Group items tagged

So when I hear scientists say, “The data speak for themselves,” I cringe. Data never speak. And data generally and most often are politically and socially inflected. They have import for people’s lives. To ignore that is to ignore the social and cultural dimensions within which this science is taking place.

I do think that there is a process by which, for example, the connection between cigarette smoking and cancer for decades had a scientific consensus that this was an issue, then a social process begins, and then it becomes accepted.

The interesting thing with climate change, I find, is that positioning on climate change is strikingly predictable based on someone’s political leanings. One-third of Republicans and three-quarters of Democrats think that climate change is real. That to me speaks to the political, ideological and cultural dimensions of this debate.

It’s interesting because it wasn’t always so. In 1997 with the Kyoto treaty, with the development of regulations that would impact economic and political interests, sides started to be drawn. We’ve reached the stage today that climate change has become part of the culture wars, the same as health care, abortion, gun control and evolution.

There are many who distrust the peer-review process and distrust scientists. So that can be step one. I think a lot of people will be uncomfortable accepting a scientific conclusion if it necessarily leads to outcomes they find objectionable. People will be hesitant to accept the notion of climate change if that leads directly towards ideas that are at variance with values that they hold dear.

do you trust the scientific process? Do you trust scientists? The faith-and-reason debate has been around for centuries. I just read a book that I thought was prescient, “Anti-Intellectualism in American Life,” about this suspicion people have about intellectuals who are working on issues that are inaccessible, opaque to them, yielding conclusions that alter the way we structure our society, the way we live our lives.

There’s a certain helpless frustration people have: Who are these cultural elites, these intellectual elites who can make these conclusions in the ivory tower of academia or other scientific institutions and tell me how to live my life?

And we can’t leave out power. There are certain powerful interests out there that will not accept the conclusions this will yield to, therefore they will not accept the definition of the problem if they are not going to accept the solutions that follow it. I’m speaking of certain industry sectors that stand to lose in a carbon-constrained world.

Also, if you can’t define solutions on climate change and you’re asking me to accept it, you’re asking me to accept basically a pretty dismal reality that I refuse to accept. And many climate proponents fall into this when they give these horrific, apocalyptic predictions of cities under water and ice ages and things like that. That tends to get people to dig their heels in even harder.

Some people look at this as just a move for more government, more government bureaucracy. And I think importantly fear or resist the idea of world government. Carbon dioxide is part of the economy of every country on earth. This is a global cooperation challenge the likes of which we have never seen before.

Do you trust the message and do you trust the messenger? If I am inclined to resist the notion of global cooperation — which is a nice way to put what others may see as a one-world government — and if the scientific body that came to that conclusion represents that entity, I will be less inclined to believe it. People will accept a message from someone that they think shares their values and beliefs. And for a lot of people, environmentalists are not that kind of person. There’s a segment of the population that sees environmentalists as socialists, trying to control people’s lives.

In our society today, I think people have more faith in economic institutions than they do in scientific institutions. Scientists can talk until they are blue in the face about climate change. But if businesses are paying money to address this issue, then people will say: It must be true, because they wouldn’t be throwing their money away.

what I’m laying out is that this is very much a value- and culture-based debate. And to ignore that – you will never resolve it and you will end up in what I have described a logic schism, where the two sides talk about completely different things, completely different issues, demonizing the other, only looking for things that confirm their opinion. And we get nowhere.

Arguing that governments can pick winners, Professor Chang urges us to reclaim economic planning, not as a token of centrally-planned communism, but rather as the simple reality behind our market economies today:

Capitalist economies are in large part planned. Governments in capitalist economies practice planning too, albeit on a more limited basis than under communist central planning. All of them finance a significant share of investment in R&D and infrastructure. Most of them plan a significant chunk of the economy through the planning of the activities of state-owned enterprises. Many capitalist governments plan the future shape of individual industrial sectors through sectoral industrial policy or even that of the national economy through indicative planning. More importantly, modern capitalist economies are made up of large, hierarchical corporations that plan their activities in great detail, even across national borders. Therefore, the question is not whether you plan or not. It is about planning the right things at the right levels.

Drawing a clear distinction between communist central planning and capitalist 'indicative' planning, Chang notes that the latter: ... involves the government ... setting some broad targets concerning key economic variables (e.g., investments in strategic industries, infrastructure development, exports) and working with, not against, the private sector to achieve them. Unlike under central planning, these targets are not legally binding; hence the adjective 'indicative'. However, the government will do its best to achieve them by mobilizing various carrots (e.g., subsidies, granting of monopoly rights) and sticks (e.g., regulations, influence through state-owned banks) at its disposal.

Chang observes that: France had great success in promoting investment and technological innovation through indicative planning in the 1950s and 60s, thereby overtaking the British economy as Europe's second industrial power. Other European countries, such as Finland, Norway and Austria, also successfully used indicative planning to upgrade their economies between the 1950s and the 1970s. The East Asian miracle economies of Japan, Korea and Taiwan used indicative planning too between the 1950s and 1980s. This is not to say that all indicative planning exercises have been successful; in India, for example, it has not. Nevertheless, the European and East Asian examples show that planning in certain forms is not incompatible with capitalism and may even promote capitalist development very well.

As we have argued before, the current crisis raging through Europe (in large part caused by free-market economics), forces us to reconsider our economic options. More than ever before, now is the time to rehabilitate indicative planning and industrial policy as key levers in our arsenal of policy tools.

Implicitly two separate debates are being collapsed here and I would argue that we need to separate both. The first one relates to the stability of the internet as an information and communication infrastructure because of the way we collectively use that infrastructure. The second debate is whether ISPs and telecommunication companies should be allowed to differentiate in their pricing between different levels of quality of access, both towards consumers and content providers.

Just as with freedom of speech, circumstances can be found in which the principle while still cherished and upheld, can be adapted and constrained to some extent. To paraphrase Tim Wu (2008), the aspiration should still be ‘to treat all content, sites, and platforms equally’, but maybe some forms of content should be treated more equally than others in order to guarantee an excellent quality of service for all. However, the societal and political implications of this need to be thought through in detail and as with freedom of speech itself, it will, I believe, require strict regulation and conditions.

In regards to the first debate on internet stability, a case can be made for allowing internet operators to differentiate between different types of data with different needs – if for any reason the quality of service of the internet as a whole cannot be guaranteed anymore. 

