This school year, dozens of professors from across the country gave students an unexpected assignment: Write Wikipedia entries about public policy issues.
The Wikimedia Foundation, which supports the Web site, organized the project in an effort to bulk up the decade-old online encyclopedia’s coverage of topics ranging from the Toxic Substances Control Act of 1976 to Sudanese refugees in Egypt. Such issues have been treated on the site in much less depth than TV shows, celebrity biographies and other elements of pop culture.
Granted, on topics which have political implications Wikipedia is dominated by left-leaning people who slant their coverage. In spite of that Wikipedia has a lot of useful knowledge. Turning otherwise wasted student labor writing papers into more enduring intellectual products is a step forward.
This idea of harnessing students to create intellectual products of enduring value seems like it could be applied to projects outside of Wikipedia's domain. Students could get practice doing work more like the real world and create useful work products rather than assignments that immediately get thrown out.
Most obvious: computer science students could on real world problems that are usually neglected. For example, computer science students could develop regression test suites for Linux device drivers and other Linux services or for gcc glibc library functions. Ditto for other open source projects. Students could develop test suites for scripting languages such as Ruby, Perl, Python, PHP. They could also develop test suites for security in browsers, important server apps, and desktop apps.
The percentage of household income going to gasoline is near record highs. Not coincidentally, economic growth is much slower than the 4% that economists were predicting 6 months ago.
For the year, the figure is 7.9 percent.
Only twice before have Americans spent this much of their income on gas. In 1981, after the last oil crisis, Americans spent 8.8 percent of household income on gas. In July 2008, when oil price spiked, they spent 10.2 percent.
The figure was 8.9% in April. So consumers are paying more for gasoline than they can sustain. The high oil prices cut consumer spending on other products while also increasing costs to industry. This cuts into economic growth. The US economy currently can't grow at more than a 2% rate. We would need either lower oil prices or a big jump in energy effciency to grow faster than that. Since available net exports of oil are at best flat we need to shift away from oil in order to resume economic growth. I expect that shift to take years and it will come only with deep recessions.
Update: Check out this cool interactive graph of job losses and job growth by sector. Once it comes up (and you probably need Flash enabled to see it) then click on the red line for overall jobs. That will cause a splitting up in many other lines you can hover over to see the details of each sector of the economy. Education and health care have been immune to the recession. Mining and logging recovered quickly and are going gang-busters. There are not enough natural resources in the world with China buying them up and oil companies drilling like mad. Everything else is doing not so good.
When the Democrats tried to rein in Medicare costs the Republicans accused them of trying to create Death Panels. Now the parties have traded roles. The Democrats are playing for partisan advantage by attacking Paul Ryan's plan to cut Medicare costs. But Bill Clinton sees the health care cost problem as so huge we can't avoid cutting medical costs.
Hours before the Senate vote Wednesday, former president Bill Clinton urged Congress, including his fellow Democrats, not to “tippy-toe around” Medicare, saying the program “is part of a whole health-care system that has a toxic effect on inflation.” Speaking at a conference about fiscal challenges, Clinton warned Democrats to be wary of weighing the issue solely for political gain, adding: “We’ve got to deal with these things.”
This amounts to stating the obvious. But the American people don't want to accept that we can't all afford all the health care that we could possibly want. Yes, we are hitting limits. No, Americans don't want to accept it. So we continue on course toward a sovereign debt crisis.
The editorial board of the Washington Post says the Democrats are using their familiar Medicare scare tactic.
Democrats have effectively scared seniors as a political tactic for many years. Republicans turned the tables in 2010, using the Medicare scare tactic against Democrats. Now Rep. Paul Ryan (R-Wis.) has given President Obama and his party a chance to reclaim the low ground, and they haven’t hesitated.
The problem is that as the population ages and medical costs per person continue to go up faster than the rate of inflation we can't afford the costs of catering to scare tactics. America is going to get poorer in part because we continue to live beyond our means. We live in the era of the Great Stagnation and we can't help to grow out of our fiscal problems.
Henry Kissinger, who negotiated America's opening to China for Richard Nixon (back when competent people ran US foreign policy, sigh), has spent the intervening decades periodically carrying messages back and forth between the top leaders of America and China. He is back on the public stage at age 88 with a book On China. In an interview with Bret Stephens of the Wall Street Journal Kissinger admits to a lack of optimism on the ability of the two countries to avoid war.
The second is more prophetic. "Is it possible," he asks, "to achieve enough of a cooperative pattern [with China] to avoid sliding through a series of mutual misconceptions, of stepping on each other's toes, into a situation where an ultimate confrontation becomes inevitable? And looking at the fact that we have not known how to end our little wars, I have no great hope that either side would know how to end such a conflict. . . . Am I optimistic that it's going to be done? No."
Back during the Cold War American political leaders had to come to terms with the need for restraint. Since the fall of the Soviet Union a succession of madnesses have swept thru policy making circles that led to foolish forays into the Balkans, Iraq, and other places. While the US doesn't have big domestic ethnic lobbies pushing for war with China even that is subject to change depending on policies China might pursue in the Middle East. So we aren't safe from factional insanity even when the stakes are much higher.
Americans need to become less triumphalist and more pragmatic in dealing with the rest of the world.
Update: Want to cut back on the size of bloated government bureaucracy and save money for yourself and make the economy more efficient? Want to shrink an agency that employs over half a million people? Move all your banking, bill-pay, and other correspondence online. Then see at the bottom of this post for ways to cut your burden of junk mail. Some steps are easy to do. Also, every time you get junk mail see if they have a web site and then go to it and look for a way to cut off junk mail from them. I've just done this for half a dozen places.
