Archive for December, 2011

Looking backwards from the year 2096

December 31, 2011

The Nobel economist Paul Krugman was a science fiction fan.  He once said he was inspired to become an economist by the example of Isaac Asimov’s Foundation stories, in which the fictional Hari Seldon created a predictive science of history by which his followers saved galactic civilization.

In 1996, Krugman was invited by the New York Times Magazine to try his hand at science fiction.  To celebrate its centennial, the magazine invited contributors to write as if they were 100 years in the future, looking back on the year 1996.  Here is Krugman’s contribution.


When looking backward, you must always be prepared to make allowances: it is unfair to blame late-20th-century observers for their failure to foresee everything about the century to come.  Long-term social forecasting is an inexact science even now, and in 1996 the founders of modern nonlinear socioeconomics were obscure graduate students.  Still, many people understood that the major forces driving economic change would be the continuing advance of digital technology and the spread of economic development throughout the world; in that sense, there were no big surprises. The puzzle is why the pundits of the time completely misjudged the consequences of those changes.

Paul Krugman

Perhaps the best way to describe the flawed vision of fin de siecle futurists is to say that, with few exceptions, they expected the coming of an ”immaculate” economy — one in which people would be largely emancipated from any grubby involvement with the physical world.  The future, everyone insisted, would bring an ”information economy” that would mainly produce intangibles.  The good jobs would go to ”symbolic analysts,” who would push icons around on computer screens; knowledge, rather than traditional resources like oil or land, would become the primary source of wealth and power.

But even in 1996 it should have been obvious that this was silly. First, for all the talk about information, ultimately an economy must serve consumers — and consumers want tangible goods.  The billions of third-world families that finally began to have some purchasing power when the 20th century ended did not want to watch pretty graphics on the Internet.  They wanted to live in nice houses, drive cars and eat meat.

Second, the Information Revolution of the late 20th century was a spectacular but only partial success.  Simple information processing became faster and cheaper than anyone had imagined, but the once-confident artificial intelligence movement went from defeat to defeat.  As Marvin Minsky, one of the movement’s founders, despairingly remarked, ”What people vaguely call common sense is actually more intricate than most of the technical expertise we admire.”  And it takes common sense to deal with the physical world — which is why, even at the end of the 21st century, there are still no robot plumbers.

Most important of all, the long-ago prophets of the information age seemed to have forgotten basic economics.  When something becomes abundant, it also becomes cheap.  A world awash in information is one in which information has very little market value.  In general, when the economy becomes extremely good at doing something, that activity becomes less, rather than more, important.  Late-20th-century America was supremely efficient at growing food; that was why it had hardly any farmers.  Late-21st-century America is supremely efficient at processing routine information; that is why traditional white-collar workers have virtually disappeared.

These, then, were the underlying misconceptions of late-20th-century futurists. Their flawed analysis led, in turn, to the five great economic trends that observers in 1996 should have expected but didn’t.

Soaring Resource Prices

The first half of the 1990’s was an era of extraordinarily low prices for raw materials.  In retrospect, it is hard to see why anyone thought that situation would last.  When two billion Asians began to aspire to Western levels of consumption, it was inevitable that they would set off a scramble for limited supplies of minerals, fossil fuels and even food.

In fact, there were danger signs as early as 1996.  A surge in gasoline prices during the spring of that year was prompted by an unusually cold winter and miscalculations about Middle East oil supplies.  Although prices soon subsided, the episode should have reminded people that industrial nations were once again vulnerable to disruptions of oil supplies.  But the warning was ignored.

Quite soon, however, it became clear that natural resources, far from becoming irrelevant, had become more crucial.  In the 19th century, great fortunes were made in heavy industry; in the late 20th, they were made in technology; today’s super-rich are, more frequently, those who own prime land or mineral rights.


U.S. still keeping forces in Iraq

December 30, 2011

The secret world of the Internet

December 30, 2011

It is easy to think of the Internet as a magical immaterial realm, in which information, thought and imagination are the only realities and physical distance and material reality don’t matter.

This is of course not true.  The Internet depends upon a physical infrastructure which, like so many things in our lives that are easy to take for granted, depends on the devoted and capable work of people we never hear of.

I once remarked to my friend Bill, a retired electrical engineer, that it is easy for laymen such as myself to think of the interface on my i-Mac as real, and forget that the reality is the 1s and 0s that make up computer code.  Not so, Bill said; the reality is the flow of electrons through circuitry.  Information technology is a technology; it is not pure information.  Human beings have to design and make the equipment through which the information flows.