Concerning the second debate on differential pricing, it is fair to say that from a public interest and civic liberty perspective the consolidation and institutionalization of a commercially driven two-tiered internet is not acceptable and impossible to legitimate. As is allowing operators to differentiate in the quality of provision of certain kind of content above others.  A core principle such as net neutrality should never be relinquished for the sake of private interests and profit-making strategies – on behalf of industry or for others. If we need to compromise on net neutrality it would always have to be partial, to be circumscribed and only to improve the quality of service for all, not just for the few who can afford it.

Separating these two debates exposes the crux of the current net-neutrality debate. In essence, we are being urged to give up on the principle of net-neutrality to guarantee a good quality of service.  However, this argument is actually a pre-text for the telecom industry to make content-providers pay for the facilitation of access to their audiences – the internet subscribers. And this again can be linked to another debate being waged amongst content providers: how do we make internet users pay for the content they access online? I won’t open that can of worms here, but I will make my point clear.  Telecommunication industry efforts to make content providers pay for access to their audiences do not offer legitimate reasons to suspend the first amendment of the internet.

Efforts in at least eight other states to restrict gaming content have been rejected by various courts. Video game makers have the support of various free-speech, entertainment, and media organizations. Nine states also agree, noting California's law has good intentions but would compel law enforcement to become "culture critics" and "distract from the task of policing actual violence." But 11 other states back California, saying they have enjoyed a traditional regulatory power over commerce aimed at protecting children, including such goods as alcohol and cigarettes.

It’s amazing that the myth of the lone genius has persisted for so long, since simultaneous invention has always been the norm, not the exception. Anthropologists have shown that the same inventions tended to crop up in prehistory at roughly similar times, in roughly the same order, among cultures on different continents that couldn’t possibly have contacted one another.

Also, there’s a related myth—that innovation comes primarily from the profit motive, from the competitive pressures of a market society. If you look at history, innovation doesn’t come just from giving people incentives; it comes from creating environments where their ideas can connect.

The musician Brian Eno invented a wonderful word to describe this phenomenon: scenius. We normally think of innovators as independent geniuses, but Eno’s point is that innovation comes from social scenes,from passionate and connected groups of people.

It turns out that the lone genius entrepreneur has always been a rarity—there’s far more innovation coming out of open, nonmarket networks than we tend to assume.

Really, we should think of ideas as connections,in our brains and among people. Ideas aren’t self-contained things; they’re more like ecologies and networks. They travel in clusters.

ideas are networks

In part, that’s because ideas that leap too far ahead are almost never implemented—they aren’t even valuable. People can absorb only one advance, one small hop, at a time. Gregor Mendel’s ideas about genetics, for example: He formulated them in 1865, but they were ignored for 35 years because they were too advanced. Nobody could incorporate them. Then, when the collective mind was ready and his idea was only one hop away, three different scientists independently rediscovered his work within roughly a year of one another.

Charles Babbage is another great case study. His “analytical engine,” which he started designing in the 1830s, was an incredibly detailed vision of what would become the modern computer, with a CPU, RAM, and so on. But it couldn’t possibly have been built at the time, and his ideas had to be rediscovered a hundred years later.

I think there are a lot of ideas today that are ahead of their time. Human cloning, autopilot cars, patent-free law—all are close technically but too many steps ahead culturally. Innovating is about more than just having the idea yourself; you also have to bring everyone else to where your idea is. And that becomes really difficult if you’re too many steps ahead.

The scientist Stuart Kauffman calls this the “adjacent possible.” At any given moment in evolution—of life, of natural systems, or of cultural systems—there’s a space of possibility that surrounds any current configuration of things. Change happens when you take that configuration and arrange it in a new way. But there are limits to how much you can change in a single move.

Which is why the great inventions are usually those that take the smallest possible step to unleash the most change. That was the difference between Tim Berners-Lee’s successful HTML code and Ted Nelson’s abortive Xanadu project. Both tried to jump into the same general space—a networked hypertext—but Tim’s approach did it with a dumb half-step, while Ted’s earlier, more elegant design required that everyone take five steps all at once.

Also, the steps have to be taken in the right order. You can’t invent the Internet and then the digital computer. This is true of life as well. The building blocks of DNA had to be in place before evolution could build more complex things. One of the key ideas I’ve gotten from you, by the way—when I read your book Out of Control in grad school—is this continuity between biological and technological systems.

technology is something that can give meaning to our lives, particularly in a secular world.

He had this bleak, soul-sucking vision of technology as an autonomous force for evil. You also present technology as a sort of autonomous force—as wanting something, over the long course of its evolution—but it’s a more balanced and ultimately positive vision, which I find much more appealing than the alternative.

As I started thinking about the history of technology, there did seem to be a sense in which, during any given period, lots of innovations were in the air, as it were. They came simultaneously. It appeared as if they wanted to happen. I should hasten to add that it’s not a conscious agency; it’s a lower form, something like the way an organism or bacterium can be said to have certain tendencies, certain trends, certain urges. But it’s an agency nevertheless.

technology wants increasing diversity—which is what I think also happens in biological systems, as the adjacent possible becomes larger with each innovation. As tech critics, I think we have to keep this in mind, because when you expand the diversity of a system, that leads to an increase in great things and an increase in crap.

the idea that the most creative environments allow for repeated failure.

And for wastes of time and resources. If you knew nothing about the Internet and were trying to figure it out from the data, you would reasonably conclude that it was designed for the transmission of spam and porn. And yet at the same time, there’s more amazing stuff available to us than ever before, thanks to the Internet.

To create something great, you need the means to make a lot of really bad crap. Another example is spectrum. One reason we have this great explosion of innovation in wireless right now is that the US deregulated spectrum. Before that, spectrum was something too precious to be wasted on silliness. But when you deregulate—and say, OK, now waste it—then you get Wi-Fi.

If we didn’t have genetic mutations, we wouldn’t have us. You need error to open the door to the adjacent possible.

image of the coral reef as a metaphor for where innovation comes from. So what, today, are some of the most reeflike places in the technological realm?

Twitter—not to see what people are having for breakfast, of course, but to see what people are talking about, the links to articles and posts that they’re passing along.

second example of an information coral reef, and maybe the less predictable one, is the university system. As much as we sometimes roll our eyes at the ivory-tower isolation of universities, they continue to serve as remarkable engines of innovation.