The US Postal Service is bleeding billions of dollars because people are shifting to online everything (ordering, online bill-paying, and online correspondence with friends, businesses, governments, etc). In spite of this its most recent union agreement granted its overstaffed unionized workforce cost-of-living salary increases and raises and a no layoff clause. The USPS wants escape from having to set aside money for future retiree health care benefits.The USPS, unlike most employers, actually pays retiree health care benefits - at your expense. This Businessweek article takes a long look at the depth of the problems at the post office.
The USPS has stayed afloat by borrowing $12 billion from the U.S. Treasury. This year it will reach its statutory debt limit. After that, insolvency looms.
On Mar. 2, Postmaster General Patrick R. Donahoe warned Congress that his agency would default on $5.5 billion of health-care costs set aside for its future retirees scheduled for payment on Sept. 30 unless the government comes to the rescue. "At the end of the year, we are out of cash," Donahoe said. He noted that the unusual requirement was enacted five years ago by Congress before mail started to disappear.
Bricks-and-mortar post offices and hand-delivered mail are so 20th century. Why bail out a relic from the past? I rarely even look at what I get in the mail because months go by between the arrival pieces of mail that matters. In fact, as the ratio of useless-to-useful mail has gone up into the hundreds it is a problem that I do not want to look thru hundreds of mail items just to find one letter that matters. You have the same problem? Then on top of this we are supposed to subsidize our getting pelted with junk mail?
How can this be? Money politics. Bribery has bought (or at least rented) friends in the Democratic Party.
Democrats receive the vast majority of the contributions made by postal workers' unions, according to campaign finance records, so they tend to be sympathetic. President Barack Obama inserted a proposal in his 2012 budget to absolve the USPS of $4 billion of its retiree health-care liabilities in 2011.
The union's influence-buying has yielded them a no-layoffs contract. So Postmaster General Donahoe has to take a much more gradual approach to cost cutting.
He wants permission from Congress to cut weekly delivery from six to five days, which he says will save $3 billion a year. He says he wants to reduce the USPS’s headcount by 20 percent over the next five years through attrition; the agency’s union contracts prohibit layoffs.
Donahoe isn't legally allowed to close a post office just to save money. Really. The US government can't run a business. Donahoe wants to shift post offices into small presences in stores where store employees (non-union usually) can service the sporadic flow of customers. Makes sense. Could be done much faster and save billions of dollars. The article cites examples of European nations which have outsourced most post offices to convenience stores and other retail outlets. These European nations forced their postal services to compete. We need their reforms here. Read the full article for details.
The US government is running a massive and unsustainable deficit. Economic growth will not save the government by boosting tax revenue. We are now in a low growth era. The liability side of the balance sheet (accumulated debts, Peak Oil, aging population, and declining skill sets of work force due to immigration) are going to swamp whatever is going right. Therefore the US is headed for a sovereign debt crisis. Really, our governing class needs to start acting like we are in a real crisis.
Update: Hey, some web sites provide easy ways to opt out of junk mail and catalogs for your physical mail box. Some associations of direct mailers have online forms for turning off the junk. I just went thru and listed myself on DirectMail.com's Mail Preference Registry. Opting out there is easy to do. I also registered (more steps required) for the DMAchoice.org mail preference service of the Direct Marketing Association (which one web page claims can cut your junk mail by 75%). Once you've registered and logged back in from the email response you need to go into each category and click on the bottom right button on each category to opt out of the entire category. You can also selectively do steps for individual companies listed there. Those are my first two steps to cut back on junk mail. If you are like me and rarely find anything useful in junk mail I suggest you do likewise.
Update II: To get rid of credit card or insurance mail offers use OptOutPrescreen.com which tells Equifax, Experian, Innovis, and TransUnion credit report firms not to use your credit info to help credit card and insurance companies know to mail to you.
Also, you can turn off Valassis Red Plum and Cox Target Media ValPak. For other web pages and also email addresses to send opt-out junk mail requests to see the Ecycycle.org opt-out suggestion list, the WikiHow Get Rid Of Junk Mail,and the Privacy Rights Clearinghouse fact sheet on junk mail.
After taking the steps above after a month to wait for the flow to stop I am going to make it a habit to look at all remaining junk mail and go to their web sites to try to get off their lists. My hope is to make arrival of physical mail a rare event.
Los Angeles, CA (May 23, 2011) With teen moms being debated heavily in popular culture today, it's easy to neglect the effects of fatherhood. However, recent research shows that young, disadvantaged men also affect a family and society. In fact, by age 30, between 68 and 75 percent of young men with a high school degree or less are fathers.
What is wrong with America: It is beyond the pale to tell poor young men to delay making babies. Really, we can't afford the rising costs of irresponsible reproduction. America is going to get poorer. When will our intellectuals face the need to address root causes?
A "perfect storm of adverse events":
A new issue of The Annals of the American Academy of Political and Social Science (published by SAGE) called "Young Disadvantaged Men: Fathers, Family, Poverty, and Policy," examines how poverty and lack of education are creating a "perfect storm of adverse events".
What makes this perfect storm possible. Many harmful changes in norms contributed. Pregnancy out of wedlock used to be beyond the pale. It was rare. It was strongly disapproved of. Social programs did not enable it. Political rhetoric about single motherhood was not morally neutral, let alone approving. Celebrities did not make babies outside of marriage if they wanted to remain famous and liked. That's all changed.
So many things have cut into lower class incomes: Automation, outsourcing factories to less developed countries, and immigration have all kicked the supports out from under wages for less skilled workers. Their relative standing in the economy has dropped. Dumber guys aren't making much money. Hey, sorry guys. But we also need you to make fewer babies too for the common good.
So far all the trends continue to point in the direction of a widening gap in earning power between the most and least cognitively able. Machines do routine work. Smart people designs stuff that cuts their need for the labor of dumber people. Mainstream discourse phrases this in terms of low educational achievement rather than IQ. But we need to be real. All the spin isn't going to change the root causes.
