Commons Construct

The Rise of Big Data

Sat, 08 Jun 2013 01:46:54 -0400

The Rise of Big Data

How It’s Changing the Way We Think About the World

By Kenneth Neil Cukier and Viktor Mayer-Schoenberger
May/June 2013

Everyone knows that the Internet has changed how businesses operate, governments function, and people live. But a new, less visible technological trend is just as transformative: “big data.” Big data starts with the fact that there is a lot more information floating around these days than ever before, and it is being put to extraordinary new uses. Big data is distinct from the Internet, although the Web makes it much easier to collect and share data. Big data is about more than just communication: the idea is that we can learn from a large body of information things that we could not comprehend when we used only smaller amounts.

In the third century BC, the Library of Alexandria was believed to house the sum of human knowledge. Today, there is enough information in the world to give every person alive 320 times as much of it as historians think was stored in Alexandria’s entire collection — an estimated 1,200 exabytes’ worth. If all this information were placed on CDs and they were stacked up, the CDs would form five separate piles that would all reach to the moon.
This explosion of data is relatively new. As recently as the year 2000, only one-quarter of all the world’s stored information was digital. The rest was preserved on paper, film, and other analog media. But because the amount of digital data expands so quickly — doubling around every three years — that situation was swiftly inverted. Today, less than two percent of all stored information is nondigital.
We can learn from a large body of information things that we could not comprehend when we used only smaller amounts.
Given this massive scale, it is tempting to understand big data solely in terms of size. But that would be misleading. Big data is also characterized by the ability to render into data many aspects of the world that have never been quantified before; call it “datafication.” For example, location has been datafied, first with the invention of longitude and latitude, and more recently with GPS satellite systems. Words are treated as data when computers mine centuries’ worth of books. Even friendships and “likes” are datafied, via Facebook.
This kind of data is being put to incredible new uses with the assistance of inexpensive computer memory, powerful processors, smart algorithms, clever software, and math that borrows from basic statistics. Instead of trying to “teach” a computer how to do things, such as drive a car or translate between languages, which artificial-intelligence experts have tried unsuccessfully to do for decades, the new approach is to feed enough data into a computer so that it can infer the probability that, say, a traffic light is green and not red or that, in a certain context, lumière is a more appropriate substitute for “light” than léger.
Using great volumes of information in this way requires three profound changes in how we approach data. The first is to collect and use a lot of data rather than settle for small amounts or samples, as statisticians have done for well over a century. The second is to shed our preference for highly curated and pristine data and instead accept messiness: in an increasing number of situations, a bit of inaccuracy can be tolerated, because the benefits of using vastly more data of variable quality outweigh the costs of using smaller amounts of very exact data. Third, in many instances, we will need to give up our quest to discover the cause of things, in return for accepting correlations. With big data, instead of trying to understand precisely why an engine breaks down or why a drug’s side effect disappears, researchers can instead collect and analyze massive quantities of information about such events and everything that is associated with them, looking for patterns that might help predict future occurrences. Big data helps answer what, not why, and often that’s good enough.
The Internet has reshaped how humanity communicates. Big data is different: it marks a transformation in how society processes information. In time, big data might change our way of thinking about the world. As we tap ever more data to understand events and make decisions, we are likely to discover that many aspects of life are probabilistic, rather than certain.
APPROACHING “N=ALL”
For most of history, people have worked with relatively small amounts of data because the tools for collecting, organizing, storing, and analyzing information were poor. People winnowed the information they relied on to the barest minimum so that they could examine it more easily. This was the genius of modern-day statistics, which first came to the fore in the late nineteenth century and enabled society to understand complex realities even when little data existed. Today, the technical environment has shifted 179 degrees. There still is, and always will be, a constraint on how much data we can manage, but it is far less limiting than it used to be and will become even less so as time goes on.
The way people handled the problem of capturing information in the past was through sampling. When collecting data was costly and processing it was difficult and time consuming, the sample was a savior. Modern sampling is based on the idea that, within a certain margin of error, one can infer something about the total population from a small subset, as long the sample is chosen at random. Hence, exit polls on election night query a randomly selected group of several hundred people to predict the voting behavior of an entire state. For straightforward questions, this process works well. But it falls apart when we want to drill down into subgroups within the sample. What if a pollster wants to know which candidate single women under 30 are most likely to vote for? How about university-educated, single Asian American women under 30? Suddenly, the random sample is largely useless, since there may be only a couple of people with those characteristics in the sample, too few to make a meaningful assessment of how the entire subpopulation will vote. But if we collect all the data — “n = all,” to use the terminology of statistics — the problem disappears.
This example raises another shortcoming of using some data rather than all of it. In the past, when people collected only a little data, they often had to decide at the outset what to collect and how it would be used. Today, when we gather all the data, we do not need to know beforehand what we plan to use it for. Of course, it might not always be possible to collect all the data, but it is getting much more feasible to capture vastly more of a phenomenon than simply a sample and to aim for all of it. Big data is a matter not just of creating somewhat larger samples but of harnessing as much of the existing data as possible about what is being studied. We still need statistics; we just no longer need to rely on small samples.
There is a tradeoff to make, however. When we increase the scale by orders of magnitude, we might have to give up on clean, carefully curated data and tolerate some messiness. This idea runs counter to how people have tried to work with data for centuries. Yet the obsession with accuracy and precision is in some ways an artifact of an information-constrained environment. When there was not that much data around, researchers had to make sure that the figures they bothered to collect were as exact as possible. Tapping vastly more data means that we can now allow some inaccuracies to slip in (provided the data set is not completely incorrect), in return for benefiting from the insights that a massive body of data provides.
Consider language translation. It might seem obvious that computers would translate well, since they can store lots of information and retrieve it quickly. But if one were to simply substitute words from a French-English dictionary, the translation would be atrocious. Language is complex. A breakthrough came in the 1990s, when IBM delved into statistical machine translation. It fed Canadian parliamentary transcripts in both French and English into a computer and programmed it to infer which word in one language is the best alternative for another. This process changed the task of translation into a giant problem of probability and math. But after this initial improvement, progress stalled.
Using big data will sometimes mean forgoing the quest for why in return for knowing what.
Then Google barged in. Instead of using a relatively small number of high-quality translations, the search giant harnessed more data, but from the less orderly Internet — “data in the wild,” so to speak. Google inhaled translations from corporate websites, documents in every language from the European Union, even translations from its giant book-scanning project. Instead of millions of pages of texts, Google analyzed billions. The result is that its translations are quite good — better than IBM’s were—and cover 65 languages. Large amounts of messy data trumped small amounts of cleaner data.
FROM CAUSATION TO CORRELATION
These two shifts in how we think about data — from some to all and from clean to messy — give rise to a third change: from causation to correlation. This represents a move away from always trying to understand the deeper reasons behind how the world works to simply learning about an association among phenomena and using that to get things done.
Of course, knowing the causes behind things is desirable. The problem is that causes are often extremely hard to figure out, and many times, when we think we have identified them, it is nothing more than a self-congratulatory illusion. Behavioral economics has shown that humans are conditioned to see causes even where none exist. So we need to be particularly on guard to prevent our cognitive biases from deluding us; sometimes, we just have to let the data speak.
Take UPS, the delivery company. It places sensors on vehicle parts to identify certain heat or vibrational patterns that in the past have been associated with failures in those parts. In this way, the company can predict a breakdown before it happens and replace the part when it is convenient, instead of on the side of the road. The data do not reveal the exact relationship between the heat or the vibrational patterns and the part’s failure. They do not tell UPS why the part is in trouble. But they reveal enough for the company to know what to do in the near term and guide its investigation into any underlying problem that might exist with the part in question or with the vehicle.
A similar approach is being used to treat breakdowns of the human machine. Researchers in Canada are developing a big-data approach to spot infections in premature babies before overt symptoms appear. By converting 16 vital signs, including heartbeat, blood pressure, respiration, and blood-oxygen levels, into an information flow of more than 1,000 data points per second, they have been able to find correlations between very minor changes and more serious problems. Eventually, this technique will enable doctors to act earlier to save lives. Over time, recording these observations might also allow doctors to understand what actually causes such problems. But when a newborn’s health is at risk, simply knowing that something is likely to occur can be far more important than understanding exactly why.
Medicine provides another good example of why, with big data, seeing correlations can be enormously valuable, even when the underlying causes remain obscure. In February 2009, Google created a stir in health-care circles. Researchers at the company published a paper in Nature that showed how it was possible to track outbreaks of the seasonal flu using nothing more than the archived records of Google searches. Google handles more than a billion searches in the United States every day and stores them all. The company took the 50 million most commonly searched terms between 2003 and 2008 and compared them against historical influenza data from the Centers for Disease Control and Prevention. The idea was to discover whether the incidence of certain searches coincided with outbreaks of the flu — in other words, to see whether an increase in the frequency of certain Google searches conducted in a particular geographic area correlated with the CDC’s data on outbreaks of flu there. The CDC tracks actual patient visits to hospitals and clinics across the country, but the information it releases suffers from a reporting lag of a week or two — an eternity in the case of a pandemic. Google’s system, by contrast, would work in near-real time.
Google did not presume to know which queries would prove to be the best indicators. Instead, it ran all the terms through an algorithm that ranked how well they correlated with flu outbreaks. Then, the system tried combining the terms to see if that improved the model. Finally, after running nearly half a billion calculations against the data, Google identified 45 terms — words such as “headache” and “runny nose” — that had a strong correlation with the CDC’s data on flu outbreaks. All 45 terms related in some way to influenza. But with a billion searches a day, it would have been impossible for a person to guess which ones might work best and test only those.
Moreover, the data were imperfect. Since the data were never intended to be used in this way, misspellings and incomplete phrases were common. But the sheer size of the data set more than compensated for its messiness. The result, of course, was simply a correlation. It said nothing about the reasons why someone performed any particular search. Was it because the person felt ill, or heard sneezing in the next cubicle, or felt anxious after reading the news? Google’s system doesn’t know, and it doesn’t care. Indeed, last December, it seems that Google’s system may have overestimated the number of flu cases in the United States. This serves as a reminder that predictions are only probabilities and are not always correct, especially when the basis for the prediction — Internet searches — is in a constant state of change and vulnerable to outside influences, such as media reports. Still, big data can hint at the general direction of an ongoing development, and Google’s system did just that.
BACK-END OPERATIONS
There will be a special need to carve out a place for the human: to reserve space for intuition, common sense, and serendipity.
Many technologists believe that big data traces its lineage back to the digital revolution of the 1980s, when advances in microprocessors and computer memory made it possible to analyze and store ever more information. That is only superficially the case. Computers and the Internet certainly aid big data by lowering the cost of collecting, storing, processing, and sharing information. But at its heart, big data is only the latest step in humanity’s quest to understand and quantify the world. To appreciate how this is the case, it helps to take a quick look behind us.