Life seems to gravitate toward these complex states where there’s just enough disorder to create new things. There’s a rate of mutation just high enough to let interesting new innovations happen, but not so many mutations that every new generation dies off immediately.

, technology is an extension of life. Both life and technology are faces of the same larger system.

All we can currently bank on is the fact that we all have blinders in some situations. The question then becomes: What can be done to counteract human nature itself?

This is why, for example, large numbers of Americans oppose the idea of an estate tax even though the current form of the tax, slated to return in 2011, is very unlikely to affect them or their estates. In narrowly self-interested terms, that view may be irrational, but most Americans are unwilling to frame national issues in terms of rich versus poor. There’s a great deal of hostility toward various government bailouts, but the idea of “undeserving” recipients is the key factor in those feelings. Resentment against Wall Street gamesters hasn’t spilled over much into resentment against the wealthy more generally. The bailout for General Motors’ labor unions wasn’t so popular either—again, obviously not because of any bias against the wealthy but because a basic sense of fairness was violated. As of November 2010, congressional Democrats are of a mixed mind as to whether the Bush tax cuts should expire for those whose annual income exceeds $250,000; that is in large part because their constituents bear no animus toward rich people, only toward undeservedly rich people.

envy is usually local. At least in the United States, most economic resentment is not directed toward billionaires or high-roller financiers—not even corrupt ones. It’s directed at the guy down the hall who got a bigger raise. It’s directed at the husband of your wife’s sister, because the brand of beer he stocks costs $3 a case more than yours, and so on. That’s another reason why a lot of people aren’t so bothered by income or wealth inequality at the macro level. Most of us don’t compare ourselves to billionaires. Gore Vidal put it honestly: “Whenever a friend succeeds, a little something in me dies.”

Occasionally the cynic in me wonders why so many relatively well-off intellectuals lead the egalitarian charge against the privileges of the wealthy. One group has the status currency of money and the other has the status currency of intellect, so might they be competing for overall social regard? The high status of the wealthy in America, or for that matter the high status of celebrities, seems to bother our intellectual class most. That class composes a very small group, however, so the upshot is that growing income inequality won’t necessarily have major political implications at the macro level.

All that said, income inequality does matter—for both politics and the economy.

The numbers are clear: Income inequality has been rising in the United States, especially at the very top. The data show a big difference between two quite separate issues, namely income growth at the very top of the distribution and greater inequality throughout the distribution. The first trend is much more pronounced than the second, although the two are often confused.

When it comes to the first trend, the share of pre-tax income earned by the richest 1 percent of earners has increased from about 8 percent in 1974 to more than 18 percent in 2007. Furthermore, the richest 0.01 percent (the 15,000 or so richest families) had a share of less than 1 percent in 1974 but more than 6 percent of national income in 2007. As noted, those figures are from pre-tax income, so don’t look to the George W. Bush tax cuts to explain the pattern. Furthermore, these gains have been sustained and have evolved over many years, rather than coming in one or two small bursts between 1974 and today.1

At the same time, wage growth for the median earner has slowed since 1973. But that slower wage growth has afflicted large numbers of Americans, and it is conceptually distinct from the higher relative share of top income earners. For instance, if you take the 1979–2005 period, the average incomes of the bottom fifth of households increased only 6 percent while the incomes of the middle quintile rose by 21 percent. That’s a widening of the spread of incomes, but it’s not so drastic compared to the explosive gains at the very top.

The broader change in income distribution, the one occurring beneath the very top earners, can be deconstructed in a manner that makes nearly all of it look harmless. For instance, there is usually greater inequality of income among both older people and the more highly educated, if only because there is more time and more room for fortunes to vary. Since America is becoming both older and more highly educated, our measured income inequality will increase pretty much by demographic fiat. Economist Thomas Lemieux at the University of British Columbia estimates that these demographic effects explain three-quarters of the observed rise in income inequality for men, and even more for women.2

Attacking the problem from a different angle, other economists are challenging whether there is much growth in inequality at all below the super-rich. For instance, real incomes are measured using a common price index, yet poorer people are more likely to shop at discount outlets like Wal-Mart, which have seen big price drops over the past twenty years.3 Once we take this behavior into account, it is unclear whether the real income gaps between the poor and middle class have been widening much at all. Robert J. Gordon, an economist from Northwestern University who is hardly known as a right-wing apologist, wrote in a recent paper that “there was no increase of inequality after 1993 in the bottom 99 percent of the population”, and that whatever overall change there was “can be entirely explained by the behavior of income in the top 1 percent.”4

And so we come again to the gains of the top earners, clearly the big story told by the data. It’s worth noting that over this same period of time, inequality of work hours increased too. The top earners worked a lot more and most other Americans worked somewhat less. That’s another reason why high earners don’t occasion more resentment: Many people understand how hard they have to work to get there. It also seems that most of the income gains of the top earners were related to performance pay—bonuses, in other words—and not wildly out-of-whack yearly salaries.5

It is also the case that any society with a lot of “threshold earners” is likely to experience growing income inequality. A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.

The funny thing is this: For years, many cultural critics in and of the United States have been telling us that Americans should behave more like threshold earners. We should be less harried, more interested in nurturing friendships, and more interested in the non-commercial sphere of life. That may well be good advice. Many studies suggest that above a certain level more money brings only marginal increments of happiness. What isn’t so widely advertised is that those same critics have basically been telling us, without realizing it, that we should be acting in such a manner as to increase measured income inequality. Not only is high inequality an inevitable concomitant of human diversity, but growing income inequality may be, too, if lots of us take the kind of advice that will make us happier.

Why is the top 1 percent doing so well?

Steven N. Kaplan and Joshua Rauh have recently provided a detailed estimation of particular American incomes.6 Their data do not comprise the entire U.S. population, but from partial financial records they find a very strong role for the financial sector in driving the trend toward income concentration at the top. For instance, for 2004, nonfinancial executives of publicly traded companies accounted for less than 6 percent of the top 0.01 percent income bracket. In that same year, the top 25 hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning more than $100 million a year was nine times higher than the public company executives earning that amount. The authors also relate that they shared their estimates with a former U.S. Secretary of the Treasury, one who also has a Wall Street background. He thought their estimates of earnings in the financial sector were, if anything, understated.