Today almost half of all kids are being raised by at least one parent with a low educational background (high school degree or less by age 30) and a poor expected economic future. Additionally 62 percent of fathers with a high school degree or less earned less than $20,000 in 2002. These issues combine to create a roadmap to failure for young, disadvantaged dads.
A recent Pew Research Center report on the decline of marriage underscores the extent to which the decline of marriage is very class-based. Smarter and more affluent people are more likely to raise kids within the institution of marriage.
The Class-Based Decline in Marriage. About half (52%) of all adults in this country were married in 2008; back in 1960, seven-in-ten (72%) were. This decline has occurred along class lines. In 2008, there was a 16 percentage point gap in marriage rates between college graduates (64%) and those with a high school diploma or less (48%). In 1960, this gap had been just four percentage points (76% vs. 72%). The survey finds that those with a high school diploma or less are just as likely as those with a college degree to say they want to marry. But they place a higher premium than college graduates (38% versus 21%) on financial stability as a very important reason to marry.
What is going on here? Do lower class women see their men as less than assets? Has lower IQ male earning power dropped so far that lower IQ women just see these men as more trouble than they are worth? Do they decide to get knocked up by the guys anyway in order to satisfy instinctive desires for babies? Are they getting knocked up by guys who are above their league for permanent relationships?
A point I've made previously: while today older generation married grandparents are raising out-of-wedlock babies the future grand parents will be single losers. So who will raise the illegitimate following generation? Once responsible people are the minority how to keep things working well? The social capital of the United States is on the decline. The nation's prospects are poor.
Since the majority insists on denying the obvious a US sovereign debt crisis is inevitable.
WASHINGTON — They’re not buying it. Most Americans say they don’t believe Medicare has to be cut to balance the federal budget, and ditto for Social Security, a new poll shows. The Associated Press-GfK poll suggests that arguments for overhauling the massive benefit programs to pare government debt have failed to sway the public. The debate is unlikely to be resolved before next year’s elections for president and Congress.
Bottom line: the Republicans are going to run away from Social Security and Medicare cuts. The US total debt will continue to grow faster than the US economy, and the US won't be able to avoid a sovereign debt crisis.
The US government deficit is about 10% of GDP. Social Security and Medicare outlays are going much higher due to an aging population and medical costs that rise faster than the rate of inflation. In the face of these fundamentals the American people like to tell absurd jokes to pollsters.
In the poll, 54 percent said it’s possible to balance the budget without cutting spending for Medicare, and 59 percent said the same about Social Security.
Democracy begins to fail as soon as the majority figure out they can vote stuff for themselves at the expense of their future selves or future generations.
MEDFORD/SOMERVILLE, Mass. -- Whites believe that they have replaced blacks as the primary victims of racial discrimination in contemporary America, according to a new study from researchers at Tufts University's School of Arts and Sciences and Harvard Business School. The findings, say the authors, show that America has not achieved the "post-racial" society that some predicted in the wake of Barack Obama's election.
Both whites and blacks agree that anti-black racism has decreased over the last 60 years, according to the study. However, whites believe that anti-white racism has increased and is now a bigger problem than anti-black racism.
What's notable: These whites are reaching these views in spite of the media that does not want them to form these opinions. Racial preferences in college admissions, jobs, promotions, scholarships, and in other forms register with the public as unfair.
A Tufts prof finds this result surprising.
"It's a pretty surprising finding when you think of the wide range of disparities that still exist in society, most of which show black Americans with worse outcomes than whites in areas such as income, home ownership, health and employment," said Tufts Associate Professor of Psychology Samuel Sommers, Ph.D., co-author of "Whites See Racism as a Zero-sum Game that They Are Now Losing," which appears in the May 2011 issue of the journal Perspectives on Psychological Science.
Sommers misses the extent to which people compare themselves aiming for the same jobs, same slots in school admissions, and the like. Group average outcomes are besides the point if you want a promotion to detective on a police force or captain in a fire department but you get passed over for people who have lower test scores, less education, and fewer accomplishments. One's own life is very personal.
Regards zero-sum games: When economies stagnate for long periods of time and substantial fractions of a population experience stagnant or declining wages for decades life does begin to look like a zero sum game. We are well past the 1950s and 1960s when real wages for the vast majority rose substantially every year. So people see that if someone wins someone else loses. The gain public sector workers comes at the expense of private sector workers. Racial preferences are stronger for government jobs. So that strengthens feelings of unfairness.
The site PrisonPlanet.com manages to convey in its URL a grim view of what it sees happening in the world and what it opposes. A Prison Planet article by Paul Joseph Watson reports on censorship in Britain via YouTube. The British government got YouTube to block a video of a political protest for viewers from Britain. (thanks Lou Pagnucco)
In a frightening example of how the state is tightening its grip around the free Internet, it has emerged that You Tube is complying with thousands of requests from governments to censor and remove videos that show protests and other examples of citizens simply asserting their rights, while also deleting search terms by government mandate.
The latest example is You Tube’s compliance with a request from the British government to censor footage of the British Constitution Group’s Lawful Rebellion protest, during which they attempted to civilly arrest Judge Michael Peake at Birkenhead county court.
It is amazing just how petty the British government can be when it tries to prevent people from seeing something. What's the great threat to the state here?
Britain needs the equivalent of the American 1st amendment. But the article claims the US government asks for videos to be pulled off of YouTube. So what's the pattern in each country on what gets pulled and why?
Drudge is pointing to a speech Barack Obama gave at CIA headquarters where he said "I" 35 times. (a speech supposedly about the accomplishments of others) Click thru and you can see under Obama's part of that page 7 my's, 2 me's, and, yes, 35 I's.
