lives. The woman and her son only discovered thatLambert was a police spy last year.
The internal police inquiry is also investigating claims raised in parliament that Lambert ignited an incendiary device at a branch of Debenhams when infiltrating animal rights campaigners. The incident occurred in 1987 and the explosion inflicted £300,000 worth of damage to the branch in Harrow, north London. Lambert has previously strongly denied he planted the incendiary device in the Debenhams store.
Undercover: the True Story of Britain’s Secret PoliceRob Evans and Paul Lewis
The Guardian’s revelations about undercover police from the Special Demonstration Squad (and more recently the National Public Order Intelligence Unit) have unfolded rather like one of its other great exclusives, on phonehacking. The steady drip of unsavoury information has culminated in the allegation that the Met Police used undercover officers to smear the family of the murder victim Stephen Lawrence.
Nearly every officer described in the book had passionate, long-term relationships with women from the groups they were investigating. At least one, Bob Lambert, went so far as to get a woman pregnant. Shortly afterwards, Lambert, with whom this woman had expected to live for the rest of her life, faked his emigration and left her a single parent, bereft of any kind of emotional or financial support.
Lambert, who was a special branch detective between 1980 and 2006, later became a tweedy academic (he is now a lecturer in terrorism studies at St Andrews University). Like many officers, Lambert was married with children while the affairs were taking place. Yet it’s hardly the only morally questionable decision that these officers made. They took on the names of dead children to protect their identities. Some committed crimes and lied in court. Many seemed to be not only movers and shakers in the ecological and political circles in which they were embedded but instigators of direct action.
During the “McLibel” trial (a multi – million-pound libel suit filed by McDonald’s against the environmental activists Helen Steel and David Morris, which this book alleges was at least in part instigated by Lambert), there were sometimes more spies among the activists’ group than there were activists, as a result of the combined efforts of McDonald’s and the police.
The process of infiltration, repeated for nearly 40 years, seems more often than not to have severely damaged both the police officers’ mental well-being and that of the friends and lovers they gained and discarded. Throughout this period, there was a pattern of officers who had infiltrated groups returning to desk duty and then threatening to go rogue – or doing so.
At one of the most significant trials mentioned here that resulted from the actions of these officers (that of the Ratcliffe-on-Soar power station protesters who were arrested in 2009 because of the work of Mark Kennedy, a notorious undercover operator), the guilty were spared jail. The judge declared that the protesters had acted “with the highest possible motives”.
The phrase “domestic extremism” is, as the authors point out, “as meaningless as it [is] useful”. At various points here, the police apply it to the anti-roads movement, the Lawrence family, activists exposing allegations of police corruption and a 69-year-old retired physicist campaigning to protect a local beauty spot. The women with whom these officers had affairs hardly seem major threats to national security. Indeed, many seem to have done nothing illegal at all.
They, and many other such systems, still struggle to handle the unexpected
Technology Quarterly
Jun 11th 2020 edition
Jun 11th 2020
In march Starsky Robotics, a self-driving lorry firm based in San Francisco, closed down. Stefan Seltz-Axmacher, its founder, gave several reasons for its failure. Investors’ interest was already cooling, owing to a run of poorly performing tech-sector ipos and a recession in the trucking business. His firm’s focus on safety, he wrote, did not go down well with impatient funders, who preferred to see a steady stream of whizzy new features. But the biggest problem was that the technology was simply not up to the job. “Supervised machine learning doesn’t live up to the hype. It isn’t actual artificial intelligence akin to c-3po [a humanoid robot from the “Star Wars” films]. It’s a sophisticated pattern-matching tool.”
Policing social media, detecting fraud and defeating humans at ancient games are all very well. But building a vehicle that can drive itself on ordinary roads is—along with getting computers to conduct plausible conversations—one of the grand ambitions of modern ai. Some imagined driverless cars could do away with the need for car ownership by letting people summon robotaxis at will. They believe they would be safer, too. Computers never tire, and their attention never wanders. According to the who, over a million people a year die in car accidents caused by fallible human drivers. Advocates hoped to cut those numbers drastically.
And they would do it soon. In 2015 Elon Musk, the boss of Tesla, an electric-car maker, predicted the arrival of “complete autonomy” by 2018. Cruise, a self-driving firm acquired by General Motors in 2016, had planned to launch self-driving taxis in San Francisco by 2019. Chris Urmson, then the boss of Waymo, a Google subsidiary widely seen as the market leader, said in 2015 that he hoped his son, then 11 years old, would never need a driving licence.
But progress has lagged. In 2018 a self-driving car being tested by Uber, a ride-hailing service, became the first to kill a pedestrian when it hit a woman pushing a bicycle across a road in Arizona. Users of Tesla’s “Autopilot” software must, despite its name, keep their hands on the wheel and their eyes on the road (several who seem to have failed to do so have been killed in crashes). The few firms that carry passengers, such as Waymo in America and WeRide in China, are geographically limited and rely on human safety drivers. Mr Urmson, who has since left Waymo, now thinks that adoption will be slower and more gradual.
Black swans and bitter lessons
Self-driving cars work in the same way as other applications of machine learning. Computers crunch huge piles of data to extract general rules about how driving works. The more data, at least in theory, the better the systems perform. Tesla’s cars continuously beam data back to headquarters, where it is used to refine the software. On top of the millions of real-world miles logged by its cars, Waymo claims to have generated well over a billion miles-worth of data using ersatz driving in virtual environments.