Many of the other high earners are also connected to finance. After Wall Street, Kaplan and Rauh identify the legal sector as a contributor to the growing spread in earnings at the top. Yet many high-earning lawyers are doing financial deals, so a lot of the income generated through legal activity is rooted in finance. Other lawyers are defending corporations against lawsuits, filing lawsuits or helping corporations deal with complex regulations. The returns to these activities are an artifact of the growing complexity of the law and government growth rather than a tale of markets per se. Finance aside, there isn’t much of a story of market failure here, even if we don’t find the results aesthetically appealing.

When it comes to professional athletes and celebrities, there isn’t much of a mystery as to what has happened. Tiger Woods earns much more, even adjusting for inflation, than Arnold Palmer ever did. J.K. Rowling, the first billionaire author, earns much more than did Charles Dickens. These high incomes come, on balance, from the greater reach of modern communications and marketing. Kids all over the world read about Harry Potter. There is more purchasing power to spend on children’s books and, indeed, on culture and celebrities more generally. For high-earning celebrities, hardly anyone finds these earnings so morally objectionable as to suggest that they be politically actionable. Cultural critics can complain that good schoolteachers earn too little, and they may be right, but that does not make celebrities into political targets. They’re too popular. It’s also pretty clear that most of them work hard to earn their money, by persuading fans to buy or otherwise support their product. Most of these individuals do not come from elite or extremely privileged backgrounds, either. They worked their way to the top, and even if Rowling is not an author for the ages, her books tapped into the spirit of their time in a special way. We may or may not wish to tax the wealthy, including wealthy celebrities, at higher rates, but there is no need to “cure” the structural causes of higher celebrity incomes.

to be sure, the high incomes in finance should give us all pause.

The first factor driving high returns is sometimes called by practitioners “going short on volatility.” Sometimes it is called “negative skewness.” In plain English, this means that some investors opt for a strategy of betting against big, unexpected moves in market prices. Most of the time investors will do well by this strategy, since big, unexpected moves are outliers by definition. Traders will earn above-average returns in good times. In bad times they won’t suffer fully when catastrophic returns come in, as sooner or later is bound to happen, because the downside of these bets is partly socialized onto the Treasury, the Federal Reserve and, of course, the taxpayers and the unemployed.

if you bet against unlikely events, most of the time you will look smart and have the money to validate the appearance. Periodically, however, you will look very bad. Does that kind of pattern sound familiar? It happens in finance, too. Betting against a big decline in home prices is analogous to betting against the Wizards. Every now and then such a bet will blow up in your face, though in most years that trading activity will generate above-average profits and big bonuses for the traders and CEOs.

To this mix we can add the fact that many money managers are investing other people’s money. If you plan to stay with an investment bank for ten years or less, most of the people playing this investing strategy will make out very well most of the time. Everyone’s time horizon is a bit limited and you will bring in some nice years of extra returns and reap nice bonuses. And let’s say the whole thing does blow up in your face? What’s the worst that can happen? Your bosses fire you, but you will still have millions in the bank and that MBA from Harvard or Wharton. For the people actually investing the money, there’s barely any downside risk other than having to quit the party early. Furthermore, if everyone else made more or less the same mistake (very surprising major events, such as a busted housing market, affect virtually everybody), you’re hardly disgraced. You might even get rehired at another investment bank, or maybe a hedge fund, within months or even weeks.

Moreover, smart shareholders will acquiesce to or even encourage these gambles. They gain on the upside, while the downside, past the point of bankruptcy, is borne by the firm’s creditors. And will the bondholders object? Well, they might have a difficult time monitoring the internal trading operations of financial institutions. Of course, the firm’s trading book cannot be open to competitors, and that means it cannot be open to bondholders (or even most shareholders) either. So what, exactly, will they have in hand to object to?

Perhaps more important, government bailouts minimize the damage to creditors on the downside. Neither the Treasury nor the Fed allowed creditors to take any losses from the collapse of the major banks during the financial crisis. The U.S. government guaranteed these loans, either explicitly or implicitly. Guaranteeing the debt also encourages equity holders to take more risk. While current bailouts have not in general maintained equity values, and while share prices have often fallen to near zero following the bust of a major bank, the bailouts still give the bank a lifeline. Instead of the bank being destroyed, sometimes those equity prices do climb back out of the hole. This is true of the major surviving banks in the United States, and even AIG is paying back its bailout. For better or worse, we’re handing out free options on recovery, and that encourages banks to take more risk in the first place.

there is an unholy dynamic of short-term trading and investing, backed up by bailouts and risk reduction from the government and the Federal Reserve. This is not good. “Going short on volatility” is a dangerous strategy from a social point of view. For one thing, in so-called normal times, the finance sector attracts a big chunk of the smartest, most hard-working and most talented individuals. That represents a huge human capital opportunity cost to society and the economy at large. But more immediate and more important, it means that banks take far too many risks and go way out on a limb, often in correlated fashion. When their bets turn sour, as they did in 2007–09, everyone else pays the price.

And it’s not just the taxpayer cost of the bailout that stings. The financial disruption ends up throwing a lot of people out of work down the economic food chain, often for long periods. Furthermore, the Federal Reserve System has recapitalized major U.S. banks by paying interest on bank reserves and by keeping an unusually high interest rate spread, which allows banks to borrow short from Treasury at near-zero rates and invest in other higher-yielding assets and earn back lots of money rather quickly. In essence, we’re allowing banks to earn their way back by arbitraging interest rate spreads against the U.S. government. This is rarely called a bailout and it doesn’t count as a normal budget item, but it is a bailout nonetheless. This type of implicit bailout brings high social costs by slowing down economic recovery (the interest rate spreads require tight monetary policy) and by redistributing income from the Treasury to the major banks.

the “going short on volatility” strategy increases income inequality. In normal years the financial sector is flush with cash and high earnings. In implosion years a lot of the losses are borne by other sectors of society. In other words, financial crisis begets income inequality. Despite being conceptually distinct phenomena, the political economy of income inequality is, in part, the political economy of finance. Simon Johnson tabulates the numbers nicely: From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.7

There’s a second reason why the financial sector abets income inequality: the “moving first” issue. Let’s say that some news hits the market and that traders interpret this news at different speeds. One trader figures out what the news means in a second, while the other traders require five seconds. Still other traders require an entire day or maybe even a month to figure things out. The early traders earn the extra money. They buy the proper assets early, at the lower prices, and reap most of the gains when the other, later traders pile on. Similarly, if you buy into a successful tech company in the early stages, you are “moving first” in a very effective manner, and you will capture most of the gains if that company hits it big.