It is all about Barry.
The administration has accelerated direct talks with the Taliban, initiated several months ago, that U.S. officials say they hope will enable President Obama to report progress toward a settlement of the Afghanistan war when he announces troop withdrawals in July.
A senior Afghan official said a U.S. representative attended at least three meetings in Qatar and Germany, one as recently as “eight or nine days ago,” with a Taliban official considered close to Mohammad Omar, the group’s leader.
A reporter should get Henry Kissinger on record with his views about this negotiation. Who is serving as the Taliban's Le Duc Tho and will he decline the Nobel Peace Prize? Will Obama share the Peace Prize with Mullah Omar?
With over half the Chinese GDP going to investment, bubble-level real estate prices, and debts rising to unsustainable levels hedge fund manager Jim Chanos sees cracks in China's bubble.
The Chinese Communist Party played a strategy of funneling most economic output back into investment during a time when the country had little capital. They could get away with it because they had great growth potential for exports and because they had so little capital to start with. A new steel plant's output could be used for exports and factories and rail to haul exports to ports. The output of a new concrete plant could be used to make factories and roads and port facilities. No great finesse was needed to cause growth.
Mercantilism combined with state-subsidized capital expenditures worked well for China for a few decades. But China can't sustain this strategy. They've gradually run out of productive ways to use large amounts of capital. As a result their return on capital has gone down and, has Chanos has pointed out previously, China is hit by the law of diminishing returns. At the same time, costs of raw materials inputs have soared as long term extraction costs are trending upward.
Whether China's policy makers can even make the shifts needed is debatable. The interests inside of China dependent on the current status quo (e.g. construction firms, real estate spectators, steel mills) work against the needed shift toward greater internal consumption.
Mish Shedlock says China is headed for a correction. Also see Vitaliy Katsenelson's China – The Mother of All Gray Swans. Katsenelson believes China's measures to avoid recession when the rest of the world contracted in 2008 have severe global consequences.
My questions: How severe a correction will hit China? Also, on the other side of that correction what will be China's new (lower) long term growth rate? Will Peak Oil prevent resumption of growth? Or will China's Communist Party manage to shift transportation to electric power fast enough to avoid stagnation due to Peak Oil? Also, can the Chinese Communist Party maintain sufficient legitimacy during a downturn to prevent regime-threatening mass protests?
For the next year or two put this in a global context. Every major region has serious economic problems and these problems will interact. The US economy is weak and hard hit by high oil prices. Japan's economy is down for 2 quarters and is in a double dip recession. Popular opposition to austerity measures in the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) seem likely to force sovereign debt defaults in the PIIGS. The resulting German bank losses will increase German popular dissatisfaction with the Euro. Will the currency zone survive without defections?
Nancy needs to keep prices down at the restaurants her and her friends attend. Do as I say, not as I do. (h/t Lou Pagnucco)
Of the 204 new Obamacare waivers President Barack Obama’s administration approved in April, 38 are for fancy eateries, hip nightclubs and decadent hotels in House Minority Leader Nancy Pelosi’s Northern California district.
Unions are getting a lot of waivers too.
If our elites just left us alone I wouldn't mind their hypocrisy. But they want to remold us to fit their image of how society should work.
Medicare will exhaust its trust fund 5 years sooner than projected last year. My advice: save money for your retirement medical costs.
Today, the Medicare trustees issued their annual assessment of the government insurance program’s fiscal health. The prognosis: the trust fund (covering hospital stays) will be exhausted in 2024, as the WSJ reports. That’s five years earlier than they predicted last year; the sluggish economy has led to lower payroll taxes, but health costs keep going up.
Think about that. Over the course of a single year the Medicare trustees pulled in the bankruptcy date for Medicare by 5 years. Imagine (as seems likely) economic growth does not return with vigor over the next 10 years. The system assumes and depends upon vigorous growth. The argument for running up huge deficits for Keynesian fiscal stimulus during the current downturn is that the spending would bring back growth and thereby pay for itself in the long run. But if that return to Business As Usual (BAU) fails to materialize then the debts taken on in recent years will crush our standards of living and sorely tempt the US government to inflate away federal debts.
Last year the Medicare trustees changed their projected bankruptcy date for Medicare by pushing it out 12 years into the future. They did this on the theory that the Obama medical insurance legislation would greatly slow the growth in Medicare spending. Well, that was never realistic. So now the are readjusting back toward reality Not a full adjustment so far. But in future years Medicare will come up with more revisions on who gets what and when.
Harvard economist Kenneth Rogoff says high levels of debt slow economic growth. That puts us in even worse shape.
Q: What's the risk in the U.S. having so much debt? Other countries, like Japan, have larger debt burdens.
A: It doesn't automatically cause a crisis, but it certainly weighs on the recovery. Very roughly speaking, when a country has public debt over 90 percent of income, growth is about 1 percent lower for a very long time.
Slower growth means less taxes collected and an even earlier bankruptcy of Medicare.
Crisis with approaching problems is the new normal. You can not expect efficacy from the US federal government as the crisis intensifies. Save more for your own retirement and expect higher taxes.
Noted Peruvian economist Hernando de Soto argues in a Businessweek piece that the financial markets went so awry because there is no longer enough publicly available knowledge about financial firms to enable the markets to operate efficiently.
To prevent the breakdown of industrial and commercial progress, hundreds of creative reformers concluded that the world needed a shared set of facts. Knowledge had to be gathered, organized, standardized, recorded, continually updated, and easily accessible—so that all players in the world's widening markets could, in the words of France's free-banking champion Charles Coquelin, "pick up the thousands of filaments that businesses are creating between themselves."