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The problem, says Rodney Brooks, an Australian roboticist who has long been sceptical of grand self-driving promises, is deep-learning approaches are fundamentally statistical, linking inputs to outputs in ways specified by their training data. That leaves them unable to cope with what engineers call “edge cases”—unusual circumstances that are not common in those training data. Driving is full of such oddities. Some are dramatic: an escaped horse in the road, say, or a light aircraft making an emergency landing on a highway (as happened in Canada in April). Most are trivial, such as a man running out in a chicken suit. Human drivers usually deal with them without thinking. But machines struggle.
One study, for instance, found that computer-vision systems were thrown when snow partly obscured lane markings. Another found that a handful of stickers could cause a car to misidentify a “stop” sign as one showing a speed limit of 45mph. Even unobscured objects can baffle computers when seen in unusual orientations: in one paper a motorbike was classified as a parachute or a bobsled. Fixing such issues has proved extremely difficult, says Mr Seltz-Axmacher. “A lot of people thought that filling in the last 10% would be harder than the first 90%”, he says. “But not that it would be ten thousand times harder.”
Mary “Missy” Cummings, the director of Duke University’s Humans and Autonomy Laboratory, says that humans are better able to cope with such oddities because they can use “top-down” reasoning about the way the world works to guide them in situations where “bottom-up” signals from their senses are ambiguous or incomplete. ai systems mostly lack that capacity and are, in a sense, working with only half a brain. Though they are competent in their comfort zone, even trivial changes can be problematic. In the absence of the capacity to reason and generalise, computers are imprisoned by the same data that make them work in the first place. “These systems are fundamentally brittle,” says Dr Cummings.
This narrow intelligence is visible in areas beyond just self-driving cars. Google’s “Translate” system usually does a decent job at translating between languages. But in 2018 researchers noticed that, when asked to translate 18 repetitions of the word “dog” into Yoruba (a language spoken in parts of Nigeria and Benin) and then back into English, it came up with the following: “Doomsday Clock is at three minutes to twelve. We are experiencing characters and dramatic developments in the world, which indicate that we are increasingly approaching the end times and Jesus’ return.”
Gary Marcus, a professor of psychology at New York University, says that, besides its comedy value, the mistranslation highlights how Google’s system does not understand the basic structure of language. Concepts like verbs or nouns are alien, let alone the notion that nouns refer to physical objects in a real world. Instead, it has constructed statistical rules linking strings of letters in one language with strings of letters in another, without any understanding of the concepts to which those letters refer. Language processing, he says, is therefore still baffled by the sorts of questions a toddler would find trivial.
How much those limitations matter varies from field to field. An automated system does not have to be better than a professional human translator to be useful, after all (Google’s system has since been tweaked). But it does set an upper bound on how useful chatbots or personal assistants are likely to become. And for safety-critical applications like self-driving cars, says Dr Cummings, ai’s limitations are potentially show-stopping.
Researchers are beginning to ponder what to do about the problem. In a conference talk in December Yoshua Bengio, one of ai’s elder statesmen, devoted his keynote address to it. Current machine-learning systems, said Dr Bengio, “learn in a very narrow way, they need much more data to learn a new task than [humans], they need humans to provide high-level concepts through labels, and they still make really stupid mistakes”.
Beyond deep learning
Different researchers have different ideas about how to try to improve things. One idea is to widen the scope, rather than the volume, of what machines are taught. Christopher Manning, of Stanford University’s ai Lab, points out that biological brains learn from far richer data-sets than machines. Artificial language models are trained solely on large quantities of text or speech. But a baby, he says, can rely on sounds, tone of voice or tracking what its parents are looking at, as well as a rich physical environment to help it anchor abstract concepts in the real world. This shades into an old idea in ai research called “embodied cognition”, which holds that if minds are to understand the world properly, they need to be fully embodied in it, not confined to an abstracted existence as pulses of electricity in a data-centre.
Biology offers other ideas, too. Dr Brooks argues that the current generation of ai researchers “fetishise” models that begin as blank slates, with no hand-crafted hints built in by their creators. But “all animals are born with structure in their brains,” he says. “That’s where you get instincts from.”
Dr Marcus, for his part, thinks machine-learning techniques should be combined with older, “symbolic ai” approaches. These emphasise formal logic, hierarchical categories and top-down reasoning, and were most popular in the 1980s. Now, with machine-learning approaches in the ascendancy, they are a backwater.
But others argue for persisting with existing approaches. Last year Richard Sutton, an ai researcher at the University of Alberta and DeepMind, published an essay called “The Bitter Lesson”, arguing that the history of ai shows that attempts to build human understanding into computers rarely work. Instead most of the field’s progress has come courtesy of Moore’s law, and the ability to bring ever more brute computational force to bear on a problem. The “bitter lesson” is that “the actual contents of [human] minds are tremendously, irredeemably complex…They are not what should be built in [to machines].”
“This less ambitious stuff—I think that’s much more realistic”
Away from the research labs, expectations around driverless cars are cooling. Some Chinese firms are experimenting with building digital guide rails into urban infrastructure, in an attempt to lighten the cognitive burden on the cars themselves. Incumbent carmakers, meanwhile, now prefer to talk about “driver-assistance” tools such as automatic lane-keeping or parking systems, rather than full-blown autonomous cars. A new wave of startups has deliberately smaller ambitions, hoping to build cars that drive around small, limited areas such as airports or retirement villages, or vehicles which trundle slowly along pavements, delivering packages under remote human supervision. “There’s a scientific reason we’re not going to get to full self-driving with our current technology,” says Dr Cummings. “This less ambitious stuff—I think that’s much more realistic.” ■