The moving-first phenomenon sums to a “winner-take-all” market. Only some relatively small number of traders, sometimes just one trader, can be first. Those who are first will make far more than those who are fourth or fifth. This difference will persist, even if those who are fourth come pretty close to competing with those who are first. In this context, first is first and it doesn’t matter much whether those who come in fourth pile on a month, a minute or a fraction of a second later. Those who bought (or sold, as the case may be) first have captured and locked in most of the available gains. Since gains are concentrated among the early winners, and the closeness of the runner-ups doesn’t so much matter for income distribution, asset-market trading thus encourages the ongoing concentration of wealth. Many investors make lots of mistakes and lose their money, but each year brings a new bunch of projects that can turn the early investors and traders into very wealthy individuals.

These two features of the problem—“going short on volatility” and “getting there first”—are related. Let’s say that Goldman Sachs regularly secures a lot of the best and quickest trades, whether because of its quality analysis, inside connections or high-frequency trading apparatus (it has all three). It builds up a treasure chest of profits and continues to hire very sharp traders and to receive valuable information. Those profits allow it to make “short on volatility” bets faster than anyone else, because if it messes up, it still has a large enough buffer to pad losses. This increases the odds that Goldman will repeatedly pull in spectacular profits.

Still, every now and then Goldman will go bust, or would go bust if not for government bailouts. But the odds are in any given year that it won’t because of the advantages it and other big banks have. It’s as if the major banks have tapped a hole in the social till and they are drinking from it with a straw. In any given year, this practice may seem tolerable—didn’t the bank earn the money fair and square by a series of fairly normal looking trades? Yet over time this situation will corrode productivity, because what the banks do bears almost no resemblance to a process of getting capital into the hands of those who can make most efficient use of it. And it leads to periodic financial explosions. That, in short, is the real problem of income inequality we face today. It’s what causes the inequality at the very top of the earning pyramid that has dangerous implications for the economy as a whole.

What about controlling bank risk-taking directly with tight government oversight? That is not practical. There are more ways for banks to take risks than even knowledgeable regulators can possibly control; it just isn’t that easy to oversee a balance sheet with hundreds of billions of dollars on it, especially when short-term positions are wound down before quarterly inspections. It’s also not clear how well regulators can identify risky assets. Some of the worst excesses of the financial crisis were grounded in mortgage-backed assets—a very traditional function of banks—not exotic derivatives trading strategies. Virtually any asset position can be used to bet long odds, one way or another. It is naive to think that underpaid, undertrained regulators can keep up with financial traders, especially when the latter stand to earn billions by circumventing the intent of regulations while remaining within the letter of the law.

For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism. It’s no longer obvious that the system is stable at a macro level, and extreme income inequality at the top has been one result of that imbalance. Income inequality is a symptom, however, rather than a cause of the real problem. The root cause of income inequality, viewed in the most general terms, is extreme human ingenuity, albeit of a perverse kind. That is why it is so hard to control.

Another root cause of growing inequality is that the modern world, by so limiting our downside risk, makes extreme risk-taking all too comfortable and easy. More risk-taking will mean more inequality, sooner or later, because winners always emerge from risk-taking. Yet bankers who take bad risks (provided those risks are legal) simply do not end up with bad outcomes in any absolute sense. They still have millions in the bank, lots of human capital and plenty of social status. We’re not going to bring back torture, trial by ordeal or debtors’ prisons, nor should we. Yet the threat of impoverishment and disgrace no longer looms the way it once did, so we no longer can constrain excess financial risk-taking. It’s too soft and cushy a world.

Why don’t we simply eliminate the safety net for clueless or unlucky risk-takers so that losses equal gains overall? That’s a good idea in principle, but it is hard to put into practice. Once a financial crisis arrives, politicians will seek to limit the damage, and that means they will bail out major financial institutions. Had we not passed TARP and related policies, the United States probably would have faced unemployment rates of 25 percent of higher, as in the Great Depression. The political consequences would not have been pretty. Bank bailouts may sound quite interventionist, and indeed they are, but in relative terms they probably were the most libertarian policy we had on tap. It meant big one-time expenses, but, for the most part, it kept government out of the real economy (the General Motors bailout aside).

We probably don’t have any solution to the hazards created by our financial sector, not because plutocrats are preventing our political system from adopting appropriate remedies, but because we don’t know what those remedies are. Yet neither is another crisis immediately upon us. The underlying dynamic favors excess risk-taking, but banks at the current moment fear the scrutiny of regulators and the public and so are playing it fairly safe. They are sitting on money rather than lending it out. The biggest risk today is how few parties will take risks, and, in part, the caution of banks is driving our current protracted economic slowdown. According to this view, the long run will bring another financial crisis once moods pick up and external scrutiny weakens, but that day of reckoning is still some ways off.

Is the overall picture a shame? Yes. Is it distorting resource distribution and productivity in the meantime? Yes. Will it again bring our economy to its knees? Probably. Maybe that’s simply the price of modern society. Income inequality will likely continue to rise and we will search in vain for the appropriate political remedies for our underlying problems.

Mashable always give misleading news with misleading titles and ridiculous analysis. In France, you cannot do neither good nor bad ad for any brand or company in a TV program (unless you pay your ad slot of course). With the coming of social networks, people advertise their page and by the way facebook and twitter. That’s why the ban comes to say that facebook and twitter are also brands and companies like others. Actually, you can say “Facebook” and “twitter” and whatever you want… in any TV program in France, but you cannot advertise for them. So please be less simplistic and a little more percise in you articles.

By this logic no personal brand (i.e. Brad Pitt, Angelina Jolie, and so on) could be mentioned without them paying for it. And by this logic, public relations could not exist as a profession in France.

Content industry analyses of the file sharing phenomenon tend to downplay key sources of income for musicians, the LSE report charges, most notably revenue from live concert performances.

Legal file sharing also grew by nine percent globally in 2009, along with an eight percent increase in performance rights revenue.

So what is emerging is an increasingly "ephemeral" global music culture based not upon the purchasing of discrete physical packages of music, but on the discovery and subsequent promotion of musicians through file sharing. The big winner in this model is not the digital music file seller, but the touring band, whose music is easily discoverable on the 'Net. As with so much of the rest of the emerging world economy, the shift is away from buying things and towards purchasing services—in this case tickets to concerts and related activities.