The result was the invention of the first massive "public memory systems" to record and classify—in rule-bound, certified, and publicly accessible registries, titles, balance sheets, and statements of account—all the relevant knowledge available, whether intangible (stocks, commercial paper, deeds, ledgers, contracts, patents, companies, and promissory notes), or tangible (land, buildings, boats, machines, etc.). Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: "economic facts."
Changes in financial regulations (along with a large amount of enabling computing power) enabled financial firms to create private markets with repos, credit default swaps, and other instruments that leave regulatory agencies (along with buyers and sellers of shares in financial firms) unable to figure out the financial condition of banks, insurance firms, and other financial firms.
Over the past 20 years, Americans and Europeans have quietly gone about destroying these facts. The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don't know and can't prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.
While de Soto does not mention it, resource shortages and other factors are undermining the ability of governments, firms, and workers to grow their incomes enough to service their debts. The enormous house of cards built with debt instruments stands at risk of an even greater crisis than we saw in late 2008.
The financial problem posed by rising resource prices and limits to growth has been driven home to me as I read Chris Martenson's The Crash Course: The Unsustainable Future Of Our Economy, Energy, And Environment. Our system of debt assumes growth. Take away growth and the amount of unaffordable debt quickly scales up into the trillions of dollars.
Looking at the Congressional Budget Office Analysis Of The President's 2011 Budget a link to economic projections of the CBO shows the CBO is assuming 4.2% annual GDP growth for 2012-2014 and then 2.4% annual growth for 2015-2020. They expect this to yield a 31% real growth in the US economy. Well, what if that does not happen? What if commodity price spikes keep kicking the US economy (along with the other OECD developed countries) back into recession? The effect on debt service would (will?) be catastrophic. More people would demand stuff from government (e.g. people would retire earlier due to lack of jobs) and they would pay far less in taxes.
While greater transparency would help (e.g. to help people learn they need to start growing gardens and cancel vacations) if economic growth stops then no amount of transparency will help us avoid inflation as some of the developed country governments try to inflate away their unaffordable debts. The Western countries and Japan aren't the only ones heavily dependent on growth to manage their debts. China's increasingly debt-driven growth puts its economy at substantial risk of a huge correction. A depression there is not out of the question. So many houses of cards.
The state of Michigan has basically passed a law to handle severe cases of local democracy failure. Republican governor of Michigan Rick Snyder and his Democratic treasurer Andy Dillon (a corporate turn-around expert according to Businessweek) have gotten a law enacted that allows the governor to take over financial basket case local governments and appoint basically a financial dictator for each town.
The law gives those managers—often former politicians or civil servants—broad and controversial powers, including the authority to void union contracts and remove elected officials. It has also given other outsiders, namely private consultants and restructuring experts, an opportunity to do to distressed places what they've done to distressed companies. "Ninety percent of the law is an early warning system," says Representative Al Pscholka, who sponsored it. "The fundamental point is that if the municipality had made the hard choices there would be no need for an emergency manager."
The tacit assumption here is that some electorates will not choose competent elected officials who will live within the (often very modest) means of their taxpayers. Competent management has to be imposed on them. This assumption is a rejection of the idea that democracy is a universal balm. Of course bankrupt, decayed, and corrupt cities, captured by their public employee unions, already provide strong enough evidence that democracy is no panacea.
The management of Detroit's school system by emergency management is now so well established that appointed emergency managers get replaced by new appointed emergency managers when their terms expire. In some cases local governments basically ask for emergency financial management. Flint Michigan's mayor Dayne Walling has asked for state review of the city's finances, a move that could lead to appointment of an emergency financial manager. Walling wants the power to break union contracts.
The city is now run by Joseph Harris, an accountant and auditor from miles away, one of a small cadre of "emergency managers" dispatched like firefighters by the state to put out financial blazes in Michigan's most troubled cities..
Of course, if government profligacy to the edge of financial disaster is reason to appoint restructuring financial managers with near dictatorial power then the United States of America should be put under the rule of an appointed emergency manager with a strong background in corporate restructurings. The problem: Who would be competent enough to appoint an emergency manager? The Joint Chiefs of Staff?
The 2010s will bring us many more government financial crises including large sovereign government financial crises. The US government will most likely respond to its own worsening crisis by eventually inflating the currency. But state governments, lacking their own currencies, need to develop laws based on the Michigan model.
Read this Bloomberg article to see just how corrupt higher education has become.
The deluge of correspondence from even the most hard-to- get-into colleges is raising false expectations among thousands of students, swelling school coffers with application fees as high as $90 apiece and making colleges seem more selective by soliciting and then rejecting applicants.
They get rated higher if they accept a smaller percentage of all the students who apply. So they lure students into applying just so they can reject them.
Harvard is a big offender.
Jon Reider, director of college counseling at San Francisco University High School, advises students to view e-mails and mailings skeptically, especially from Harvard University, the most selective college in the country. Reider called its mailings “not honorable” and “misleading.”
Avoid the very high costs of the bricks-and-mortar schools. Western Governors University looks like a good bet. The US Department of Education wants to throw up roadblocks to online schools and Tyler Cowen says abolish the Department of Education. Good idea.
The United States government is desperate for revenue and is headed for either a sovereign debt crisis or high price inflation. Andrew Cohen offers a modest proposal: Why Not Charge People to See Bin Laden's Death Photo?
I just don't think the Obama administration ought to give them up cheaply. And by that I don't only refer to the government's legal defense against the blizzard of Freedom of Information Act requests for the photographs already filed or on the way on behalf of individuals and media organizations alike. I refer also to simple market principles of supply and demand. The government is desperate for money. And it has a wholly unique "good" that many people in and out of Washington seem eager to view.