Robot wars

December 28, 2011

There’s nothing wrong with robot technology in and of itself.  Anything that protects the lives of American troops on a battlefield and improves their effectiveness is a good thing, not a bad thing.

The problems with waging war by means of flying killer robots is that it creates the illusion of impunity.  Other nations will soon develop their own war robot technology.  And people in countries that are targets of drone attacks will eventually find a way to bring the war back to the United States.  We will have “terrorism” aimed at the drone controllers on American soil.  I don’t invite or justify such attacks.  I merely point out that there is such a thing as cause and effect.

Some people think that the computers controlling the war robots will develop an artificial intelligence that will escape human control.  This isn’t something that I fear.  What I fear is that human commanders will defer decision-making to so-called artificial intelligence because they can’t or won’t act on their own responsibility.

[Added 12/29/11]

Click on Under Obama, an emerging global apparatus for drone killing for a good Washington Post article on how the CIA and Pentagon are opening new theaters of war in secrecy and without accountability.

Click on Snapshots of Washington’s essence for Glenn Greenwald’s comment on the article.  Click on Point and Click Empire for B Psycho’s comment.  I don’t think there’s anything I could add to what these two say.

The art of tricking your mind

December 28, 2011

Double click to enlarge

Hat tip to GOOD magazine.

An amazing Bangladeshi brick carrier

December 26, 2011

I have been amazed all my life at the things that seemingly ordinary people are capable of doing.

Bear in mind that this guy is not a circus performer.  This is what he does for a living.

Hat tip to Brick magazine.

[Afterthought 12/28/11]   I got to thinking what this man in Bangladesh might think of a wealthy privileged person (compared to him) viewing his struggle for survival as just something interesting to watch.   He might think my time would be better spent working for a world in which people don’t have to make near-superhuman efforts just to get by.

Sub-zero on the Great Plains

December 23, 2011

The adventures of Babbage and Lovelace

December 21, 2011

Click to view

Charles Babbage was an eccentric genius who lived in the early 19th century, who tried to create a mechanical device that would do all the things that electronic computers do today.  His ideas theoretically would have worked, but he never was able to build a model that actually would have worked.  His great friend was Ada Countess of Lovelace, Lord Byron’s daughter, who created the theory of programming.  If Babbage’s Difference Engine and Analytical Engine had worked, she would have been the first programmer.

SF writers Bruce Sterling and William Gibson collaborated on a great alternate history novel, The Difference Engine, on what would have happened if Babbage’s machines had worked, and the computer age had begun in Victorian England.  The Difference Engine was published in 1990, and became the prototype for the steampunk genre of science fiction.

Another eccentric genius, the British animator Sydney Padua, used that idea as a premise for a wild and crazy cartoon epic on the Adventures of Babbage and Lovelace, mixed with research on odd historical facts about the actual Babbage and Lovelace.  Some people may find her series a little too peculiar.  I think it is one of the funniest and most entertaining things on-line.

Click on 2D Goggles: Dangerous Experiments in Comics for her home page.

Click on 2D Goggles: FAQ for an introduction to the series.

Click on Lovelace – The Origin for the first story.

Click on Lovelace and Babbage Vs. the Economy. for how our protagonists’ steam-powered economic model went horribly wrong.

Click on Babbage and Lovelace Vs. the Client for our protagonists’ encounter with Queen Victoria.

Click on Lovelace and Babbage Vs. the Organist for how Charles Babbage’s campaign against street musicians went horribly wrong.

Click on Vampire Poets Prologue and Vampire Poets Part One for the story currently in progress.

Click on Metaphysical Speculations Into the Nature of this Comic for more cartoons.

Syncopated Sleigh Ride

December 19, 2011

I like traditional Christmas carols best, but this is delightful.

Hat tip to Obsidian Wings.

The war on “Happy Holidays”

December 19, 2011

Click to view

Click on Candorville for more cartoons by Darrin Bell.

In Focus: 2011 in pictures

December 19, 2011

Japan hit by tsunami

The Atlantic’s In Focus picture site has compiled 120 top news photos of 2011, all well worth looking at if you care anything about photography or photojournalism.

Click on 2011: The Year in Photos, Part One for the first 40 pictures.

Click on 2011: The Year in Photos, Part Two for the next 40 pictures.

Click on 2011: The Year in Photos, Part Three for 40 more pictures.

Arab Spring protesters in Cairo's Tahrir Square

Is Bradley Manning the real criminal?

December 18, 2011

This program aired on the Real News Network last Wednesday, and is based on a documentary that was on German television about 10 months ago.

My morning newspaper carried an Associated Press dispatch saying that material in the video may not have been classified information.

