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Weiye Loh

Breakthrough Europe: A (Heterodox) Lesson in Economics from Ha-Joon Chang - 0 views

breakthrougheurope.org/...on_in_economics_from_haj.shtml

Economist Economics Free Market Activism Sustainability Cultural Industries Capitalism Marxism

shared by Weiye Loh on 16 Apr 11 - No Cached
  • But, to the surprise of the West, that steel mill grew out to be POSCO, the world's third-largest and Asia's most profitable steel maker.
  • South Korea's developmental state, which relied on active government investment in R&D and crucial support for capital-intensive sectors in the form of start-up subsidies and infant industry protection, transformed the country into the richest on the Asian continent (with the exception of Singapore and Hong Kong). LG and Hyundai are similar legacies of Korea's spectacular industrial policy success.
  • Even though they were not trained as economists, the economic officials of East Asia knew some economics. However, especially until the 1970s, the economics they knew was mostly not of the free-market variety. The economics they happened to know was the economics of Karl Marx, Friedrich List, Joseph Schumpeter, Nicholas Kaldor and Albert Hirschman. Of course, these economists lived in different times, contended with different problems and had radically differing political views (ranging from the very right-wing List to the very left-wing Marx). However, there was a commonality between their economics. It was the recognition that capitalism develops through long-term investments and technological innovations that transform the productive structure, and not merely an expansion of existing structures, like inflating a balloon.
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  • 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.
  • Weiye Loh on 16 Apr 11
     
    heterodox Cambridge economist exposes 23 myths behind the neoliberal free-market dogma and urges us to recognize that "capitalism develops through long-term investments and technological innovations," spearheaded by an activist state committed to sustainable economic development.
Weiye Loh

The Inequality That Matters - Tyler Cowen - The American Interest Magazine - 0 views

www.the-american-interest.com/article-bd.cfm

Income Inequality Social Divide Economy

shared by Weiye Loh on 16 Dec 10 - No Cached
  • most of the worries about income inequality are bogus, but some are probably better grounded and even more serious than even many of their heralds realize.
  • In terms of immediate political stability, there is less to the income inequality issue than meets the eye. Most analyses of income inequality neglect two major points. First, the inequality of personal well-being is sharply down over the past hundred years and perhaps over the past twenty years as well. Bill Gates is much, much richer than I am, yet it is not obvious that he is much happier if, indeed, he is happier at all. I have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that Gates does. Like the vast majority of Americans, I have access to some important new pharmaceuticals, such as statins to protect against heart disease. To be sure, Gates receives the very best care from the world’s top doctors, but our health outcomes are in the same ballpark. I don’t have a private jet or take luxury vacations, and—I think it is fair to say—my house is much smaller than his. I can’t meet with the world’s elite on demand. Still, by broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.
  • when average people read about or see income inequality, they don’t feel the moral outrage that radiates from the more passionate egalitarian quarters of society. Instead, they think their lives are pretty good and that they either earned through hard work or lucked into a healthy share of the American dream.
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  • 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.
Weiye Loh

Roger Pielke Jr.'s Blog: Julia Gillard Goes All In - 0 views

rogerpielkejr.blogspot.com/...julia-gillard-goes-all-in.html

Carbon Tax Carbon Trade Policy Economy Political Economy

shared by Weiye Loh on 16 Mar 11 - No Cached
  • It is here where I think that Gillard has made a bad bet. Carbon pricing is supposed to create jobs by making fossil fuels appreciably more expensive, thereby creating a market signal that disfavors carbon-intensive industry and stimulates less carbon-intensive economic activity. The economic parts of theory seem sound enough.
  • However, it is the political realities that the theory does not account for.  Australia's economy is very carbon intensive (PDF). Thus, if carbon pricing were to work exactly as the Prime Minister describes, it will necessary lead to a great deal of economic dislocation and change -- Consider that to meet the 5% emissions reduction target (from 2000 levels), without relying on offsets or other tricks, implies that Australia's economy would need to become as carbon efficient as Japan's by the end of this decade. How such a profoundly disruptive transitional period would be managed is the one issue that advocates of a high carbon price have never really dealt with -- the market's invisible hand will take care of it I guess.
  • How does one become "reskilled"?  Without an explanation, many people will translate "reskilled" to mean "unemployed".  The oft-stated idea that the proceeds of a carbon tax will be used to compensate those who fact higher costs does not address the issue of dislocation in the economy. There is a element of "magical thinking" in the idea that transforming a national economy starts with a simple decision: . . . clean energy will open up opportunities we are only just beginning to imagine. Those opportunities begin with that simple but momentous decision: Putting a price on carbon. Friends, a price on carbon is the cheapest way to drive investment and jobs.
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  • There are only two realistic outcomes here. One is that the carbon tax proposal is scrapped. With this speech it seems highly unlikely that Gillard will be the one doing any scrapping.  So it would probably be via an election or a change in leadership, such as if Kevin Rudd becomes captain of the Brisbane Broncos. The second possible outcome is that the carbon pricing is watered down so far that its enactment allows Labor to claim success while limiting any actual impact from the tax on the economy.  Of course, that would undercut its stated purpose -- to transform the economy.
  • A better strategy is the one proposed in The Climate Fix -- start with a very low carbon tax, one that is politically acceptable, and use the proceeds to invest in innovation. The carbon price would rise over time as the fruits of innovation make it politically acceptable to raise that price.  I expect that Australia will soon provide (yet aonpther) lesson in how not to try to put a price on carbon.
  • Weiye Loh on 16 Mar 11
     