3. Collaboration at scale Across many economies, the number of people who undertake knowledge work has grown much more quickly than the number of production or transactions workers. Knowledge workers typically are paid more than others, so increasing their productivity is critical. As a result, there is broad interest in collaboration technologies that promise to improve these workers' efficiency and effectiveness. While the body of knowledge around the best use of such technologies is still developing, a number of companies have conducted experiments, as we see in the rapid growth rates of video and Web conferencing, expected to top 20 per cent annually during the next few years.

4. The growing ‘Internet of Things' The adoption of RFID (radio-frequency identification) and related technologies was the basis of a trend we first recognised as "expanding the frontiers of automation." But these methods are rudimentary compared with what emerges when assets themselves become elements of an information system, with the ability to capture, compute, communicate, and collaborate around information—something that has come to be known as the "Internet of Things." Embedded with sensors, actuators, and communications capabilities, such objects will soon be able to absorb and transmit information on a massive scale and, in some cases, to adapt and react to changes in the environment automatically. These "smart" assets can make processes more efficient, give products new capabilities, and spark novel business models. Auto insurers in Europe and the United States are testing these waters with offers to install sensors in customers' vehicles. The result is new pricing models that base charges for risk on driving behavior rather than on a driver's demographic characteristics. Luxury-auto manufacturers are equipping vehicles with networked sensors that can automatically take evasive action when accidents are about to happen. In medicine, sensors embedded in or worn by patients continuously report changes in health conditions to physicians, who can adjust treatments when necessary. Sensors in manufacturing lines for products as diverse as computer chips and pulp and paper take detailed readings on process conditions and automatically make adjustments to reduce waste, downtime, and costly human interventions.

5. Experimentation and big data Could the enterprise become a full-time laboratory? What if you could analyse every transaction, capture insights from every customer interaction, and didn't have to wait for months to get data from the field? What if…? Data are flooding in at rates never seen before—doubling every 18 months—as a result of greater access to customer data from public, proprietary, and purchased sources, as well as new information gathered from Web communities and newly deployed smart assets. These trends are broadly known as "big data." Technology for capturing and analysing information is widely available at ever-lower price points. But many companies are taking data use to new levels, using IT to support rigorous, constant business experimentation that guides decisions and to test new products, business models, and innovations in customer experience. In some cases, the new approaches help companies make decisions in real time. This trend has the potential to drive a radical transformation in research, innovation, and marketing.

Using experimentation and big data as essential components of management decision making requires new capabilities, as well as organisational and cultural change. Most companies are far from accessing all the available data. Some haven't even mastered the technologies needed to capture and analyse the valuable information they can access. More commonly, they don't have the right talent and processes to design experiments and extract business value from big data, which require changes in the way many executives now make decisions: trusting instincts and experience over experimentation and rigorous analysis. To get managers at all echelons to accept the value of experimentation, senior leaders must buy into a "test and learn" mind-set and then serve as role models for their teams.

6. Wiring for a sustainable world Even as regulatory frameworks continue to evolve, environmental stewardship and sustainability clearly are C-level agenda topics. What's more, sustainability is fast becoming an important corporate-performance metric—one that stakeholders, outside influencers, and even financial markets have begun to track. Information technology plays a dual role in this debate: it is both a significant source of environmental emissions and a key enabler of many strategies to mitigate environmental damage. At present, information technology's share of the world's environmental footprint is growing because of the ever-increasing demand for IT capacity and services. Electricity produced to power the world's data centers generates greenhouse gases on the scale of countries such as Argentina or the Netherlands, and these emissions could increase fourfold by 2020. McKinsey research has shown, however, that the use of IT in areas such as smart power grids, efficient buildings, and better logistics planning could eliminate five times the carbon emissions that the IT industry produces.

7. Imagining anything as a service Technology now enables companies to monitor, measure, customise, and bill for asset use at a much more fine-grained level than ever before. Asset owners can therefore create services around what have traditionally been sold as products. Business-to-business (B2B) customers like these service offerings because they allow companies to purchase units of a service and to account for them as a variable cost rather than undertake large capital investments. Consumers also like this "paying only for what you use" model, which helps them avoid large expenditures, as well as the hassles of buying and maintaining a product.

In the IT industry, the growth of "cloud computing" (accessing computer resources provided through networks rather than running software or storing data on a local computer) exemplifies this shift. Consumer acceptance of Web-based cloud services for everything from e-mail to video is of course becoming universal, and companies are following suit. Software as a service (SaaS), which enables organisations to access services such as customer relationship management, is growing at a 17 per cent annual rate. The biotechnology company Genentech, for example, uses Google Apps for e-mail and to create documents and spreadsheets, bypassing capital investments in servers and software licenses. This development has created a wave of computing capabilities delivered as a service, including infrastructure, platform, applications, and content. And vendors are competing, with innovation and new business models, to match the needs of different customers.

8. The age of the multisided business model Multisided business models create value through interactions among multiple players rather than traditional one-on-one transactions or information exchanges. In the media industry, advertising is a classic example of how these models work. Newspapers, magasines, and television stations offer content to their audiences while generating a significant portion of their revenues from third parties: advertisers. Other revenue, often through subscriptions, comes directly from consumers. More recently, this advertising-supported model has proliferated on the Internet, underwriting Web content sites, as well as services such as search and e-mail (see trend number seven, "Imagining anything as a service," earlier in this article). It is now spreading to new markets, such as enterprise software: Spiceworks offers IT-management applications to 950,000 users at no cost, while it collects advertising from B2B companies that want access to IT professionals.

9. Innovating from the bottom of the pyramid The adoption of technology is a global phenomenon, and the intensity of its usage is particularly impressive in emerging markets. Our research has shown that disruptive business models arise when technology combines with extreme market conditions, such as customer demand for very low price points, poor infrastructure, hard-to-access suppliers, and low cost curves for talent. With an economic recovery beginning to take hold in some parts of the world, high rates of growth have resumed in many developing nations, and we're seeing companies built around the new models emerging as global players. Many multinationals, meanwhile, are only starting to think about developing markets as wellsprings of technology-enabled innovation rather than as traditional manufacturing hubs.

10. Producing public good on the grid The role of governments in shaping global economic policy will expand in coming years. Technology will be an important factor in this evolution by facilitating the creation of new types of public goods while helping to manage them more effectively. This last trend is broad in scope and draws upon many of the other trends described above.