During its cross-examination of [Special Agent Toni] Graham [an Army criminal investigator], Manning’s defense team … sought to convince the court that not all the material he is accused of leaking is classified.

Graham, who collected evidence from Manning’s living quarters and workplace, testified that among the items seized was a DVD marked “secret” that contained a military video showing the 2007 incident in which Apache attack helicopters gunned down unarmed men in Iraq.

[Major Matthew] Kemkes, one of Manning’s lawyers, asked Graham whether she knew the video was unclassified.  She said she didn’t.  “In fact, it was an unclassified video,” Kemkes said.

At the time the video was posted by WikiLeaks, the Pentagon called it a breach of national security and it was believed to be a secret.

There is nothing in the Apache helicopter video that was unknown to the people of Iraq and their neighbors.  They knew very well how war was waged in Iraq.  The people that the American government didn’t want to see the video were the people of the United States.  The secrecy was aimed at us.

Manning is accused of releasing a great deal of other material, some of which really is classified as confidential or secret.  An estimated 2.5 million personnel reportedly had access to that material.  If so, it can’t have been all that secret.

It should be noted that the program refers to conditions under which Manning was then being held at the Marine Corps station at Quantico.  Subsequently he was moved to Fort Leavenworth and held under more humane conditions.  And Manning is no longer in jeopardy of the death penalty, although if convicted he could be sentenced to life imprisonment.  So there has been some improvement in his situation since the program was made.

But meanwhile the soldiers who shot a wounded man and his rescuer, and the people who ordered them to do it, and the people who gave them orders, are in jeopardy of nothing at all.

Are we already at war with Iran?

December 17, 2011

U.S. military bases in the Middle East (double click to enlarge)

Barack Obama is President of the United States because, alone of all the major Presidential candidates, he had sense enough to oppose the invasion of Iraq from the beginning.  He said he wasn’t against all wars—just stupid wars.

But now that Barack Obama is President, his administration is drifting into war with Iran, a larger and more powerful nation with a stronger government than the crumbling Saddam dictatorship.  All the reasons that made invading Iraq a stupid apply many times over to Iran.

In fact, all indications show that a covert war already is being waged against Iran.  Mysterious explosions have wrecked a uranium enrichment facility, a military base storing missile, a steel factory.  Nuclear scientists have been killed by car bombs, by shooting and by unknown means.  The Stuxnet computer virus attacked the systems that run the centrifuges at an Iranian nuclear facility.  All these things are covert.

On the record, the United States government continues to wage economic warfare against Iran.  An anti-government organization called the Mujahedin-a-Khalq (People”s Mujahadeen Organization of Iran), which the U.S. State Department declared a terrorist organization in 1995, has been taken off the terrorist list.  And U.S. drones regularly violate Iranian air space.

Suppose the situation was reverse, Glenn Greenwald asked.  Suppose there was a powerful foreign country with bases and 150,000 troops in Canada and Mexico.  Suppose there was reason to believe that this country’s agents were murdering American scientists, blowing up American nuclear facilities, and waging cyber-warfare against the United States government.  Suppose that country were openly trying to cripple the U.S. economy.  Suppose it was involved with a terrorist organization operating on U.S. soil.  Suppose its aircraft violated U.S. air space.  How would the U.S. government respond?  What would be our reaction as Americans?

The reason we Americans so seldom think this way is that we assume that our government can invade, bomb and subvert foreign countries with impunity.  We are under the illusion that this will never have any adverse consequences for ourselves.

Click on George Orwell on the Evil Iranian Menace for Glenn Greenwald’s comment on American policymakers’ hypocrisy on U.S. policy toward Iran.

Click on We’re already at war with Iran for a report by Jordan Michael Smith for Salon.

Click on Iran war: Has it already begun? for a Jerusalem dispatch to GlobalPost, a Boston-based on-line international news service.

Click on War on Iran has already begun for a report by Seumas Milne for Britain’s The Guardian newspaper.

Click on Iran war: Mystery explosions at nuke sites fuel fears conflict is already under way for a report in Britain’s Daily Mail newspaper.

Click on Has a war with Iran already begun? for a report by the National Journal’s Michael Hirsch for The Atlantic.

[Update] Click on Ron Paul Was Right On Iran, and His Position Is More Popular Than You Might Think for Daniel Larison’s comment on the only Republican Presidential candidate clearly opposed to attacking Iran.