Appreciating people’s posteriors is the art and science of Shigeomi Koshimizu, a professor at the Advanced Institute of Industrial Technology in Tokyo. Few would think that the way a person sits constitutes information, but it can. When a person is seated, the contours of the body, its posture, and its weight distribution can all be quantified and tabulated. Koshimizu and his team of engineers convert backsides into data by measuring the pressure they exert at 360 different points with sensors placed in a car seat and by indexing each point on a scale of zero to 256. The result is a digital code that is unique to each individual. In a trial, the system was able to distinguish among a handful of people with 98 percent accuracy.
The research is not asinine. Koshimizu’s plan is to adapt the technology as an antitheft system for cars. A vehicle equipped with it could recognize when someone other than an approved driver sat down behind the wheel and could demand a password to allow the car to function. Transforming sitting positions into data creates a viable service and a potentially lucrative business. And its usefulness may go far beyond deterring auto theft. For instance, the aggregated data might reveal clues about a relationship between drivers’ posture and road safety, such as telltale shifts in position prior to accidents. The system might also be able to sense when a driver slumps slightly from fatigue and send an alert or automatically apply the brakes.
Koshimizu took something that had never been treated as data — or even imagined to have an informational quality — and transformed it into a numerically quantified format. There is no good term yet for this sort of transformation, but “datafication” seems apt. Datafication is not the same as digitization, which takes analog content — books, films, photographs — and converts it into digital information, a sequence of ones and zeros that computers can read. Datafication is a far broader activity: taking all aspects of life and turning them into data. Google’s augmented-reality glasses datafy the gaze. Twitter datafies stray thoughts. LinkedIn datafies professional networks.
Once we datafy things, we can transform their purpose and turn the information into new forms of value. For example, IBM was granted a U.S. patent in 2012 for “securing premises using surface-based computing technology” — a technical way of describing a touch-sensitive floor covering, somewhat like a giant smartphone screen. Datafying the floor can open up all kinds of possibilities. The floor could be able to identify the objects on it, so that it might know to turn on lights in a room or open doors when a person entered. Moreover, it might identify individuals by their weight or by the way they stand and walk. It could tell if someone fell and did not get back up, an important feature for the elderly. Retailers could track the flow of customers through their stores. Once it becomes possible to turn activities of this kind into data that can be stored and analyzed, we can learn more about the world — things we could never know before because we could not measure them easily and cheaply.
BIG DATA IN THE BIG APPLE
Big data will have implications far beyond medicine and consumer goods: it will profoundly change how governments work and alter the nature of politics. When it comes to generating economic growth, providing public services, or fighting wars, those who can harness big data effectively will enjoy a significant edge over others. So far, the most exciting work is happening at the municipal level, where it is easier to access data and to experiment with the information. In an effort spearheaded by New York City Mayor Michael Bloomberg (who made a fortune in the data business), the city is using big data to improve public services and lower costs. One example is a new fire-prevention strategy.
Illegally subdivided buildings are far more likely than other buildings to go up in flames. The city gets 25,000 complaints about overcrowded buildings a year, but it has only 200 inspectors to respond. A small team of analytics specialists in the mayor’s office reckoned that big data could help resolve this imbalance between needs and resources. The team created a database of all 900,000 buildings in the city and augmented it with troves of data collected by 19 city agencies: records of tax liens, anomalies in utility usage, service cuts, missed payments, ambulance visits, local crime rates, rodent complaints, and more. Then, they compared this database to records of building fires from the past five years, ranked by severity, hoping to uncover correlations. Not surprisingly, among the predictors of a fire were the type of building and the year it was built. Less expected, however, was the finding that buildings obtaining permits for exterior brickwork correlated with lower risks of severe fire.
Using all this data allowed the team to create a system that could help them determine which overcrowding complaints needed urgent attention. None of the buildings’ characteristics they recorded caused fires; rather, they correlated with an increased or decreased risk of fire. That knowledge has proved immensely valuable: in the past, building inspectors issued vacate orders in 13 percent of their visits; using the new method, that figure rose to 70 percent — a huge efficiency gain.
Of course, insurance companies have long used similar methods to estimate fire risks, but they mainly rely on only a handful of attributes and usually ones that intuitively correspond with fires. By contrast, New York City’s big-data approach was able to examine many more variables, including ones that would not at first seem to have any relation to fire risk. And the city’s model was cheaper and faster, since it made use of existing data. Most important, the big-data predictions are probably more on target, too.
Big data is also helping increase the transparency of democratic governance. A movement has grown up around the idea of “open data,” which goes beyond the freedom-of-information laws that are now commonplace in developed democracies. Supporters call on governments to make the vast amounts of innocuous data that they hold easily available to the public. The United States has been at the forefront, with its Data.gov website, and many other countries have followed.
At the same time as governments promote the use of big data, they will also need to protect citizens against unhealthy market dominance. Companies such as Google, Amazon, and Facebook — as well as lesser-known “data brokers,” such as Acxiom and Experian — are amassing vast amounts of information on everyone and everything. Antitrust laws protect against the monopolization of markets for goods and services such as software or media outlets, because the sizes of the markets for those goods are relatively easy to estimate. But how should governments apply antitrust rules to big data, a market that is hard to define and that is constantly changing form? Meanwhile, privacy will become an even bigger worry, since more data will almost certainly lead to more compromised private information, a downside of big data that current technologies and laws seem unlikely to prevent.
Regulations governing big data might even emerge as a battleground among countries. European governments are already scrutinizing Google over a raft of antitrust and privacy concerns, in a scenario reminiscent of the antitrust enforcement actions the European Commission took against Microsoft beginning a decade ago. Facebook might become a target for similar actions all over the world, because it holds so much data about individuals. Diplomats should brace for fights over whether to treat information flows as similar to free trade: in the future, when China censors Internet searches, it might face complaints not only about unjustly muzzling speech but also about unfairly restraining commerce.
BIG DATA OR BIG BROTHER?
States will need to help protect their citizens and their markets from new vulnerabilities caused by big data. But there is another potential dark side: big data could become Big Brother. In all countries, but particularly in nondemocratic ones, big data exacerbates the existing asymmetry of power between the state and the people.
The asymmetry could well become so great that it leads to big-data authoritarianism, a possibility vividly imagined in science-fiction movies such as Minority Report. That 2002 film took place in a near-future dystopia in which the character played by Tom Cruise headed a “Precrime” police unit that relied on clairvoyants whose visions identified people who were about to commit crimes. The plot revolves around the system’s obvious potential for error and, worse yet, its denial of free will.
Although the idea of identifying potential wrongdoers before they have committed a crime seems fanciful, big data has allowed some authorities to take it seriously. In 2007, the Department of Homeland Security launched a research project called FAST (Future Attribute Screening Technology), aimed at identifying potential terrorists by analyzing data about individuals’ vital signs, body language, and other physiological patterns. Police forces in many cities, including Los Angeles, Memphis, Richmond, and Santa Cruz, have adopted “predictive policing” software, which analyzes data on previous crimes to identify where and when the next ones might be committed.
For the moment, these systems do not identify specific individuals as suspects. But that is the direction in which things seem to be heading. Perhaps such systems would identify which young people are most likely to shoplift. There might be decent reasons to get so specific, especially when it comes to preventing negative social outcomes other than crime. For example, if social workers could tell with 95 percent accuracy which teenage girls would get pregnant or which high school boys would drop out of school, wouldn’t they be remiss if they did not step in to help? It sounds tempting. Prevention is better than punishment, after all. But even an intervention that did not admonish and instead provided assistance could be construed as a penalty — at the very least, one might be stigmatized in the eyes of others. In this case, the state’s actions would take the form of a penalty before any act were committed, obliterating the sanctity of free will.
Another worry is what could happen when governments put too much trust in the power of data. In his 1999 book, Seeing Like a State, the anthropologist James Scott documented the ways in which governments, in their zeal for quantification and data collection, sometimes end up making people’s lives miserable. They use maps to determine how to reorganize communities without first learning anything about the people who live there. They use long tables of data about harvests to decide to collectivize agriculture without knowing a whit about farming. They take all the imperfect, organic ways in which people have interacted over time and bend them to their needs, sometimes just to satisfy a desire for quantifiable order.
This misplaced trust in data can come back to bite. Organizations can be beguiled by data’s false charms and endow more meaning to the numbers than they deserve. That is one of the lessons of the Vietnam War. U.S. Secretary of Defense Robert McNamara became obsessed with using statistics as a way to measure the war’s progress. He and his colleagues fixated on the number of enemy fighters killed. Relied on by commanders and published daily in newspapers, the body count became the data point that defined an era. To the war’s supporters, it was proof of progress; to critics, it was evidence of the war’s immorality. Yet the statistics revealed very little about the complex reality of the conflict. The figures were frequently inaccurate and were of little value as a way to measure success. Although it is important to learn from data to improve lives, common sense must be permitted to override the spreadsheets.
HUMAN TOUCH
Big data is poised to reshape the way we live, work, and think. A worldview built on the importance of causation is being challenged by a preponderance of correlations. The possession of knowledge, which once meant an understanding of the past, is coming to mean an ability to predict the future. The challenges posed by big data will not be easy to resolve. Rather, they are simply the next step in the timeless debate over how to best understand the world.
Still, big data will become integral to addressing many of the world’s pressing problems. Tackling climate change will require analyzing pollution data to understand where best to focus efforts and find ways to mitigate problems. The sensors being placed all over the world, including those embedded in smartphones, provide a wealth of data that will allow climatologists to more accurately model global warming. Meanwhile, improving and lowering the cost of health care, especially for the world’s poor, will make it necessary to automate some tasks that currently require human judgment but could be done by a computer, such as examining biopsies for cancerous cells or detecting infections before symptoms fully emerge.
Ultimately, big data marks the moment when the “information society” finally fulfills the promise implied by its name. The data take center stage. All those digital bits that have been gathered can now be harnessed in novel ways to serve new purposes and unlock new forms of value. But this requires a new way of thinking and will challenge institutions and identities. In a world where data shape decisions more and more, what purpose will remain for people, or for intuition, or for going against the facts? If everyone appeals to the data and harnesses big-data tools, perhaps what will become the central point of differentiation is unpredictability: the human element of instinct, risk taking, accidents, and even error. If so, then there will be a special need to carve out a place for the human: to reserve space for intuition, common sense, and serendipity to ensure that they are not crowded out by data and machine-made answers.
This has important implications for the notion of progress in society. Big data enables us to experiment faster and explore more leads. These advantages should produce more innovation. But at times, the spark of invention becomes what the data do not say. That is something that no amount of data can ever confirm or corroborate, since it has yet to exist. If Henry Ford had queried big-data algorithms to discover what his customers wanted, they would have come back with “a faster horse,” to recast his famous line. In a world of big data, it is the most human traits that will need to be fostered — creativity, intuition, and intellectual ambition — since human ingenuity is the source of progress.
Big data is a resource and a tool. It is meant to inform, rather than explain; it points toward understanding, but it can still lead to misunderstanding, depending on how well it is wielded. And however dazzling the power of big data appears, its seductive glimmer must never blind us to its inherent imperfections. Rather, we must adopt this technology with an appreciation not just of its power but also of its limitations.