    In the face of opinion polls showing a lack of support for her proposed carbon tax, Julia Gillard today has delivered a speech that indicates that she is willing to wager her future on this issue (The speech is here in PDF). 
Weiye Loh

The Problem with Climate Change | the kent ridge common - 0 views

kentridgecommon.com/?p=9079

Climate Science AGW Carbon Tax Political Economy Neoliberalism

shared by Weiye Loh on 16 Dec 10 - No Cached
  • what is climate change? From a scientific point of view, it is simply a statistical change in atmospheric variables (temperature, precipitation, humidity etc). It has been occurring ever since the Earth came into existence, far before humans even set foot on the planet: our climate has been fluctuating between warm periods and ice ages, with further variations within. In fact, we are living in a warm interglacial period in the middle of an ice age.
  • Global warming has often been portrayed in apocalyptic tones, whether from the mouth of the media or environmental groups: the daily news tell of natural disasters happening at a frightening pace, of crop failures due to strange weather, of mass extinctions and coral die-outs. When the devastating tsunami struck Southeast Asia years ago, some said it was the wrath of God against human mistreatment of the environment; when hurricane Katrina dealt out a catastrophe, others said it was because of (America’s) failure to deal with climate change. Science gives the figures and trends, and people take these to extremes.
  • One immediate problem with blaming climate change for every weather-related disaster or phenomenon is that it reduces humans’ responsibility of mitigating or preventing it. If natural disasters are already, as their name suggests, natural, adding the tag ‘global warming’ or ‘climate change’ emphasizes the dominance of natural forces, and our inability to do anything about it. Surely, humans cannot undo climate change? Even at Cancun, amid the carbon cuts that have been promised, questions are being brought up on whether they are sufficient to reverse our actions and ‘save’ the planet.  Yet the talk about this remote, omnipotent force known as climate change obscures the fact that, we can, and have always been, thinking of ways to reduce the impact of natural hazards. Forecasting, building better infrastructure and coordinating more efficient responses – all these are far more desirable to wading in woe. For example, we will do better at preventing floods in Singapore at tackling the problems rather than singing in praise of God.
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  • However, a greater concern lies in the notion of climate change itself. Climate change is in essence one kind of nature-society relationship, in which humans influence the climate through greenhouse gas (particularly CO2) emissions, and the climate strikes back by heating up and going crazy at times. This can be further simplified into a battle between humans and CO2: reducing CO2 guards against climate change, and increasing it aggravates the consequences. This view is anchored in scientists’ recommendation that a ‘safe’ level of CO2 should be at 350 parts per million (ppm) instead of the current 390. Already, the need to reduce CO2 is understood, as is evident in the push for greener fuels, more efficient means of production, the proliferation of ‘green’ products and companies, and most recently, the Cancun talks.
  • So can there be anything wrong with reducing CO2? No, there isn’t, but singling out CO2 as the culprit of climate change or of the environmental problems we face prevents us from looking within. What do I mean? The enemy, CO2, is an ‘other’, an externality produced by our economic systems but never an inherent component of the systems. Thus, we can declare war on the gas or on climate change without taking a step back and questioning: is there anything wrong with the way we develop?  Take Singapore for example: the government pledged to reduce carbon emissions by 16% under ‘business as usual’ standards, which says nothing about how ‘business’ is going to be changed other than having less carbon emissions (in fact, it is questionable even that CO2 levels will decrease, as ‘business as usual’ standards project a steady increase emission of CO2 each year). With the development of green technologies, decrease in carbon emissions will mainly be brought about by increased energy efficiency and switch to alternative fuels (including the insidious nuclear energy).
  • Thus, the way we develop will hardly be changed. Nobody questions whether our neoliberal system of development, which relies heavily on consumption to drive economies, needs to be looked into. We assume that it is the right way to develop, and only tweak it for the amount of externalities produced. Whether or not we should be measuring development by the Gross Domestic Product (GDP) or if welfare is correlated to the amount of goods and services consumed is never considered. Even the UN-REDD (Reducing Emissions from Deforestation and Forest Degradation) scheme which aims to pay forest-rich countries for protecting their forests, ends up putting a price tag on them. The environment is being subsumed under the economy, when it should be that the economy is re-looked to take the environment into consideration.
  • when the world is celebrating after having held at bay the dangerous greenhouse gas, why would anyone bother rethinking about the economy? Yet we should, simply because there are alternative nature-society relationships and discourses about nature that are more or of equal importance as global warming. Annie Leonard’s informative videos on The Story of Stuff and specific products like electronics, bottled water and cosmetics shed light on the dangers of our ‘throw-away culture’ on the planet and poorer countries. What if the enemy was instead consumerism? Doing so would force countries (especially richer ones) to fundamentally question the nature of development, instead of just applying a quick technological fix. This is so much more difficult (and less economically viable), alongside other issues like environmental injustices – e.g. pollution or dumping of waste by Trans-National Corporations in poorer countries and removal of indigenous land rights. It is no wonder that we choose to disregard internal problems and focus instead on an external enemy; when CO2 is the culprit, the solution is too simple and detached from the communities that are affected by changes in their environment.
  • We need hence to allow for a greater politics of the environment. What I am proposing is not to diminish our action to reduce carbon emissions, for I do believe that it is part of the environmental problem that we are facing. What instead should be done is to reduce our fixation on CO2 as the main or only driver of climate change, and of climate change as the most pertinent nature-society issue we are facing. We should understand that there are many other ways of thinking about the environment; ‘developing’ countries, for example, tend to have a closer relationship with their environment – it is not something ‘out there’ but constantly interacted with for food, water, regulating services and cultural value. Their views and the impact of the socio-economic forces (often from TNCs and multi-lateral organizations like IMF) that shape the environment must also be taken into account, as do alternative meanings of sustainable development. Thus, even as we pat ourselves on the back for having achieved something significant at Cancun, our action should not and must not end there. Even if climate change hogs the headlines now, we must embrace more plurality in environmental discourse, for nature is not and never so simple as climate change alone. And hopefully sometime in the future, alongside a multi-lateral conference on climate change, the world can have one which rethinks the meaning of development.
  • Weiye Loh on 16 Dec 10
     