America’s real drug epidemic (3)

December 16, 2011

Medical journalist Robert Whitaker wrote an explosive book, ANATOMY OF AN EPIDEMIC: Magic Bullets, Psychiatric Drugs and the Astonishing Rise of Mental Illness in America, in which he argued that much mental illness is caused or made worse by the use of psychiatric drugs.  Here are some videos showing him making his case.

Fast forward through the first minute and a half of the above video to get to the gist of Whitaker’s presentation.

Fast forward through the first five or so minutes to get to the gist of Whitaker’s presentation.

I recommend reading the book or, if you don’t have time for that, my previous two posts, but the videos give the gist of his argument for those who learn better by listening than by reading.

Click on Anatomy of an Epidemic for Robert Whitaker’s home page and links to the scientific studies he cites in his book.

Click on Antipsychotic drugs and chronic illness for Robert Whitaker’s list of studies for his earlier book, Mad in America.

Click on Mad in America for Robert Whitaker’s web log for Psychology Today.

Click on Robert Whitaker’s Anatomy of an Epidemic: the Carlat Take and The Carlat Take Part 2 for an thoughtful critique of Whitaker’s book by a psychiatrist named Daniel Carlat.  Both his mini-essays and their comment threads are well worth reading.

Click on Do Psych Drugs Do More Harm Than Good? for an account of a confrontation between Whitaker and Andrew Nierenberg, a psychiatrist who directs Massachusetts General Hospital’s bipolar research program.

Click on The Epidemic of Mental Illness: Why? and The Illusions of Psychiatry  for a two-part series by Marcia Angell in the New York Review of Books.

My two earlier posts on this subject were a review of Whitaker’s book and a presentation of charts illustrating his argument.

America’s real drug epidemic (2)

December 16, 2011

Robert Whitaker, author of ANATOMY OF AN EPIDEMIC: Magic Bullets, Psychiatric Drugs and the Astonishing Rise of Mental Illness in America, was a believer in the benefits of psychiatric drugs until he came across a study by the World Health Organization that showed that schizophrenia outcomes were much better for patients in poor countries such as India and Nigeria than in rich countries such as the United States.  What was the reason, he wondered, why mental illness was so much worse in the United States when treatment was so much more advanced.

He said that another study that made him a skeptic was a 1994 study by Harvard Medical School which showed that outcomes for schizophrenia patients had worsened in the previous 20 years, and were no better than they were a century before.  Surely, he thought, with all the wondrous psychiatric drugs available, the trend out to be in the opposite direction.

The number of people receiving Social Security Disability Income or Supplemental Security Income because of mental disabilities has increased eight-fold in the past 20 years.  We don’t know how much is due to an actual increase in disability, and how much to the widening definition of disability.

Marcia Angell, in the New York Review of Books, said that for many low-income families, applying for SSI payments on the grounds of mental disability is a way to survive.  It is more generous than welfare and guarantees eligibility for Medicaid.  But to qualify requires the applicants, including children, to take psychiatric drugs.

She told about four-year-old Rebecca Riley, who died of a combination of Clomidine and Depakote, which has been prescribed when she was two years old [!!] along with Seroquel to treat ADHD (attention deficit hyperactivity disorder) and bipolar disorder.  Her two older siblings were also taking psychiatric drugs.  The parents had obtained SSI benefits for themselves and the siblings, and were applying for SSI benefits for Rebecca when she died.  The family’s total SSI income, Angell reported, was $30,000 a year.

Double click to enlarge

Correlation is not causation, but if psychiatric drugs aren’t a cause of the epidemic of mental illness among children and youth, they clearly aren’t the solution.


America’s real drug epidemic

December 16, 2011

In ANATOMY OF AN EPIDEMIC: Magic Bullets, Psychiatric Drugs and the Astonishing Rise of Mental Illness in America Robert Whitaker, an award-winning science journalist, argues that the increasing use of psychiatric drugs has not only failed to stem a huge increase in mental illness in the United States, but that the drugs themselves may be a factor—maybe the main factor—in that increase.

This is an astonishing claim, but he backs it up with scientific evidence and illustrates it with heart-breaking accounts of people who’ve struggled with debilitating addiction to psychiatric drugs.  I am surprised that Whitaker’s book has not gotten more attention than it has.  It ought to have the impact of Rachel Carson’s Silent Spring or Ralph Nader’s Unsafe at Any Speed.

If psychiatric drugs were as effective as antibiotics or insulin, you would expect mental illness to be declining.  But the reverse is true.  Conditions that once were rare and temporary are now common and long-lasting.  In the past 30 years, the number of disabled mentally ill in the United States has tripled.