a knife to a gunfight

Thu, 06 Jun 2013 23:44:15 -0400

So I was having this mini-debate (debatelette?) with a friend regarding the state of the economy. Not that either of us thinks its great, but he was really honking about the stock market and how the “real issue” is 58% of adults are not in the workforce. And that and a Robert Reich got me to thinking.

I like Robert Reich (see his recent piece below this post) and I’ve been a little puzzled by the home price rise too. (Why? don’t we still have an overabundance of supply? Did we add a lot of new people to the country? Knock down a bunch of old houses?) And there has got to be some movement on wages. But cheap energy is spurring some industrial expansion.

But one thing that has been tumbling thru my head for a few years now is this - one of the primary methods used to determine the number of people working (or unemployment levels) and this oft cited ‘people have just stopped looking” meme is taking data from a sample population of households covering about 110,000 people and uses data from people like ADP (payroll processors) and Challenger, Gray & Christmas (big HR consultancy). But it occurs to me that the economy is very different than it was 10 - 20 years ago. More people are working as 1099s or some similar indy format or collaboratively with people in such a way that it is highly likely that those people aren’t counted regularly. Are the tracking methods of old missing people who are “employed” in an economic structure that the system wasn’t built to measure?

Do you remember the major misses that occurred with pre-election polling errors (or misfires or appearances of bias) last November? What was Gallup’s problem? they polled by landline telephone and called largely during the day. Who did they miss? People under 30; non-whites and “indy” types that don’t have that circumstance. Much like how the Dow is no longer a good measurement of the economy’s health (in part I think because of automated trading and ‘day-trading’ mentality - a stock can rise or fall mercurially for reasons that having nothing to do with its ‘value’) because the rules by which it operates are different from the what we think it is supposed to represent.

Maybe we are bringing a measurement knife to s situational gunfight.

ahhh, but that’s too introspective and takes to long to read or think about.

Damn it, Obama better do something about those damn jobs!
THE unemployment is too damn high!
No Kool-Aid for you!
(ahhh, I feel better already….)

Robert Reich Storm Clouds Ahead FRIDAY, MAY 31, 2013

Economic forecasters exist to make astrologers look good. But the recent jubilance is enough to make even weather forecasters blush. “Just look at the bull market! Look at home prices! Look at consumer confidence!”Please.I can understand the jubilation in the narrow sense that we’ve been down so long everything looks up. Plus, professional economists tend to cheerlead because they believe that if consumers and businesses think the future will be great, they’ll buy and invest more – leading to a self-fulfilling prophesy.But prophesies can’t be self-fulfilling if they’re based on wishful thinking.The reality is we’re still in the doldrums, and the most recent data gives cause for serious worry.Almost all the forward movement in the economy is now coming from consumers — whose spending is 70 percent of economic activity. But wages are still going nowhere, which means consumer spending will slow because consumers just don’t have the money to spend. On Thursday the Commerce Department reported that consumer spending rose 3.4 percent in the first quarter of this year. But the personal savings rate dropped to 2.3 percent — from 5.3 percent in the last quarter of 2012. That’s the lowest level of savings since before the Great Recession. You don’t have to be an economic forecaster, or an astrologer, to see this can’t go on.Yes, home prices are rising. The problem is, they’re beginning to rise above their long-run historical average. (Before the housing crash they were were way, way above the long-run average.) So watch your wallets. We’ve been here before: The Fed is keeping interest rates artificially low, allowing consumers to get low home-equity loans and to borrow against the rising values of their homes. Needless to say, this trend, too, is unsustainable.What about the stock market? It’s time we stopped assuming that a rising stock market leads to widespread prosperity. Over 90 percent of the value of the stock market — including 401(k)s and IRAs — is held by the wealthiest 10 percent of the population.Moreover, the main reason stock prices have risen is corporate profits have soared. But that’s largely because corporations have slashed their payrolls and keep them low. Which brings us full circle, back to the fundamental fact that wages that are going nowhere for most people.Not even fat corporate profits are sustainable if American consumers don’t have enough money in their pockets. Exports can’t make up for the shortfall, given the rotten shape Europe is in and the slowdown in Asia.So don’t expect those profits to continue. In fact, the new Commerce Department report shows that corporate profits shrank in the first quarter, reversing some of the gains in the second half of 2012.And, by the way, the full effect of the cuts in government spending hasn’t even been felt yet. The sequester is going to be a large fiscal drag starting next month. Look, I don’t want to rain on the parade. But any self-respecting weather forecaster would warn you to zipper up and take an umbrella. Don’t be swayed by all the sunny talk. There are too many storm clouds ahead.
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stumbled upon this....