Much of this flow of cash was the product of the Three Power Source Development Laws, a sophisticated system of government subsidies created in 1974 by Kakuei Tanaka, the powerful prime minister who shaped Japan’s nuclear power landscape and used big public works projects to build postwar Japan’s most formidable political machine. The law required all Japanese power consumers to pay, as part of their utility bills, a tax that was funneled to communities with nuclear plants. Officials at the Ministry of Economy, Trade and Industry, which regulates the nuclear industry, and oversees the subsidies, refused to specify how much communities have come to rely on those subsidies. “This is money to promote the locality’s acceptance of a nuclear plant,” said Tatsumi Nakano of the ministry’s Agency for Natural Resources and Energy.

the query "stem cells" might produce diametrically opposed results for scientists who support stem-cell research and activists who oppose it.

"Proof of climate change" might turn up different results for an environmental activist and an oil-company executive.

majority of us assume search engines are unbiased. But that may be just because they're increasingly biased to share our own views. More and more, your computer monitor is a kind of one-way mirror, reflecting your own interests while algorithmic observers watch what you click. Google's announcement marked the turning point of an important but nearly invisible revolution in how we consume information. You could say that on 4 December 2009 the era of personalisation began.

We are predisposed to respond to a pretty narrow set of stimuli – if a piece of news is about sex, power, gossip, violence, celebrity or humour, we are likely to read it first. This is the content that most easily makes it into the filter bubble. It's easy to push "Like" and increase the visibility of a friend's post about finishing a marathon or an instructional article about how to make onion soup. It's harder to push the "Like" button on an article titled "Darfur sees bloodiest month in two years". In a personalised world, important but complex or unpleasant issues – the rising prison population, for example, or homelessness – are less likely to come to our attention at all.

As a consumer, it's hard to argue with blotting out the irrelevant and unlikable. But what is good for consumers is not necessarily good for citizens. What I seem to like may not be what I actually want, let alone what I need to know to be an informed member of my community or country. "It's a civic virtue to be exposed to things that appear to be outside your interest," technology journalist Clive Thompson told me. Cultural critic Lee Siegel puts it a different way: "Customers are always right, but people aren't."

Personalisation is based on a bargain. In exchange for the service of filtering, you hand large companies an enormous amount of data about your daily life – much of which you might not trust friends with.

To be the author of your life, professor Yochai Benkler argues, you have to be aware of a diverse array of options and lifestyles. When you enter a filter bubble, you're letting the companies that construct it choose which options you're aware of. You may think you're the captain of your own destiny, but personalisation can lead you down a road to a kind of informational determinism in which what you've clicked on in the past determines what you see next – a web history you're doomed to repeat. You can get stuck in a static, ever- narrowing version of yourself – an endless you-loop.

What, in your view, are the best global solutions?

There are plenty aid programs that seem to work, from de-worming to small business grants to incentives to send children to school. But none of these programs are likely to have transformative effects.

The difference between a country with $1,500 and $15,000 of income a head a head is simple: industry. All the microfinance and microenterprise programs in the world are not going to build large firms and import technology and provide most people with what they really want: a stable job, regular wages, and a decent work environment.

How you get these firms is the tricky question. Only a few firms will be home grown; most will be firms that spread across borders, because they have the markets and know-how. Probably we’ll need to see wages rise in China and India before manufacturing ever spreads to the poorest places on the planet, like Central Asia and Africa.The countries that will get them first are the ones that are close to trade routes, have stable political climates, make it easy to get finance, are open to trade, have large domestic markets, have able and educated workforces (i.e. secondary education), and have leaders in charge who don’t see the industrial sector as either a threat to their power or a garden from which they get to select the sweetest fruits for themselves.

How urgent is it to act (in the context of climate change)?The short answer: I wouldn’t know. For the US and China and Europe and India, they must change because if they don’t nothing will.For the Ugandas or Uzbekistans or Bolivias of the world, I can’t see it making a difference. Let them develop as green as possible, but let’s not impede their growth because of it, and rob them of the opportunity we took ourselves.

Figure 1 summarises the data and shows how printing diffused from Mainz 1450-1500. Figure 1. The diffusion of the printing press

City-level data on the adoption of the printing press can be exploited to examine two key questions: Was the new technology associated with city growth? And, if so, how large was the association? I find that cities in which printing presses were established 1450-1500 had no prior growth advantage, but subsequently grew far faster than similar cities without printing presses. My work uses a difference-in-differences estimation strategy to document the association between printing and city growth. The estimates suggest early adoption of the printing press was associated with a population growth advantage of 21 percentage points 1500-1600, when mean city growth was 30 percentage points. The difference-in-differences model shows that cities that adopted the printing press in the late 1400s had no prior growth advantage, but grew at least 35 percentage points more than similar non-adopting cities from 1500 to 1600.

The restrictions on diffusion meant that cities relatively close to Mainz were more likely to receive the technology other things equal. Printing presses were established in 205 cities 1450-1500, but not in 40 of Europe’s 100 largest cities. Remarkably, regulatory barriers did not limit diffusion. Printing fell outside existing guild regulations and was not resisted by scribes, princes, or the Church (Neddermeyer 1997, Barbier 2006, Brady 2009).

Historians observe that printing diffused from Mainz in “concentric circles” (Barbier 2006). Distance from Mainz was significantly associated with early adoption of the printing press, but neither with city growth before the diffusion of printing nor with other observable determinants of subsequent growth. The geographic pattern of diffusion thus arguably allows us to identify exogenous variation in adoption. Exploiting distance from Mainz as an instrument for adoption, I find large and significant estimates of the relationship between the adoption of the printing press and city growth. I find a 60 percentage point growth advantage between 1500-1600.

The importance of distance from Mainz is supported by an exercise using “placebo” distances. When I employ distance from Venice, Amsterdam, London, or Wittenberg instead of distance from Mainz as the instrument, the estimated print effect is statistically insignificant.

Cities that adopted print media benefitted from positive spillovers in human capital accumulation and technological change broadly defined. These spillovers exerted an upward pressure on the returns to labour, made cities culturally dynamic, and attracted migrants. In the pre-industrial era, commerce was a more important source of urban wealth and income than tradable industrial production. Print media played a key role in the development of skills that were valuable to merchants. Following the invention printing, European presses produced a stream of math textbooks used by students preparing for careers in business.