Psychiatric drugs are sold based on the claim that they correct chemical imbalances in the brain.  But according to Whitaker, there is no evidence that mental illness is linked to chemical imbalances, nor do psychiatric drugs correct chemical imbalances.  Rather the drugs alter brain function, sometimes permanently.

Some people undoubtedly are helped by psychiatric drugs, Whitaker wrote.  He believes drugs have their place.  But he cited studies show that in the long run, patients on psychiatric drugs don’t fare any better than patients on placebos or unmedicated patients, and sometimes do a lot worse.

Long-term recovery rates are higher for unmedicated schizophrenia patients than for medicated patients.  Taking an anti-depressant increases the risk that the person will become disabled by the disorder.  Bipolar disorder was once rare and short-lived; now it is common and long-lasting.  Long-term studies of children with ADHD (attention deficit / hyperactivity disorder) do not show any benefit from ADHD drugs.  Drugs are dangerous, and their use should be a last resort, not a first resort, Whltaker said.

Robert Whitaker

Whitaker traced the origins of the drug epidemic to the American Psychiatric Association’s struggle  in the 1950s and 1960s to define psychiatry as a profession.  Psychiatry was under attack on the one hand by critics who claimed that Freudian psychotherapy was too expensive and had no scientific basis, and by various New Age therapies that offered alternatives to psychiatry.  What gave psychiatrists an edge was that they, unlike psychologists and other therapists could, could prescribe drugs.

About the same time there was a move to close mental institutions, both because they were costly and because often patients were badly treated.  It was thought that mental patients could live in society, provided their aberrant behavior was controlled by drugs.

In the 19th century, when drugs and medicines of all kinds were freely available, the American Medical Association gave itself the watchdog task of evaluating these drugs on a scientific basis.  When the Food and Drug Cosmetics Act of 1938 gave physicians an exclusive right to prescribe certain drugs, the medical profession became a purveyor rather than an evaluator of drugs.   The same thing happened to the psychiatric profession.

The pharmaceutical industry saw its opportunity, and formed an alliance with the APA.  Drug companies sponsored symposia at APA conventions, and paid top scientists (known as to the companies as KOLs, or key opinion leaders) to serve as consultants, on advisory boards and as speakers.  The value of psychiatric drugs became an orthodoxy that was dangerous to challenge.

Loren Mosher, head of schizophrenia studies at the National Institute of Mental Health, ran a 12-year project in which patients – 82 in all – were helped to work through their problems without benefit of drugs.  He compared his patients with a matched group of patients taking drugs, and found his patients did better.  But the APA did not accept the validity of his results, Mosher lost his position, and there never was a follow-up study to verify or refute his findings.

Whitaker gives many case studies, many of which are like classic cautionary tales of the danger of getting hooked on drugs.   A number of his stories are about high school and college students who felt severely depressed or had other psychological problems, and were given an antidepressant, which was followed by a bipolar episode, after which they were given an anti-anxiety medication.  Soon they had begun careers as a drug addict and mental patient, from which a heroic few were able to wean themselves.


Police confront demonstraters, then and now

December 15, 2011

Double click to enlarge

Hat tip to zunguzungu.

 Click on Riot Gear’s Evolution for the source of the chart.  [3/4/13]

Bradley Manning to get a day in court

December 14, 2011

After 17 months in prison, PFC Bradley Manning will get his day in court on charges that he leaked confidential government information to Wikileaks.  He faces the possibility of life in prison.

The U.S. Army will begin a pre-trial hearing at Fort Meade, Md., to determine whether there is sufficient evidence to bring him to trial.  This hearing is expected to last about a week.  Barring the unexpected, a date for his actual trial will then be set.

PFC Manning, a 23-year-old Army intelligence analyst (his 24th birthday is Saturday), is accused of making public the “Collateral Murder” video of a US helicopter attack that killed a dozen unarmed Iraqis, the “Iraq War Logs”, the “Afghan Diaries”, the “Gitmo Files”, and a trove of embarrassing US State Department cables by providing these files to the WikiLeaks website.

Like any other defendant, he is entitled to a legal presumption of innocence, but I have not heard any claim by his supporters or his lawyers that he is falsely accused of leaking the information.  Rather their claim is that he was justified.

Although he is charged with espionage, along with lesser charges of theft of property and he is not accused of working for a foreign power.  Rather he is accused of embarrassing the government by making the American people and the people of the world aware of things the government wants to cover up.

He had a legal obligation as a soldier to keep classified information secret.  If that legal obligation is to mean anything, a violation has to be punished.  But life imprisonment?   This is wildly disproportionate when you consider that government officials leak confidential information all the time, and suffer no punishment, because this advances some powerful person’s agenda.  If it were up to me, I would sentence PFC Manning to the time he has already served, and let it go at that.