Fri, 24 May 2013 12:30:35 -0400

The End of Us And Them: David Cannadine’s Quest to Unite History

May 10, 2013 4:45 AM EDT

David Cannadine is a distinguished historian of the British aristocracy, but can he end our binary view of human history once and for all, or will he be ostracized by his peers?

Historians need conflict as poets need spring. Just a smattering of examples: Frederick J. Teggart, writing as the First World War came to an end, called civilization “the result of the stimulus evoked by the friction of one group upon another.” The same year, the declinist Oswald Spengler disagreed with Teggart that one group can stimulate another, but he was not against the fact that civilizations clash. “Between the souls of two cultures the screen is impenetrable,” he wrote in the best-selling Decline of the West. Edward Gibbon, the father of modern declinism, proposed that barbarians and Christians were the ones who tore down a crumbling, “effeminate” Roman Empire. Eric Hobsbawm’s history of the 20th century is titled The Age of Extremes. The attacks on Sept. 11 made Samuel P. Huntington’s The Clash of Civilizations famous. “We love freedom,” George W. Bush said in September of 2002. “They hate things.”

‘The Undivided Past: Humanity Beyond Our Differences’ by David Cannadine. 352 pp. Knopf. $27. (Weegee(Arthur Fellig)/ICP/Getty; Tom Miller)

From what would seem like a divisive, Manichean, good-versus-evil world, another “decline and fall” book surfaced in 1990: The Decline and Fall of the British Aristocracy. What made the work float in its own bubble was that its author, then a relatively unknown British transplant teaching at Columbia University named David Cannadine, explained the destruction of the landed gentry without assigning blame to a perpetrator. The agents of their slide were many, and they operated offstage. The patricians also receded thanks to their own missteps. The Decline and Fall offered not an explanation of the world but an exceedingly complex story of how lions became unicorns, as the conclusion of The Decline and Fall flawlessly put it. The guardians of yesteryear had become parasites, Cannadine wrote.

But embedded inside the 700-page story was an implicit point that Cannadine wanted to make to historians: the world is not black-and-white, and we invoke the us-versus-them myth too often. “By definition, it is the task and the temptation of politicians (and journalists) to simplify both the present and the past,” he wrote in the preface to the 1999 edition. “But one responsibility of historians is to remind politicians (and journalists) that the past and the present are always more complex than they are professionally inclined to claim or believe.”

“This is a subject I’ve pondered for quite a long time—the whole notion of identities and how we are invited to see the world,” Cannadine, who is now a professor of history at Princeton University, told me. “I thought it was rather interesting to draw attention to these individuals, prophets, pundits, whatever they’ve been, who’ve said, ‘Human kind is above all determined by one single identity!’ And that’s built around whatever it might be. And it’s essentially an antagonistic one. Well, the world just isn’t that simple!”

Manichaeism doesn’t figure largely into the study of the aristocracy, but it has come to dominate American politics—especially in the post September 11th era. Cannadine’s new work, The Undivided Past: Humanity Beyond Our Differences, is really a book-length treatise that registers a historian’s recovery from the trauma of the “fatigue and fecklessness of global affairs” in the millennia past and, it seems, most especially from the last decade. Bush’s us-versus-them mentality was manifested in religious terms—biblical terms, in fact. “Gog and Magog are at work in the Middle East,” he once urged a bewildered French President Jacues Chirac to support the War in Iraq in a private call. “Biblical prophecies are being fulfilled. This confrontation is willed by God, who wants to use this conflict to erase His people’s enemies before a new age begins.” (Chirac asked his staff after, “Do any of you know what he is talking about?”)

Bush is only the most blatant of the recent violators who invoke Christ in order to conquer. “The imperatives of a shared religious identity,” as Cannadine puts it, is simply an excuse, “a proxy for alternative and more compelling considerations such as dynastic ambition, national rivalry, economic competition, territorial acquisitiveness.” Humans have often ignored our shared humanity to mobilize against each other, and religious affiliation is only one of the categorical appeals. Cannadine lines up five more, devoting a chapter each to them: national allegiance, class conflict, gender wars, racial animosity, and appeals to civilization.

“There are different occasions when protagonists, who believe in each of these identities, say this is much more important than all the others,” Cannadine tells me, with his level of indignation against the likes of Karl Marx, Eric Hobsbawm, and E.P. Thompson rising along with his animated voice. “Well, they can’t all be right!” And he’s not sure if any of them are right. To some, today’s world looks to be defined by the clash between Christian democracies and Islamic fundamentalists—that is the problem at hand, and that ought to be our focus. Cannadine is contemptuous of this view. Always composed, as a British lord must be (he was knighted by the Queen on New Year’s Eve in 2008), he is nevertheless tired of the abuse of history he’s seen, and passionate about the mission that he’s at last discovered. And as a historian, his disdain is ringed with knowledge of the past—that Christians did not always war with Muslims. To treat Islam as one evil enterprise “seems to me to be the height of inaccuracy and irresponsibility,” he told me forcefully. Even Edward Gibbon was more nuanced than that. Early Christians, Gibbon wrote, had such “intestine dissentions” that they “inflicted far greater severities on each other, than they have experienced from the zeal of infidels.” Sometimes the minor differences within one religion are bigger than the boundaries between two faiths. For most of their history, Christians and Muslims have got on reasonably well.

15 minutes is too much

Fri, 24 May 2013 10:14:00 -0400

So the other day there is a “news” story about how a HS girl with no date to her prom decided to go anyway and she decided that her date would be her TI graphing calculator. (this is not a typo) So she made a little tux, etc for her calculator. Her mom strongly advised against it as she felt it would make her daughter look desperate and a bit….nutty. Her daughter told her that it would get a lot of attention and go viral. It did. She ended up on TV. For being….not invited to her prom.

I am sorry that no human felt that she deserved to be asked to such an important moment in a HS career. I am sure she’s a nice girl in general, but we have to stop rewarding this stuff.

Its these people who grow up to be Ted Nugent or the Westboro Baptist Church or Kim Kardashian,

Does Affirmative Action Do What It Should?

Sun, 17 Mar 2013 23:58:59 -0400

Does Affirmative Action Do What It Should?:

Some minority students who get into a top school with the help of affirmative action might be better served by attending a less elite institution.

The Stories That Bind Us

Sun, 17 Mar 2013 22:27:56 -0400

The Stories That Bind Us:

Studies indicate that children learn resilience when they hear what their relatives before them have faced.

sanders talking sanity

Sat, 08 Sep 2012 22:47:56 -0400

sanders talking sanity:

so its been a long time and i have no excuses. this election season (2012), the Occupation and its aftermath; the insanity or is it audacity of the GOP. Sanders gives us a warning. We’ve got to stand up and take back our country

cycles of concentration and the conundrum

Wed, 30 Mar 2011 23:37:21 -0400

So recently my inbox and mail box have had no small number of request from candidates asking for money. For the candidates one thing that is pretty constant is that they are all going to ‘help’ me by focusing on jobs, jobs, jobs.

So I start to thinking about how all of them are going to help create jobs - presumably for the jobless - and in order to do that they need money…from people who had better have at least a job in order to send them some money.

So it seems that in order to help a guy or gal ‘get us jobs’ you need to have a job. Which might mean that your motivation to get his or her help is a little less pumped than the person without a job. In fact, while I doubt anyone would say they don’t want “jobs” to be created even if they already have a job, I am betting that some folks would pull back from that a bit if they felt that the in helping create jobs for the jobless less might be done for them to keep their jobs.

Now figuring that the jobbed and the job-giving may be less motivated to donate to the “job creators” and jobless have less to donate to the “job creator”, it seems a system where the politician has to ask people who have jobs to give money so he or she can help people that didn’t give money is a system the eventually stands perched on a conundrum. “I want you to help me so I can help other people most of whom haven’t helped me.” This is like those steps in those Escher drawings - they go up and down simultaneously.

So isn’t it reasonable to assume that the people who helped with money pressure the politician to make sure that he or she helps them while helping the non-contributors? You betcha’! So there’s a conundrum.

Now it seems to me that as long as the election thing is fueled by private money, this process has to continue. But not only does it continue, it concentrates.

Of course all of this is warped by the fact that the politician needs votes to get elected - and both the jobbed and the jobless can vote.

With each cycle of recession, the politician calls out the need to create jobs, but seeks out the support of those with jobs…those who survived the last downturn.