These and hundreds of similar texts worked students through problem sets concerned with calculating exchange rates, profit shares, and interest rates. Broadly, print media was also associated with the diffusion of cutting-edge business practice (such as book-keeping), literacy, and the social ascent of new professionals – merchants, lawyers, officials, doctors, and teachers.

The printing press was one of the greatest revolutions in information technology. The impact of the printing press is hard to identify in aggregate data. However, the diffusion of the technology was associated with extraordinary subsequent economic dynamism at the city level. European cities were seedbeds of ideas and business practices that drove the transition to modern growth. These facts suggest that the printing press had very far-reaching consequences through its impact on the development of cities.

One organization using this approach is the Science and Entertainment Exchange, a program of the National Academy of Sciences. The Exchange puts writers, producers, and directors in touch with scientists and engineers who can answer specific questions or just brainstorm ideas. For example, writers for the TV show Fringe changed their original plot point of mind control through hypnosis to magnetic manipulation of brain waves after speaking with a neuroscientist at the Salk Institute for Biological Studies in La Jolla, California.

Hollywood, Health and Society (HHS), a program of the Centers for Disease Control and Prevention, takes a similar approach by providing free resources to the entertainment industry. HHS connects writers and producers — from prime time dramas like Law and Order and House to daytime soap operas – with experts who can provide accurate health information for their scripts.

HHS Director Sandra Buffington admits that environmental issues, especially climate change, pose particular challenges for communicators because at first glance, they are not as immediately relevant as personal health issues. However, she believes that by focusing on real, human stories — climate refugees displaced by rising water levels, farmers unable to grow food because of drought, children sick because of outbreaks of malaria — the issues of the planet will crystallize into something tangible. All scientists need to do is provide the information, and the professional creative storytellers will do the rest, she says.

Olson also takes a cue from television. He points to the rise of reality TV shows as a clear indication of where the general public interest lies. If environmentalists want to capture that interest, Olson thinks they need to start experimenting with these innovative types of unscripted forms. “That’s where the cutting edge exists,” he said.

thanks to Wikileaks, the world has been enlightened to the fact that the Obama administration not only refused to prosecute these individuals itself, it also exerted pressure on the governments of Germany and Spain not to prosecute, or even indict, any of the torturers or war criminals from the Bush dictatorship.

we see many right-wing commentators demanding that Assange be hunted down, with some even calling for his murder, on the grounds that he may have endangered lives by releasing confidential government documents. Yet, for the right-wing, this apparently was not a concern when the late columnist Robert Novak "outed" CIA agent Valerie Plame after her husband Joseph Wilson authored an OP-ED piece in The New York Times criticizing the motivations for waging war against Iraq. Even though there was evidence of involvement within the highest echelons of the Bush dictatorship, only one person, Lewis "Scooter" Libby, was indicted and convicted of "outing" Plame to Novak. And, despite the fact that this "outing" potentially endangered the lives of Plame's overseas contacts, Bush commuted Libby's thirty-month prison sentence, calling it "excessive."

Why the disparity? The answer is simple: The Plame "outing" served the interests of the military-industrial complex and helped to conceal the Bush dictatorship's lies, tortures and war crimes, while Wikileaks not only exposed such evils, but also revealed how Obama's administration, and Obama himself, are little more than "snake oil" merchants pontificating about government accountability while undermining it at every turn.

When the United States Constitution was being created, a conflict emerged between delegates who wanted a strong federal government (the Federalists) and those who wanted a weak federal government (the anti-Federalists). Although the Federalists won the day, one of the most distinguished anti-Federalists, George Mason, refused to sign the new Constitution, sacrificing in the process, some historians say, a revered place amongst America's founding fathers. Two of Mason's concerns were that the Constitution did not contain a Bill of Rights, and that the presidential pardon powers would allow corrupt presidents to pardon people who had committed crimes on presidential orders.

Mason's concerns about the abuse of the pardon powers were eventually proven right when Gerald Ford pardoned Richard Nixon, when Ronald Reagan pardoned FBI agents convicted of authorizing illegal break-ins, and when George H.W. Bush pardoned six individuals involved in the Iran-Contra Affair.

Mason was also proven right after the Federalists realized that the States would not ratify the Constitution unless a Bill of Rights was added. But this was done begrudgingly, as demonstrated by America's second president, Federalist John Adams, who essentially destroyed the right to freedom of speech via the Alien and Sedition Acts, which made it a crime to say, write or publish anything critical of the United States government.

Most criminals break laws that others have created, and people who assist in exposing or apprehending them are usually lauded as heroes. But with the "espionage" acts, the criminals themselves have actually created laws to conceal their crimes, and exploit these laws to penalize people who expose them.

The problem with America's system of government is that it has become too easy, and too convenient, to simply stamp "classified" on documents that reveal acts of government corruption, cover-up, mendacity and malfeasance, or to withhold them "in the interest of national security." Given this web of secrecy, is it any wonder why so many Americans are still skeptical about the "official" versions of the John F. Kennedy or Martin Luther King Jr. assassinations, or the events surrounding the attacks of September 11, 2001?

I want to believe that the Wikileaks documents will change America for the better. But what undoubtedly will happen is a repetition of the past: those who expose government crimes and cover-ups will be prosecuted or branded as criminals; new laws will be passed to silence dissent; new Liebermans will arise to intimidate the corporate-controlled media; and new ways will be found to conceal the truth.

What Wikileaks has done is make people understand why so many Americans are politically apathetic and content to lose themselves in one or more of the addictions American culture offers, be it drugs, alcohol, the Internet, video games, celebrity gossip, text-messaging-in essence anything that serves to divert attention from the harshness of reality.

the evils committed by those in power can be suffocating, and the sense of powerlessness that erupts from being aware of these evils can be paralyzing, especially when accentuated by the knowledge that government evildoers almost always get away with their crimes

lack of regulations has meant that even prisoners can be exploited in this virtual world for profit.

The emergence of gold farming as a business in China – whether in prisons or sweatshops could raise new questions over the exporting of goods real or virtual from the country."Prison labour is still very widespread – it's just that goods travel a much more complex route to come to the US these days. And it is not illegal to export prison goods to Europe, said Nicole Kempton from the Laogai foundation, a Washington-based group which opposes the forced labour camp system in China.