Click on Bradley Manning deserves a medal for Glenn Greenwald’s comment in Britain’s The Guardian newspaper.  [Added 12/15/11]

Click on Accused Wikileaker defense argues Obama must testify for PFC Manning’s lawyers likely defense.

Click on Bradley Manning’s “no touch” torture for my earlier post on the conditions of his imprisonment.

Click on Manning Hearing Moves Forward Under a Cloud of Questions for a dispatch from Wired magazine.  [Added 12/17/11]

Congress is signing away our liberties

December 12, 2011

NO Freeman shall be taken or imprisoned, or be disseised of his Freehold, or Liberties, or free Customs, or be outlawed, or exiled, or any other wise destroyed; nor will We not pass upon him, nor condemn him, but by lawful judgment of his Peers, or by the Law of the land.  We will sell to no man, we will not deny or defer to any man either Justice or Right

Source:  Magna Carta – Wikipedia.

In 1215, the barons of England forced King John to sign the Magna Carta, in which he conceded that he was subject to the law, and that his free subjects were all entitled to the protection of the law.  That has been the foundation of basic liberty in the English-speaking world ever since.  The right to habeas corpus, freedom from ex post facto laws, and freedom of bills of attainder were written into the United States Constitution even before there was a Bill of Rights.  They mean that no citizen may be imprisoned or punished unless he or she violates an existing law.  You are free to displease the ruler so long as you stay within the law.

Now Congress is on the verge of signing away these fundamental rights.   Both the U.S. Senate and the House of Representatives have voted for versions of a National Defense Authorization Bill which would give President Obama the right to imprison people indefinitely if he designates them as terrorists.  The difference between the Senate and House bills is that the bad Senate bill gives him authority to suspend the Constitution and the worse House bill makes this mandatory.

I can’t understand why liberal Democrats think President Obama is more to be trusted with this power than President George W. Bush.

I am even more unable to understand why conservative Republicans, who claim to see the threat of dictatorship behind President Obama’s health insurance and government jobs programs, want to give him the power of a dictator.

President Obama has already claimed the power to sign death warrants of people he designates as terrorists, and to commit acts of war against countries he designates as terrorist—the definition of terrorism being whatever he says it is.


Why higher taxes might be good for the economy

December 12, 2011

Corporate executives say that the top rates on income taxes have to be kept low in order to give them an incentive to invest and create jobs.  But when you stop and think about it, the incentive is the exact opposite.  The lower the top income tax rate, the more incentive there is to take money out of the business.  The higher the top income tax rate, the more incentive there is to put money back into the business, since reinvested profits aren’t taxed.

This is obvious now that I think about it, but I didn’t see it until an economist named Mike Kimel pointed it out.  His study of the historical data indicates that the optimal top federal income tax rate is 65 percent.  Here’s how he thinks this works.

… … There is a notion that raising tax rates will reduce people’s willingness to work… which is only true above certain thresholds. (That threshold, of course, varies per individual.)  As anyone who has ever had a business will tell you (when they’re not busy demanding tax reductions), you don’t pay taxes on income from the business if you turn around and reinvest that income.  (An accountant would talk to you about decreasing your tax liability by increasing expenses which amounts to the same thing.)  You only pay taxes on that income you take that income out, presumably for consumption purposes.

So to simplify, consider an example.  Is a successful businessperson more likely to take money out of the business if his/her tax rate is 70 percent or if it’s 25 percent?  In general, a person is more likely to take that money at 25%, as there’s less of a penalty. At 70 percent tax rates, there is more of an incentive to reinvest in the business, creating more growth in the business in subsequent years, and more economic growth thereafter.  Seventy percent tax rates are more likely to generate faster economic growth than 25 percent tax rates precisely because people are self-interested and the higher tax rates induce people to continue investing in things they do well.

(Of course, tax rates can get too high. At 95 percent, people will reinvest almost every dime, even if they have exhausted every good investment opportunity they have. Thus, to avoid taxes they’ll be making lousy investments which in turn slow economic growth.)

Source:  Presimetrics.

In addition to the things Kimel mentioned, the risk-reward tradeoff on investment by rich people is much the same no matter what the marginal rate.  Higher rates decrease risks as well as returns.  You get to keep less of your marginal profit, but you get a more valuable tax deduction if you have a loss.

Now I don’t think that marginal tax rates are the main reason for high or low economic growth.  Businesses expand when there are paying customers for their products, not otherwise.  But it is a historical fact that, in the United States, business growth since the Great Depression has been greatest when the top tax rate has been highest.  And it also is a historical fact that since the Reagan revolution in taxes, there has been an increase in corporate executives and financiers who get rich not by creating value, but by transferring wealth from enterprises into their own pockets.