And chances are those that survived near the top of the food chain have maybe moved up a link or two. And with that they may be less likely to really care about helping the jobless and the impact of their contributions grows since there are fewer people with the money necessary to support the politician. The power of the few concentrates with each cycle.

But of course with each cycle the percentage of the helpless/jobless grows. Another cycle of concentration. And with each election cycle the politician makes stronger and stronger entreatments about ‘jobs jobs jobs’ and more and more pitches to the few, the fewer, the fewest.

And we are back to the conundrum.

so it seems the conventional wisdom was not so wise?

Thu, 24 Mar 2011 00:11:00 -0400

The crises in Japan (sounds like a Nightline News Exclusive) has brought out a few interesting points.

1 - Japan’s society ‘works’ - there was no looting, pillaging, shooting at fellow citizens trying to make their way to safety. People helped their fellow citizens make it through the troubles. You wouldn’t expect any of “community” crap here!

2 - while the nuclear reactor is in Japan and it is Japanese operating it and Japanese trying to fix it….the reactor is a GE design….and when American regulators saw that design some 30 - 40 years ago they said “hey, the containment shell is too thin. It could fail in a hydrogen explosion”. GE sold it based on its lower cost (we don’t need no stink containment!) Well damn, at that nothing.

3 - Japan is now acutely aware of “the black swan”.

4- when they rebuild, they will surpass us yet again.

Global supply chain’s vulnerability exposed

By Kevin Brown

Published: March 22 2011 15:45 | Last updated: March 22 2011 15:45

In normal times, the humdrum business of shifting widgets from one location to another gets very little attention outside the supply chain management fraternity.

But these are not normal times. Japan’s terrible earthquake has raised questions about the vulnerability of global supply chains to disruption caused by natural disasters. In China, rising wages have prompted suggestions that manufacturers might shift capacity to other low cost locations, or even back to the west.

Both these issues are encouraging manufacturers to review their sourcing and supply strategies. But the focus on dealing with the immediate pain is obscuring a much bigger challenge for multinationals: whether the whole concept of globalised supply chains is being outmoded by the rise of new centres of demand in Asia and Latin America that might be best served by a return to regional sourcing and production.

There is an excellent example of the tortuous nature of the supply chain system in a recent study of the Apple iPhone by the Asian Development Bank Institute. The iPhone may be designed in the US, but it is made and assembled by nine companies in six countries.

With supply chains of this complexity it would have been surprising if Japan’s electricity blackouts, closed highways and damaged ports had not caused problems elsewhere. Twelve days after the earthquake, though, the surprising thing is how little international disruption there has been. Moody’s said in a study released on Monday that the impact was likely to be manageable for most companies. Peter Chou, chief executive of Taiwan’s HTC Corporation, put it more bluntly last week, saying that “everyone is overreacting”.

If they wish, companies can do two things to protect themselves: hold more stocks, and source parts from a larger number of suppliers in geographically dispersed locations. But increasing inventory undermines productivity, and using a range of suppliers squeezes profit margins by raising input prices.

Most companies will decide that the cost of holding stocks and diversifying supplies outweighs the potential cost of greater insecurity of supply. While they grapple with that conundrum, however, multinationals are also coming to grips with Chinese wage inflation.

Labour costs are rising quickly, with wages likely to climb by an average of 17 per cent annually over the next three years, according to a study by Deutsche Bank. Influential voices suggest that China’s days as the workshop of the world may be numbered. “Utopias never last,” says Matt Rubel, chief executive of Collective Brands, a US footwear group that is shifting a chunk of production from China to Indonesia.

This seems too gloomy by far. Clearly, China’s low wage advantage is being eroded as the economy develops. But the impact is less dramatic than is sometimes suggested. Manufacturing wages are still only about 9 per cent of the US level, according to Accenture. Even a 30 per cent pay rise increases total costs for most manufacturers by only 1 to 5 per cent, the firm found, most or all of which can be offset by productivity and cost savings. That is unlikely to push many manufacturers out of China.

The really tricky issue, though, is how to handle China’s accelerating transformation from a manufacturing base for exports to a consumer of finished goods. General Motors sold more cars in China in the first half of last year than in the US; Samsung Electronics says a quarter of global consumer revenues now come from China; the country ranks second behind the US in Philips ’ global league table of consumer sales. Perhaps most revealing, McKinsey said last week that Chinese sales of luxury goods would grow by 18 per cent a year to $27bn by 2015 – when it would pass Japan as the world’s biggest market.

The global supply chain made sense when most of it pointed in the same direction – from Asian producers to western consumers. As Asia and Latin America join the consuming bandwagon it will make more sense for multinationals to site production and assembly close to their customers, which has the side effect of cutting transport costs.

That is likely to mean a return to regional production centres, with Chinese factories switching from exporting to producing for Asian consumers and new factories making goods for the US being sited in Latin America. One spin-off advantage will be an increase in production flexibility for companies essentially making the same product in two or more global locations.

That will simplify those complex supply chains, helping companies to cope with shocks like the one inflicted by Japan’s earthquake. But this shift from “offshoring” to “nearshoring” is being driven by growth, not natural disasters.

Kevin Brown is the FT’s Asia regional correspondent

kevin.brown@ft.com

from McKinsey.....

Wed, 23 Mar 2011 00:44:17 -0400

from McKinsey.....

on the meaning of friend as a noun

Sat, 12 Mar 2011 23:32:22 -0500

Read this in the Utne today and I thought it was worthwhile.

Lonely Together

by Lydialyle Gibson, from University of Chicago Magazine

Two years ago, Chicago psychologist John Cacioppo cowrote the book Loneliness, which advances a novel theory for this elusive emotional state. Loneliness, Cacioppo argues, isn’t some personality defect or sign of weakness—it’s a survival impulse like hunger or thirst, a trigger pushing us toward the nourishment of human companionship. Furthermore, he writes, “people who get stuck in loneliness have not done anything wrong. None of us is immune to feelings of isolation, any more than we are immune to feelings of hunger or physical pain.”

Being lonely isn’t the same as being alone, Cacioppo is careful to clarify. Lonely people can be surrounded by coworkers, neighbors, friends, and family. They’re no less attractive or intelligent or popular. What sets the lonely apart is a sense that their relationships do not meet their social needs.

That uneasy feeling goes back aeons. Loneliness was, Cacioppo believes, a powerful evolutionary force binding prehistoric people to those they relied on for food, shelter, and protection, to help them raise their young and carry on their genetic legacy. Cacioppo also points to the long years children spend utterly dependent on their parents. “It’s a good decade before they’re going to be able to survive on their own,” he says. Small wonder that isolation makes people feel not only unhappy but also unsafe.

Which is why loneliness can work: It prods people to reach out to those around them. “Some people get stuck,” Cacioppo says, “but on average, when you get lonely you do something to get out of that aversive state.”

Like other evolutionary adaptations, loneliness varies from person to person. There are extroverts and introverts. There are those who don’t seem to need friends at all. “That makes great sense because those are the explorers,” Cacioppo says. “We need them.” But for those who feel warmer near the communal fire, isolation works as a civilizing influence. “When children are acting selfish and narcissistic, you put them by themselves,” Cacioppo explains. “Well, that’s not a dramatic punishment, is it? And yet it’s painful.” Children cry; they beg to be allowed back into the group. When they do come back, “they’re better social citizens. They’ll now take the other child’s perspective; they’ll share their toys.”

Cacioppo’s interest in the subject began in 1988 when he read a Science paper whose conclusions seemed inconclusive. Three sociologists conducted an analysis showing that a lack of social contact predicted death from a broad range of maladies. The researchers suggested that “social support” from friends and family might foster “a sense of meaning or coherence that promotes health” and encourage loved ones to exercise, eat better, sleep more, and drink less.

“But what I knew was that no matter what social species you’re talking about, all the way down to fruit flies, if you isolate them they die earlier,” Cacioppo says. “That’s probably not due to social control from friends and family. There’s something more interesting and more direct.”

In 2002 Cacioppo launched a longitudinal study of middle-aged and older Americans around Chicago, tracking their health and daily habits. This work has shown that loneliness predicts not only depression but also higher blood pressure and increased cortisol, a hormone released in response to stress. It also makes sleep less restful because of tiny, subconscious awakenings throughout the night. Some of its most troublesome effects are cognitive: Social disconnection contributes to Alzheimer’s disease and impairs “executive functioning”—the ability to control thoughts, emotions, and impulses.

Twenty percent of Americans, about 60 million people, Cacioppo estimates, suffer from loneliness that is chronic and severe enough to be a major source of unhappiness. One study, for instance, asked respondents to list the number of confidants they had. In 1985 the most frequent answer was three. In 2004, when researchers repeated the survey, the number had dropped to zero. One-fourth of participants, drawn from a cross section of the American public, reported having no one to talk to intimately.