I think this idea should be a starting point for unique experiences that only a government can sell. Want to see a serial killer get the electric chair or lethal injection? (and surely the electric chair execution will command a much higher viewing price) Sell the seats on eBay to the highest bidders. The biggest name serial killers will earn the most for spectator viewing rights.
How about trials? They are expensive. Big name trials ought to have ticket prices for the audiences. New highway or bridge? Charge extra for anyone who wants to be first to drive it when it officially opens. The US military is going to test-fly a new fighter jet? Okay, sell tickets to the side of the runway. Why not?
You can imagine that special forces are in a position to make some pretty awesome videos of their battles with mujahideen. Why not sell viewings of videos of air strikes of muj camps? Some people will pay good money to see that sort of thing, especially if telephoto lenses show the muj guys walking around for minutes before getting splatted. Video of them laughing and smiling and then dying could earn movie viewing revenue.
Also, it is about time that those front rows of Presidential speeches to Congress have top bidders rather than US Supreme Court justices, generals, or cabinet secretaries. Those people can watch via closed circuit video - unless they want to pay big bucks of course.
Got any other ideas on how to monetize the US federal government or other governments? I'm thinking the British Parliament needs a bigger peanut gallery of paid spectators when its time for the Queen to give a speech or for Prime MInister's Questions. Also, the US Navy ought to charge for a Trident submarine ride or for a landing on an aircraft carrier. Set a price that'll earn a hefty profit. What else? We need bigger ideas for bigger revenues.
The revolutions in North Africa have driven so many Muslims northward into Europe that even Europe's ruling elites have decided that drastic measures must be taken to cut the flow of illegal immigrants.
In a serious blow to one of the cornerstones of a united, integrated Europe, EU interior ministers embarked on a radical revision of the passport-free travel regime known as the Schengen system to allow the 26 participating governments to restore border controls.
They also agreed to combat immigration by pressing for "readmission accords" with countries in the Middle East and north Africa to send refugees back to where they came from.
The Danes have turned against Muslim immigration. Without waiting for an EU decision Denmark has already started doing some border checks.
Denmark came under a barrage of European fire Thursday over its sudden decision to reintroduce controls at its borders with Germany and Sweden, despite its membership of the Schengen passport-free zone.
Razib says Go Denmark! I agree.
France acted within its rights when it halted trains carrying North African migrants crossing its border from Italy, the European Commission says.
Home Affairs Commissioner Cecilia Malmstroem said French officials had cited "public order reasons".
In the past, most immigrants were keen to travel on to the richer countries in the north, such as the UK, Germany, or the Netherlands, and Schengen made it easier for them to reach most destinations. The 30,000 Tunisians who have arrived in Italy lately are mostly heading to France. They speak the language and many have relatives or friends who already live there. Italy, eager to ease the burden on their reception camps in Lampedusa and Sicily, issued temporary residency permits and ushered them on.
Just as Americans want Mexicans out, Mexicans, who might be tolerant of their country as a passageway north to the United States, have no patience with the undocumented Guatemalans and Hondurans increasingly falling short of their destinations. Nor are their feelings of resentment unique. Around the world, the welcome mat for outsiders is being rolled up on a scale rarely seen in history as economies continue to struggle and worries about cultural identities rise.
Of course in the US our elites continue to lecture us on how we should be for more immigration. The US is definitely a lagging state due to its elites. But throw in some more recessions caused by Peak Oil and high commodities costs and even our elites will be forced to turn anti-immigration.
Mish points to a report in the Orange County Register about high pay for lifeguards in Newport Beach California.
According to a city report on lifeguard pay for the calendar year 2010, of the 14 full-time lifeguards, 13 collected more than $120,000 in total compensation; one lifeguard collected $98,160.65. More than half the lifeguards collected more than $150,000 for 2010 with the two highest-paid collecting $211,451 and $203,481 in total compensation respectively.
When you see reports like this one they are not anomalies so much as outliers on a distribution curve of abuses. The problem varies by degree but is widespread. What happens with government is similar to regulatory agency capture by regulated target industries. But government is not just captured by industries. Government is also captured by government employees.
We need innovations in public policy that make it easier for the voters to limit the tendency of government to serve its employees at the expense of net taxpayers (people who pay more in taxes than they get in benefits). How to limit the extent of parasitism by governments? It is a never-ending problem. We need better techniques for addressing it.
Some ideas: Outsourcing is one idea. But it requires government employees to manage suppliers. Can be hard to do well. Benchmarking would allow better comparison between different cities and states. A relentless drive to automate should be combined with hiring freezes. Few interactions with government should require an office visit. Web servers should do more of what governments are supposed to do). Constitutional barriers to tax increases could shift the balance of power toward greater frugality. Greater transparency on government worker pay and benefits would make it easier for citizens to learn of excesses.
One day last year, a trusted courier for Osama bin Laden answered a phone call that might have been wholly unremarkable except for one thing — the National Security Agency was apparently listening in.
Isn't this useful information for terrorists? Also, if it took the US government almost 10 years to find the bastard then doesn't it need to protect what small advantages it has? Really, it it takes 9+ years to find 1 guy who is living in a conspicuous building (barbed wire, CCTV cameras, high walls) down the street from the Pakistani military academy then the budgets of the NSA, CIA, etc require enormous outlays per accomplishment.
First they turned up al-Kuwaiti’s family, who were still living in the Arabian Gulf. With the discovery of his real family name, the high-tech sleuths of the National Security Agency began monitoring their communications and brought in satellites, unmanned drones and telephone eavesdropping. Then the breakthrough came.
“Where have you been? We’ve missed you. What’s going on in your life? And what are you doing now?,” inquired an old friend of the courier one day in a catch-up telephone call.
I even learned from that article that one of the Navy SEALs, who need to keep their identities secret, is 6 feet tall.