Why religion is good for you

December 11, 2011

Many medical studies have shown that strong religious faith is correlated with good health and long life.  Is there a scientific reason why this should be so?

One explanation for this is that religion makes you more optimistic, happy and serene, and these qualities have a beneficial effect on health.  But I don’t think religion necessarily makes you happy or serene.  I would be very anxious if I believed in the possibility of going to Hell and suffering eternal torment.  Samuel Johnson, the great 18th century English literary figure, lived in fear of death for precisely this reason.  Robert Thurman, translator of the Tibetan Book of the Dead, mocked religious skeptics who think that death is equivalent to a restful sleep.  They will be astonished when they come face to face with Yama, king of the underworld and judge of the dead, and suffer the consequences of their karma.

A better explanation of religion’s benefits came from psychologists Michael E. McCullough and Brian Willoughby of the University of Miami in a 2009 study.  Michael Shermer reported in the December issue of Scientific American that they found that religious people are more likely than irreligious people to have good health habits—to refrain from tobacco, alcohol, recreational drugs or risky sex, to eat healthy food and exercise, and to visit dentists and doctors regularly.

It has long been known that members of certain religious sects are longer-lived than average.  One of the first clues to the risks of smoking came with studies showing the low mortality rate from lung cancer and emphysema of Seventh Day Adventists, who refrain from tobacco as well as alcohol and meat.

Sticking to a religious practice—Zen meditation, fasting during Ramadan or Lent, attending church, synagogue or mosque, chanting Hebrew psalms or Hindu mantras–takes will power, Shermer noted.  Brain scans of people engaged in religious rituals show strong activity in areas associated with self control and paying attention.

The will power and self control required to live by the teachings of a higher religion carry over into other aspects of life.   Shermer said brain scans of people engaged in religious rituals show strong activity in the areas associated with self-regulation and attention.

He quoted from Willpower by Roy Baumeister, a Florida State University psychologist, and John Tierney, a science writer, which cited research that young children who delay gratification (giving up one marshmallow now for two later) get higher grades in school and are better adjusted later on.  And that religiously devout children are rated low in impulsiveness by both parents and teachers.

I don’t think this motivation is based mainly on hope for reward and fear of punishment in the afterlife.  I think the belief that God knows and cares about what you do is a more powerful influence.  The 19th-century American Universalists believed in universal salvation; they believed that eventually “the last sinner will be dragged kicking and screaming into Heaven.”  But contrary to what their opponents charged, Universalists did not sink into depravity.  Love of God is a more powerful motivator than fear of God.

I don’t believe in the Gospel of Prosperity, the idea that you can have anything you want by having faith that you will get it.  I think this idea does a lot of harm.  But I do think that people who live according to a religious discipline improve their odds of attaining the good things in life—even though that is a side effect, not a goal, of religion.

Click on Sacred Salubriousness for Michael Shermer’s full article.

Click on Henry Morton Stanley’s Unbreakable Will for an excerpt from Roy Baumeister’s and John Tierney’s Willpower in Smithsonian magazine, illustrating their ideas through the life of the great 19th century African explorer.

Could Kodak have made it?

December 10, 2011

The financial markets are on a death watch for Eastman Kodak Co., whose dominant position in its markets once prompted an anti-trust suit by the U.S. government.  Was Kodak’s decline inevitable?  Michael Hiltzik, an economics columnist for the Los Angeles Times, wrote this week that the answer is probably “yes.”

Kodak executives didn’t always make the best decisions, he wrote, but Kodak’s basic problem was that its expertise in making photographic film didn’t transfer to digital photography, and even stand stand-alone digital cameras are giving way to i-phones and other electronic gadgets.

Kodak’s decline is of a different order from GM’s.  The latter still manufactures a product with a huge market demand; it just got sloppy and inefficient at turning out its cars and trucks.  That’s why the federal government, not to mention GM’s unions and other stakeholders, thought a dramatic restructuring might put it back on its feet.  (That it was a central player in an industry employing hundreds of thousands of Americans was part of the calculus too.)

Kodak, however, markets a process technology; and as the chemistry of film has yielded to digital electronics, consumer demand for Kodak’s traditional products has evaporated.  A similar transition afflicts newspapers, book publishers, movie studios, broadcasters and record labels today, but the issues for those industries are different yet.