The reasons for this rise in social isolation are well documented: American life is less rooted and more hectic now than in the past. Jobs and friendships are transitory; rates of divorce and single parenting are high. More people move away from home, and more people live alone—that number has increased by 30 percent in the past 30 years, Cacioppo says.

Onto this landscape, social media—Facebook, MySpace, Twitter, LinkedIn—erupted, exerting an influence more complicated, Cacioppo says, than some people might think. People who use the Internet to generate or enhance in-person relationships benefit, he says. But when online connections substitute for face-to-face ones, users become lonelier and more depressed. Lonely people are likely to use the Internet as a crutch, the nonlonely as a leverage. “So,” Cacioppo says, “the rich get richer and the poor get poorer.”

In December 2009 Cacioppo copublished a paper suggesting that loneliness is contagious. Using data from a longitudinal study in small-town Framingham, Massachusetts, he and his colleagues charted a social network of more than 12,000 ties among 5,124 people, determining that having one lonely friend raised one’s chance of loneliness by 40 to 65 percent. A lonely friend-of-a-friend raised the chance by 14 to 36 percent. By the third degree of separation, the increased likelihood was slighter still, and beyond that the effect disappeared. The phenomenon makes sense to Cacioppo. “When I’m lonely, I’m more likely to interact with other people negatively,” he says. That bad feeling spreads. “Think about it: You have a bad day at work, you go home, your spouse suffers. Well, so do strangers and friends you interact with.”

That study helped inform a new project. Working with sociologists, Cacioppo is constructing a spatial map of Chicago’s South Side, in which each of the 82 neighborhoods is subdivided based upon where people feel more and less lonely. The next task is to explain the map. Cacioppo is looking at features such as block parties, well-kept homes, clean streets, public facilities, and crime. How much difference does a community center make? What about flower boxes along the sidewalks?

An even more delicate task is figuring out how to solve individuals’ persistent loneliness. In August, Cacioppo and three other coauthors published a sweeping analysis of every study on loneliness intervention from 1970 to 2009. Treatments fell into four types: fostering “social contact” by connecting lonely people; offering “social support” from visitors; teaching social skills; and training in “social cognition”—the ability to understand and navigate social interactions. Of these, the last yielded promising results.

In Loneliness, Cacioppo laid out general recommendations for fighting loneliness; he and a clinical psychologist are working to shape them into a course of cognitive behavior therapy. He advised readers to reach out, even in small ways, to those around them, to volunteer, to say hello to someone at the grocery store or the library, and eventually to find compatible, fulfilling friends. To open their lives.

Excerpted from University of Chicago Magazine (Nov.-Dec. 2010), an enlightened bimonthly publication aimed at alumni but relevant to a wide range of readers and interests. http://magazine.uchicago.edu

as a reminder

Fri, 11 Mar 2011 15:57:43 -0500

I was at the National Constitution Center in Philadelphia today. They have a great exhibit called Freedom Rising. It brought fresh to the front of my mind these words and what they mean:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Someone was thinking “sustainably” when they wrote that. Now we need to ask and answer ”who are we and what do we want?”

And get busy.

Ben Commons

the new math

Mon, 07 Mar 2011 19:06:31 -0500

So I am having this debate with a buddy today and we get into a familiar quagmire. He is largely libertarian and so has an allergic reaction to anything that even resembles a “government revenue enhancement” (aka “tax”) even from a quarter klick away in a dense fog after a sandstorm at night. Anyway, he trots out his ol’ reliable “the wealthy pay 80% of the income tax in this country” (prompted by Michael Moore’s speech in Wisconsin in support of the state workers - see link below) and I run a small ‘thought experiment’ which yields a bigger delta than….I…thought.

The experiment is pasted below, but as if to punctuate my…thought…an op-ed appeared today which i thought I might share.

Posted on Mon, Mar. 7, 2011

Numbers game doesn’t add up

By Daniel Denvir

Big business has long pulled the levers of government. Now it’s cutting out the middleman and moving on to other projects - like education. Charter schools are touted as an entrepreneurial anecdote to traditional public schools in spite of decidedly mixed results. And CEOs are the model new educators - the less relevant experience, the better.

In New York, the meteoric rise in test scores under Mayor Bloomberg and former media executive turned Chancellor Joel Klein were shown to be largely inflated. Bloomberg, according to a deputy mayor quoted in the New York Times, “uses data and metrics to determine whether policies are failing or succeeding.” So it was puzzling when he named Hearst Magazines Chairwoman Cathie Black as Klein’s replacement, precisely because of her corporate background and lack of educational experience.

The CEOs demand results, and their harried minions strive to deliver. In Georgia, accusations of teacher tampering with standardized tests are spreading. According to the Atlanta Journal-Constitution, one-fifth of state schools are now under suspicion.

The contagion has long since spread to higher education. Parents and students take U.S. News and World Report’s college and graduate school rankings as gospel truth. The numbers offer a comforting certainty: this one is best, this one worst.

Last month, it was revealed that Villanova Law School had inflated the LSAT scores and GPAs of its incoming students to secure a higher ranking. Just a few weeks beforehand, the New York Times reported that law schools were counting graduates as “employed after nine months” even if they didn’t have jobs that require a law degree. “Waiting tables at Applebee’s? You’re employed. Stocking aisles at Home Depot? You’re working, too,” the Times wrote.

That schools are allowed to “self-report” obviously courts creative accounting. But the real problem isn’t dishonesty. The problem is that our society lives and dies by numbers that are increasingly unhinged from reality - corporate profits, the stock market, test scores, rankings - reducing everything to interchangeable units that can be ordered on a spreadsheet. On Wall Street, bankers continue to be handsomely rewarded for the sort of short-term balance sheet boons that brought our economy to its knees.

Statistics indisputably serve many good purposes. They can tell us about how segregation persists throughout our cities and suburbs, the rising numbers of people who need food stamps in this or that neighborhood, or an area’s high cancer rate that might point to unacceptably high levels of pollution from a nearby factory. The only number Republicans in Congress care about is the deficit - but that is just one important number among many, including the innumerable proposed service cuts that will hit the most vulnerable the hardest.

The highly ranked schools should lead the way in refusing to cooperate with U.S. News. My alma mater, Reed College, has not cooperated since 1995. Reed even discourages students from looking at grades, which are lower than average thanks to a strict policy against grade inflation - just 10 4.0’s over the past 26 years. But Reed is an outlier and the campaign for perfect numbers continues. Which means that I will not be sharing my GPA in these pages - I was not one of those 10 students.

Daniel Denvir is a Philadelphia journalist. He can be reached at daniel.denvir@gmail.com.

The Experiment:

[a thought experiment - take what you might guess to be of the total income of the ***** Club membership - assume ~300 people@ $100k per = $30,000,000; compare it to the total income of the Miami Heat players - ~$65,000,000 @ 12 men. The total would be $95 million for 312 people but as a “group” the 12 Heat players make +2x what the ***** Club makes with less than 5 % of the bodies. At an assumed uniform 30% tax rate, the total collected revenue would be $28,500,000 with the Heat paying $19,500,000 or ~68% of that while only being ~4% of the “population” - so your hairshirt and chest beating about “80%” frankly looks like its pretty fair especially since we doubt that “$100k/yr” is a good number for “average” income across the “96%” of the “freeloaders’. Oh the games you can play with numbers!!! ]

Michael Moore’s Piece

http://www.huffingtonpost.com/michael-moore/america-is-not-broke_b_832006.html

Broke Town, U.S.A. (from the New York Times 6 March 2011)

Sun, 06 Mar 2011 23:09:00 -0500

The growing fact (or appearance) of insolvency in states and municipalities is a major cause for alarm in the US. Obviously there is concern about the loss of services to citizens but more alarming to me anyway is the fact the debate seems to rotate around two themes - which or whose ox do we gore to make our current numbers work and what ‘group’ of union employees is responsible for the problem in the first place. I think that is wrong headed and frankly part of the big play to shred services to the average person orchestrated against most of us.

The first question should be what do we want our country/society to be? Not at some trivial matter like “gay marriage” (if you hate gay marriages you probably weren’t going to be invited anyway and since your not in some couples bedroom or “stuff drawer” how could you tell the difference between gay married types and gay shacking up types anyway?) Do we want compulsory education up to high school? do we want roads and bridges and dams that work? Do we want drinkable water and breathable air? do we want a national defense that every citizen has a stake in?

Who are we and what do we want?

Ben Commons

BROKE TOWN, U.S.A. By Roger Lowenstein

March 3, 2011

Broke Town, U.S.A.