It is widely reported that the detained 9/11 mastermind Khalid Sheikh Mohammed gave his US interrogators the pseudonym of a man he described as Osama bin Laden’s most trusted courier, whose whereabouts were tracked last fall to a fortress-like compound in Abbottabad city, some 75 miles north of the capital Islamabad.
Then in 2004, top al-Qaida operative Hassan Ghul was captured in Iraq. Ghul told the CIA that al-Kuwaiti was a courier, someone crucial to the terrorist organization. In particular, Ghul said, the courier was close to Faraj al-Libi, who replaced Mohammed as al-Qaida’s operational commander.
So the Iraq war eventually led to the death of Bin Laden.
Update: Here's another contrarian take on the death of Bin Laden: Ferdinand Bardamu is mad that we let our "ally" Pakistan hide Bin Laden and we were so slow to find him. It certainly illustrates the limits to American power. But then so do the Iraq and Afghanistan wars, the Libya stalemate, and our large trade deficit.
Update II: Did Leon Panetta manage to pull off the operation to kill Bin Laden in spite of Valerie Jarrett's opposition and Obama's reluctance? We did this thing in spite of the President and one of his favorite advisors?
The debt crisis in Greece has taken on a dramatic new twist. Sources with information about the government's actions have informed SPIEGEL ONLINE that Athens is considering withdrawing from the euro zone. The common currency area's finance ministers and representatives of the European Commission are holding a secret crisis meeting in Luxembourg on Friday night.
But at Monthly Review's MRZine Yanis Varoufakis, a professor at U Athens, says while the Greek government might have an Euro exit as a policy option the Der Spiegel story was a plant by a faction of the ruling elite of Germany to spur the rest of Germany's elite to do debt restructurings of the PIIGS to prevent countries from bailing out of the Euro.
The Spiegel article was meant as a salvo that would sound long-delayed alarm bells. It was intended to raise a small storm of panic as a means of reminding Mrs. Merkel that the crisis so far is akin to a tea party when compared to what will follow if she continues to live in lies.
Who sent this message? Der Spiegel would never act by itself, without coordinating with powerful German policy circles. My sources tell me that these circles are mainly located within the Finance Ministry and, to a lesser extent, in one or two of the larger banks of Germany. In association with Der Spiegel they had been sending tamer messages along similar lines for a while, namely that the Greek debt is not sustainable under the present policy mix (see FT Alphaville's account of that series of messages sent using Der Spiegel as their main conduit).
My take: Too many incompatible economies are in the Euro. The problem runs deeper and longer than the current debt of the PIIGS. In the long run it does not make sense to have so many countries which speak so many different languages (hence low labor market mobility) and which have such different economic systems to get tied up in the same currency zone. But like other dumb things our elites do (e.g. conduct wars that are not in the national interest, run up debts that threaten sovereign debt crises, and prefer lower skilled immigrants) we can't expect reason to appeal to them. The Western countries have destructive policies and due to destructive political and economic cultures.
On Saturday, fellow FDP MP Frank Schaeffler said Germany should constructively support Athens should it choose to leave the euro zone.
Schaeffler was joined by Ifo Institute President Hans-Werner Sinn, who told Sunday weekly Frankfurter Allgemeine Sonntagszeitung (FASZ) that a Greek exit is preferable to permanent fiscal transfusions from German coffers.
How it looks to me: Germany's elites are fighting over whether to keep the Euro intact over all current members. Greece's fate will be decided in Berlin. The more southern European countries that remain in the Euro the more the Euro will be pressed to become like the currencies that those southern European countries used to have (Can you say "inflate to relieve excessively high wages caused by union power"? Sure). Also, Germany will basically be pressured to subsidize these spendthrift societies. So some portion of the German establishment wants Greece out of the Euro to ensure the Euro stays more like the Mark. Makes sense to me.
Since 2000, U.S. oil consumption has edged down 4% to 19.2 million barrels a day. In the same period, the combined demand from Brazil, India, China and Saudi Arabia has risen 76% to 18.8 million barrels, nearly matching the U.S. By itself, China has more than doubled oil consumption to 9.4 million barrels, according to data from the International Energy Agency.
"In some respects, the Chinese are pushing us into small cars so they can consume more oil," said Stephen Brown, a professor at the University of Nevada, Las Vegas, and former energy economist with the Dallas Federal Reserve Bank.
When limited natural resources limit economic growth (or cause economic contractions) we enter an era of zero sum games. We will have to work harder and longer to get the commodities we need to run our economies and lifestyles. My advice: down shift to a lower energy lifestyle before you have to.
Where does this lead to? A return to old ways. Oxens save fuel on American farms. Though they use precious biomass. Oxens and work horses can not scale up. We will need to retain the ability to use automated equipment to operate farms.
Pauline Arrilliga of the Associated Press has a good piece on the scale of China's espionage in the United States. China's going to close the military and industrial gap not just because the US companies are moving technology en masse into China but also because the Chinese are very good at finding corruptible American citizens and residents.
And Shriver is just one of at least 57 defendants in federal prosecutions since 2008 charging espionage conspiracies with China or efforts to pass classified information, sensitive technology or trade secrets to intelligence operatives, state-sponsored entities, private individuals or businesses in China, according to an Associated Press review of U.S. Justice Department cases.
Of those, nine are awaiting trial, and two are considered fugitives. The other defendants have been convicted, though some are yet to be sentenced.
China will surpass the US economically and the US military edge won't last long. With many former top officials of the US government now acting as paid agents of foreign governments (and what does it mean?) Americans in important positions are easily purchased. So as China's influence buying power, technological prowess, and economy all grow the US has got to find a strategy for how to defend its real interests. That means it has to stop serving interests of assorted economic and ethnic interests. I think the prospects are bleak for such a big pivot in how our elites govern. So America's future is one of decline.