Their business models are under pressure because they’re dependent on outdated distribution technologies; but their core products (information, entertainment) are still very much in demand.  So Kodak has faced a tougher challenge than automakers or content producers.


As I can confirm from my own experience in reporting on Kodak, it was not that Kodak management was unaware of the potential of electronic photography.  Hiltzik noted that Kodak scientists actually invented a digital camera back in 1976—a time when Kodak enjoyed a 90 percent share of the U.S. market for photographic film.  Under CEO Daniel Carp, Kodak achieved a No. 2 position in the digital photo market.  But Kodak didn’t make money in this market, because it didn’t have the experience and expertise of the electronics companies, and wasn’t able to acquire it fast enough.

A well-functioning free-market economy is an ecology in which many companies come into existence, some survive and flourish, a few seem to grow up to the sky, but all in time have to make way for new companies.  My home city of Rochester, N.Y., has been a center of flour milling, of horticulture, of textile manufacturing and of optics, photography and xerography.  The question for us, as for Americans elsewhere, is not how we can hold on to past glories, but what new things we can create that will equal the glories of the past.

Click on Kodak’s long fade to black for Michael Hiltzik’s complete article.

Click on The Rise and Fall of Eastman Kodak for a differing view by a Wall Street analyst.

I still prefer the traditional Christmas carols

December 10, 2011

Click on xkcd for the source of this chart.

I know of no popular songs more beautiful than the traditional Christmas carols.  It would be a shame if they were crowded out by the modern non-sectarian holiday carols.  The modern carols are all right for what they are.  They are just not as beautiful at the traditional carols.

Click on The Hymns and Carols of Christmas for a comprehensive list of links to recordings and lyrics of every traditional Christmas song I ever heard of, and many that I haven’t.

Americans immigrating to other lands?

December 10, 2011

One of the exceptional things about the United States is that even since its founding, our country has been a magnet for enterprising immigrants.  That was true even before, when we were a colony of Britain.  During the past 50 years, one of our great advantages as a nation was the talented people from other parts of the world who came to study at our great universities, and often stayed to work for our large corporations or found companies of their own.

Now there is some indication that this is slackening off.  Increasing numbers of students at American colleges from India, China and other Asian countries are returning to their own countries because they find sufficient opportunity there.  And now there is some indication that native-born Americans are considering emigration in larger numbers than before.

The U.S. has traditionally skimmed the best minds from around the world in pursuit of the American Dream. Indeed, according to polling firm Gallup, which surveyed people in 135 nations around the world, the U.S. was the top desired destination of those who wanted to relocate permanently to another country.

But with unemployment hovering around 9 percent, the use of food stamps at record highs and the Great Recession continuing to punish the budgets of so many families, the American economy is much less of a magnet. To some young entrepreneurs, economic possibilities seem brighter in places like Brazil, Russia, China or Latin America. Indeed, the State Department now estimates that 6.3 million Americans are studying or working abroad, the highest number on record.

In fact, according to a survey by marketing consultants America Wave, the percentage of Americans aged 25 to 34 actively planning to relocate outside the U.S. has quintupled in just two years, from less than 1 percent to 5.1 percent. “Those numbers have shot through the ceiling,” says America Wave founder Bob Adams, who has run nine such surveys over the years. “They’re very surprising, and not something I anticipated. They’re looking for work because of the sluggish economy, and they’ve lost confidence that the U.S. is going anywhere.”

Younger Americans seem even keener to look abroad, with 40 percent of those 18-24 expressing interest in foreign relocation, which is up from 15 percent two years ago.  “There’s a feeling among more entrepreneurial Americans that if you really want to get anything done, you have to get out of country and away from the depressing atmosphere,” says Adams, who lives in Panama.  “There’s a sense of lost direction, so more people are looking for locations that offer more hope about the future.”

Source: Reuters.

Now I am not going to jump to conclusions because of this one survey.  America Waves has its bias; its purpose is to serve Americans working abroad.  Americans who work abroad may come home, and bring their earnings and new knowledge with them.  Americans who are thinking of emigrating aren’t necessarily going to do so.  And the United States still attracts more immigrants by far than we lose by immigration.

Still, it is a disturbing straw in the wind.   The Americans who are thinking about leaving are not a cross-section of the population.  They are mostly singe college graduates under 30 years old—people with great potential to contribute to our nation.  We still attract the tired, the poor, the huddled masses yearning to breathe free.  But if we’re losing our ability to attract, or even retain, the energetic, the affluent, the well-educated individuals yearning for opportunity, that is a cause for concern.


If Santa were a CEO

December 9, 2011

Click to enlarge

Click on Tom Toles for more of his cartoons.