By ROGER LOWENSTEIN

Vallejo, a city about 25 miles north of San Francisco, offers a sneak preview of what could be the latest version of economic disaster. When the foreclosure wave hit, local tax revenue evaporated. The city managers couldn’t make their budget and eliminated financing for the local museum, the symphony and the senior center. The city begged the public-employee unions for pay cuts — all to no avail. In May 2008, Vallejo filed for bankruptcy. The filing drew little national attention; most people were too busy watching banks fail to worry about cities. But while the banks have largely recovered, Vallejo is still in bankruptcy. The police force has shrunk from 153 officers to 92. Calls for any but the most serious crimes go unanswered. Residents who complain about prostitutes or vandals are told to fill out a form. Three of the city’s firehouses were closed. Last summer, a fire ravaged a house in one of the city’s better neighborhoods; one of the firetrucks came from another town, 15 miles away. Is this America’s future?

Cities across America are facing dire financial distress. Meredith Whitney, a banking analyst turned independent adviser who correctly predicted the banking meltdown, has issued an Armageddon-like prediction of mass municipal defaults. Others — notably Newt Gingrich — have suggested that state governments as well as cities should be allowed to file for bankruptcy. Congress held a hearing to examine the idea.

These forecasts of apocalypse have touched a nerve. Americans, still reeling from the devastating impact of the mortgage debacle, are fearful that the next economic disaster is only a matter of time. To anyone reading the headlines of budget deficits and staggering pension liabilities, it takes little imagination to conclude that the next big one will be government itself. The problems of cities are everywhere. The city council of Harrisburg, the capital of Pennsylvania, has enlisted a big New York law firm to explore bankruptcy as a means of restructuring a crushing debt. Central Falls, R.I., is in receivership. Hamtramck, Mich., a small city within Detroit’s borders, says it could run out of money next month. Hamtramck has only 90 employees, yet it is saddled with the pensions and health care obligations of 252 retirees. Detroit itself is at risk. Large deficits will mean closing about half of the city’s schools and will push high-school class sizes to 60 students.

These and other struggling locales do not begin to approach Whitney’s forecast of hundreds of billions in municipal defaults this year. (It would take defaults by 40 cities with as much debt as Detroit to reach even $100 billion.) Some industry experts accuse Whitney of exaggerating the crisis and of worsening the cities’ problems by frightening away investors. Whitney’s theory is that states, whose finances are also in desperate shape, will cut off local aid to preserve their own budgets; cities that have been subsisting on government transfers would become fiscal orphans and, in a financial sense, unworkable. She has not elaborated on her thesis beyond a few well-chosen television appearances. (She declined to talk to me.) But in the two months following Whitney’s warning, investors unloaded about $25 billion in shares of mutual funds that invest in municipal bonds. The selling spree sent the prices of these munis, typically among the most reliable investments, into a free fall.

If muni bonds were to default (causing investors permanent harm, as distinct from the temporary discomfort of price fluctuations), ordinary Americans would lose big. Munis are bonds issued by state and local governments, as well as agencies like hospitals, with the interest going to bondholders tax-free. Their relative safety, plus the tax break, has made them a favorite among individual investors, who own about two-thirds of the total, either directly or via mutual funds.

But what if the burden of municipal woes falls elsewhere than on bondholders? Yes, cities and states have creditors. They also have citizens who rely on their services and who pay the taxes, and they have public employees who are dependent on stable public-sector jobs and often-ample benefits. Whitney isn’t wrong about a crisis in local government; the crisis is here. The question is, will it be articulated in terms of bond defaults or larger kindergarten classes — or no kindergarten classes at all? The efforts in Wisconsin and elsewhere to squash organized labor suggest that politicians are no longer so willing to protect public employees. Teachers and nurses are likely to suffer well in advance of investors.

The United States has nearly $3 trillion in municipal bonds outstanding. Though some are backed by specific projects like airports and toll roads, most are general-obligation bonds; local taxes are used to pay the interest on those bonds before other expenses. Unlike a corporation, whose revenue can disappear, cities do not go away — or at least, most of them don’t. Detroit is in trouble because of its shrinking population, as are any number of towns in the former steel region of Western Pennsylvania. Many former industrial cities are burdened with governments that are out of proportion to their shrunken tax bases. Local budgets were stretched even before the recession; now, diminished tax receipts have threatened their ability to balance budgets. Bondholders in those municipalities have reason to sweat.

For areas with a stable economy, however, solvency is largely a matter of political will. Historically, far fewer than 1 percent of municipal bonds fail, and most that do tend to be issued for quasi public projects rather than cities. Typical is a monorail that links Las Vegas casinos — and that defaulted for lack of riders. In 2008, a record 166 issues defaulted, but the great majority were Florida land developments; essentially, builders used the tax code to finance sewers and water lines and then walked away when the mortgage bubble burst. The issues were small; defaults in 2008 totaled $8.5 billion. Last year, defaults fell to $2.8 billion.

Chastened by their failure to foresee the mortgage bust, the credit agencies have downgraded munis as the cities’ troubles have accelerated. But the agencies that evaluate muni bonds are paid to worry about bondholders, not about kindergartners or local fire departments; consequently, they are not alarmed. Moody’s says it expects defaults to rise in 2011. But the agencies do not predict a default epidemic. “Munis are not like subprime bonds,” Eric Friedland, a managing director at Fitch Ratings, said.

Government entities do seem less exposed to the sort of chain-reaction panic that undid banks. Lehman Brothers needed financing every day; when confidence disappeared, Lehman disappeared, too. Cities are generally not dependent on short-term financing. (A sizable exception involves some $80 billion in variable credit lines expiring over the next six months — which could force some governments to scramble.)

Another factor that tilts against default is that states and cities carry much less debt relative to the size of their economies than do troubled national governments like those of Greece or Spain (or the United States, for that matter). And muni debts generally come due in a steady stream — not all at once. Robert Kurtter, a managing director at Moody’s, says, “State and local governments really don’t have a crushing debt problem.”

Which is not to say they don’t have a problem. For most of the past decade, local government was a growth business. Avid consumption and the real estate boom spurred an abundance of sales- and property-tax receipts; with dollars flowing in, governments got used to spending more and borrowing more. Then, in the recession, tax revenues dried up, while demands for services kept rising. For the last few years, both cities and states have faced severe, recurring budget gaps.

As part of the 2009 stimulus package, Washington gave the states $150 billion. The states became dependent on a higher level of federal aid — 35 percent of their budgets, compared with about 25 percent before. But the stimulus is ending, and the states will have to cut.

Determining who will suffer from budget cuts is a political and a legal calculation. The cities’ problem is that annual spending is greater than revenue; that imbalance does not entitle them to walk away from bond payments. Moreover, states and cities devote less than 10 percent of their revenue to annual debt service. In other words, they have ways of balancing budgets without defaulting. Lately, governments have been taking a chain saw to ordinary spending. The cuts sometimes reflect a retreat from what was once conceived as the essential mission of government. Education is being hit hard. Arizona is seeking a federal waiver to remove 280,000 adults from Medicaid rolls. Massachusetts is stripping out funds for homeless shelters. New Jersey has canceled a commuter-rail tunnel under the Hudson River. If the government doesn’t build a rail tunnel, who will?

States are also cutting aid to cities — much as Whitney forecast — aggravating the loss of local tax revenues. Camden, N.J., which has one of the highest crime rates in the country, has dismissed nearly half its police force. Michigan cities have seen aid diminish by $4 billion. In San Diego, where the city has cut other spending to pay for spiraling pension costs, residents have formed 56 “maintenance assessment districts” to take care of parks and patch up sidewalks. When the city failed to pass a hospitality tax, local hotels banded together and agreed to charge a 2 percent visitors’ fee. Scott Lewis, who writes about politics for the Web site Voice of San Diego, says, “I think the city is dissolving.”

In Wisconsin, Scott Walker, the new governor, declared that the state was “broke.” He does not mean that Madison intends to default on its obligations to debt holders; he means that public employees will have to increase contributions toward their benefits in an amount equal to 7 percent of their pay. For some employees, the cuts will mean real hardship. Public institutions like schools are also likely to suffer. Though elected officials prefer not to mention it, taxpayers will also have to ante up. Illinois sharply raised its income tax; Arizona voted for a sales-tax increase. Both of those states had markedly low tax rates to begin with, but Illinois’s case should be troubling to bondholders. Even after raising taxes, the state is planning to borrow about $12 billion to cover pensions and past-due bills — pushing both benefit costs and current expenses into the future.

The deficit problems have, at times, seemed to blend with the issue of pensions into a single, giant mess. As E. J. McMahon of the Manhattan Institute observes, “This is a conflating of different things.” States and cities have to put money aside to pay for future pensions, and the portion of that obligation that is “unfunded” represents a huge liability — from $1 trillion to $3.5 trillion, depending on your assumptions about future pension-fund investment returns. This underfunding won’t be felt in a big bang but as a continuous burden for years to come.