In a measure of the shift, Manuel Valls, a presidential hopeful in France’s Socialist Party, challenged party doctrine recently by declaring that it should not make an issue of preserving the 35-hour workweek if French factories have to compete with Chinese factories where the workweek starts at 60 hours and goes up from there. In Denmark, Prime Minister Lars Loekke Rasmussen rattled many in that icon of Scandinavian cradle-to-grave welfare by suggesting Danes should work longer before retiring, to peel back the deficit by $2.8 billion.
The short work days of Belgians, Germans, and Danes are going to run up against a billion Chinese willing to work longer and harder to afford commodities imports. At the same time, aging populations will make ratios of workers to retirees too low to allow early retirements and shorter work days.
Europeans should automate their personal lives to free up more time for paid work. But one of the distorting effects of taxes is to increases the incentives for manual labor for your own personal needs. Since your own labor isn't taxed when you mow the lawn, paint the house, or repair your car the higher your labor is taxed in your job the greater the advantage that do-it-yourselfers gain from doing their own work. In a nutshell: high labor or sales taxes decrease economies of scale by cutting the use of purchased labor and capital.
I expect Peak Oil to precipitate a crisis in the modern Western welfare states that will force a slashing of welfare state benefits. Necessity is a mother.
Pakistan's intelligence agency ISI is seen by one British counterterror official as a group of fiefdoms working independent of each other at cross- purposes.
In the past, small, trusted units of the Pakistani security forces have worked with U.S. counterterror agencies to capture fugitives such as Ramzi Binalshib, a Sept. 11 suspect arrested in Karachi in 2003 after a fierce gun battle. But now there are fears that the leadership of the ISI, the dominant institution in Pakistan, has lost control not only of its militant allies but of the spy agency itself.
"I grow ever more cautious of talking of ISI as a coherent organization," said a veteran British counterterror official who requested anonymity because of the sensitivity of the issue. "The individual directorates are remarkably autonomous and even work at cross purposes. So you are dealing with one directorate that works side-by-side with us...But then you have another running proxy operations all over South Asia. It's remarkable how little strategic command and control is exercised from the top."
But the rogue individual directorate theory for Osama's conveniently located hide-out does not seem plausible. A single ISI directorate that needed to work against the will of the military and other directorates would face too much risk placing Bin Laden so close to key elite Pakistani military installations. The height of the walls, expense of the complex in such a poor country, and other characteristics made the place unusual.
In 2009 a couple of UCLA geography professors and their students figured out Abbottabad and another Pakistani city were likely to be where Bin Laden was in hiding. They theorized risks are lower in cities and published a paper about it. They expected him to be in a building with high walls around it.
What the question of monotheism versus polytheism really comes down to: Did a single software developer write the software for the universe simulation that we exist in? Or was it a team?
One can get into a semantic argument when trying to answer that question: If a single person put the universe together from some already existing simulation components then should we credit the developers of the components as also being our Creators?
Okay, it gets even weirder: Suppose the universe creator was just one developer in a company and he created it but did so to fulfill requirements created by his bosses. Is the Creator really a minor deity figure? What if the Creator isn't even the current maintainer? In a simulated universe the polytheism-monotheism question might yield a rather complex answer if we only had a way to access the answer.
Some economists such as Jaume Ventura and Alberto Martin of Barcelona's Universitat Pompeu Fabra go so far as to argue that bubbles are the price we pay for vigorous growth. They say the optimism reflected in sharply rising prices can become a self-fulfilling prophecy: Rising prices induce more hiring and investment. That generates the growth that justifies even higher prices, and so on in a virtuous upward spiral. Of course, eventually the bubble pops and causes a mess. Yet however jarring a boom-bust economy may be, they say, it's better than an overregulated economy stuck in perpetual underperformance. "The bubble has costs. But you prefer the world with the bubble over the one without the bubble," says Ventura.
Most businesses fail. If optimism didn't spring eternal we wouldn't get as many attempts at starting businesses and the smaller number of super successes would come less often.
Jeremy Grantham, Co-founder and Chief Investment Strategist of Grantham Mayo Van Otterloo (GMO) - with $107B under management, writing in a bleak article about Peak Everything points out that optimists do better in life in spite of the fact that they cause market bubbles.
Fortunately, optimism appears to be a real indicator of future success. A famous Harvard study in the 1930s found that optimistic students had more success in all aspects of their early life and, eventually, they even lived longer. Optimism likely has a lot to do with America’s commercial success. For example, we attempt far more ventures in new technologies like the internet than the more conservative Europeans and, not surprisingly, end up with more of the winners. But optimism has a downside. No one likes to hear bad news, but in my experience, no one hates it as passionately as the U.S. and Australia. Less optimistic Europeans and others are more open to gloomy talk. Tell a Brit you think they’re in a housing bubble, and you’ll have a discussion. Tell an Australian, and you’ll have World War III. Tell an American in 1999 that a terrible bust in growth stocks was coming, and he was likely to have told you that you had missed the point, that 65 times earnings was justified by the Internet and other dazzling technology, and, by the way, please stay out of my building in the future.
Look at the German software industry (if you can find it) as a comparison to the US software industry. The Germans ought to be able to spin up lots of highly successful software companies. But no. It takes irrational exuberance (like with the current Silicon Valley social media bubble) to produce excellent companies that are game changers.
What's key: Some investment bubbles (notably in tech) are constructive. They throw up lots of experiments and a few work. Other investment bubbles (mostly involving finance and excessive loans) are destructive. They pull people away from constructive work and misallocate capital with no long term payoff. The excessive real estate build in the US, Ireland and some other countries did not make these countries richer in the long run - quite the opposite.
So have our bubbles become more destructive on average? If so, why?