Nonetheless, because governments are required to make catch-up payments to those funds, the pension problem is worsening the current budget squeeze. In some cities, the pressure is suffocating. In Miami, according to Fitch, the pension-fund obligation eats up 25 percent of the city budget. In Philadelphia, which has neglected to make payments, the pension fund could be exhausted as early as 2015, says Joshua Rauh of the Kellogg School at Northwestern. Rob Dubow, the city’s finance director, insists that “we’ll make contributions to make sure that doesn’t happen.” The city has budgeted a huge $460 million contribution next year. “The real story” of the pension debacle, Dubow says, “is that it will leave less money for police and fire and sanitation.”

For a long while, government budget-cutting obeyed a distinctive political calculus: pensions were considered untouchable, so jobs were eliminated instead. Now, governments are going after pensions. Many states have taken the easy step of reducing benefits for new employees. Benefits for existing workers were considered inviolable. But some, like New Mexico and Mississippi, are dunning employees for higher contributions, and Wisconsin may follow. Minnesota and Colorado have watered down pension cost-of-living increases; both have been sued.

Whether such efforts will significantly ease the states’ burdens may depend on the courts. In Illinois, where the pension underfunding is among the most egregious, the state constitution says that “benefits shall not be diminished.” This language has long been interpreted to mean that when a public employee is promised a pension that increases with each year of service, the rate of accrual can never be changed. Sidley Austin, a law firm in Chicago hired by a pro-business civic group, has circulated a memo arguing that the clause refers only to benefits already earned — not to the rate of accrual in the future. That interpretation, if acted on by the Legislature, would shatter previous notions of pension protections. Sidley also makes the even-more-explosive argument that if Illinois’s pension funds dried up, the state could not be forced to contribute more. Let pensioners go hungry.

That is unlikely. Even in Illinois, pensions will be paid. Failure to do so would embroil the government in court for years. That may be the hope of ideologues, who envision that the courts — or possibly even a bankruptcy filing — could be used to alter employee contracts. In the 1930s, progressives persuaded Congress to let cities declare bankruptcy to escape the clutches of creditors. Now, conservatives want Congress to authorize states to file for bankruptcy. “Some people on the right see it as a chance to whack the public unions,” says David Skeel, a law professor at the University of Pennsylvania who has written in favor of state bankruptcy. It’s not hard to fathom why Gingrich, who as speaker of the House in the 1990s briefly shut down the U.S. government, would favor default by the states.

But the fantasy of using bankruptcy to suspend government runs up against a hard truth: even in bankruptcy, cities and states don’t disappear — nor do their obligations. Orange County, Calif., which entered bankruptcy in the mid-1990s after its treasurer ran up massive losses in derivatives, ultimately paid every cent it owed. “Among the reasons so few [cities] choose to go this option is, it’s not clear what they gain,” Kurtter of Moody’s says.

Another reason is that cities are creatures of their states, which fear a negative impact on their own credit. Connecticut prevented Bridgeport from declaring bankruptcy in the ’90s, and Michigan is stopping Hamtramck now. In Pennsylvania, about 20 municipalities are operating under a program to nurse insolvent cities back to health. The program has helped Pittsburgh, despite its woefully underfunded pension plan, to slowly improve its credit.

Harrisburg is a different story. A former mayor wanted to create a destination city with a series of ambitious projects, including a Wild West museum. He also approved an expensive plan to refurbish an incinerator so that it could become a moneymaker — a project that has buried Harrisburg under a mountain of debt. There are other Harrisburgs, cities undone by foolhardy projects, but these cases are particular, not systemic.

Vallejo, which ran out of money when the economy imploded, is more representative. A blue-collar city of 110,000, it had been hurting since a naval base closed in the 1990s. In 2007, the Wal-Mart left town. Then, with the recession, property taxes crashed from $29 million to $20 million. Vallejo cut back on street repairs and vehicle maintenance and reduced its staff by a third. The city sought pay cuts from the police and fire unions, whose members’ pay and benefits accounted for about 80 percent of the budget; the unions offered to defer pay raises. The council considered, but rejected, the idea of putting a tax increase to a referendum. Rob Stout, the outgoing finance director, who noted that the police chief is retiring on a $200,000 pension, says the general attitude was one of resistance to footing the bill.

Vallejo was a failure of political will. It is also an example of why bankruptcies for cities don’t work. All the constituencies who might have hoped to avoid hardship are being walloped anyway. Labor costs are being cut (though not pensions) and holders of $54 million in city bonds will suffer losses — how much won’t be known for years. Even Marc Levinson, a partner with Orrick, Herrington & Sutcliffe, which represents the city, calls the bankruptcy a waste of money and time. “It’s better to cut a deal than go through the pain we have in Vallejo,” he says. Pain is coming regardless. In some cities, bondholders will be burned. But America’s failing governments may be one of those crises whose full impact is not registered in the muni market, or in any market. Until voters can agree on what government services they want and will pay for, it is possible that bondholders will bank the profits while taxpayers, employees and citizens share the losses.

Roger Lowenstein (elrogl@gmail.com) is a contributing writer and the author of “While America Aged” and, most recently, “The End of Wall Street.”

hallucinations

Fri, 04 Mar 2011 19:15:43 -0500

a hallucination is a fact, not an error;

what is erroneous is a judgement based upon it.

Bertrand Russell

the perception/reality paradox

Fri, 04 Mar 2011 17:11:00 -0500

I had an old boss (actually a senior partner in the firm but not my supervisor) who was fond of that “perception is reality” line.

I’ve been thinking about a ‘perception v reality’ discussion I had with a group of friends a while ago. At the time we were debating elections and results and the shoulda-woulda-coulda post-morteum predictions from same. And the debate was refired in my brain recently because of Mike Huckabee’s recent “misspoke” on the Steve Malzberg show and Congresswoman Jackie Speier’s reality based rebuke of (the moron - editorially speaking) Rep. Chris Smith’s nonsensical attack on Planned Parenthood funding. We have got to replace “reality show” political debate reality with reality-based political debate reality.

Then I started thinking about my daughter. When she was little (my 27 y/o now) she went through a period of having bad dreams - witches, monsters, hobgoblins, etc under the bed, in corners in closets, This was a real pain because it ruined my sleep and it ruined her sleep and it gave her anxiety just before bedtime. So after about a week of this crafty Dad got a water bottle with sprayer, some food coloring and a little Pine-Sol (no compensation was received for that product placement) and made ‘anti-monster and witch spray’ . The Pine-Sol gave it just enough ‘medicine’ smell to prove it was serious stuff and the coloring was critical too. I had to ‘sell’ the anti-monster spray for it to work. So I sprayed in the closets and under the bed and in corners and she had sound sleeps and periodically when a bad dream would come along I made more and sprayed more and all was good.

But as she grew older - around 8 or 9, I realized that this was not sustainable. There would be no Dad around for sleepovers at friends’ houses or similar situations. And there would be no spray bottles or food coloring or Pine-Sol always around all the time. And (maybe) more importantly there might be some things that scared her that had to be dealt with and there was no magic spray for those at all. So if I was to be a truly responsible parent it was essential that I make her understand that there were no witches, no monsters, no hobgoblins in her room at night and that Dad’s spray was just to ease her mind so she (and I) could sleep. Now this took a few nights and we did some crawling about to inspect and there were some fits and starts but in time - about a week - she realized that there’s no such thing as monsters. And she was able to sleep soundly. She could tell the difference between perception and reality.

So at what point are leaders obligated to be responsible? At what point are politicians responsible to tell people that a proposed policy solution is just water, food coloring and Pine-Sol and that it really won’t get rid of monsters? At what point does government have an obligation to look in the corners and under the bed and in the shadows and shine a light to show that the monster we perceived is just a shirt on a hanger or the remnants of some old policy that has lost its usefulness or maybe some other citizens in another bed across the room? And at what point do we as citizens become responsible and learn to tell the difference between our perception and the reality? My nine year old had a spurt of ‘monster’ dreams recently, but I didn’t make anymore spray like I did when she was five. So now when she wakes up with a bad dream, I go in talk to her a little bit and rub her back. And I tell her there is no such thing as monsters.

There are no boogeymen. Egypt won’t be perfect with Mubarak gone.

There are no monsters. 2 million jobs won’t spring up because of a tax cut.

There are no witches. You can’t wipe out deficits by cutting education funding.

There are no hobgoblins. The government spends money because the citizens - us - want stuff. All of us want stuff. Different stuff. But stuff nonetheless.

Backrub is over. Time to wake up.

Ben Commons

http://www.cbsnews.com/8301-503544_162-20037877-503544.html

http://www.cnsnews.com/news/article/california-congresswoman-talks-own-abort