    Chen Jinwen
Weiye Loh

Freakonomics » Why Is Failure a Sign of a Healthy Economy? A Guest Post by Ti... - 0 views

www.freakonomics.com/...my-a-guest-post-by-tim-harford

Economics Disaster Uncertainty Chance Risk Cosmopolitics

shared by Weiye Loh on 12 May 11 - No Cached
  • Governments often fall down on all three: they have a particular ideology and so push a single-minded policy; they bet big; and they don’t bother to evaluate the results too carefully, perhaps through overconfidence. But markets can fail badly too, and for much the same reason. Just think about the subprime crisis. It failed the same three tests. First, many big banks and insurance companies were taking similar bets at similar times, so that when subprime loans started to go bad, much of Wall Street started struggling simultaneously. Second, the bets were gigantic. Fancy derivatives such as credit default swaps and complex mortgage-backed securities were new, rapidly growing, and largely untested. And third, many investment bankers were being paid large bonuses on the assumption that their performance could be measured properly – and it couldn’t, because profitable-seeming bets concealed large risks.
  • a study by Kathy Fogel, Randall Morck, and Bernard Yeung, found statistical evidence that economies with more churn in the corporate sector also had faster economic growth. The relationship even seems causal: churn today is correlated with fast economic growth tomorrow. The real benefit of this creative destruction, say Fogel and her colleagues, is not the appearance of “rising stars” but the disappearance of old, inefficient companies. Failure is not only common and unpredictable, it’s healthy.
  • Weiye Loh on 12 May 11
     
    a study by Kathy Fogel, Randall Morck, and Bernard Yeung, found statistical evidence that economies with more churn in the corporate sector also had faster economic growth. The relationship even seems causal: churn today is correlated with fast economic growth tomorrow. The real benefit of this creative destruction, say Fogel and her colleagues, is not the appearance of "rising stars" but the disappearance of old, inefficient companies. Failure is not only common and unpredictable, it's healthy.
Weiye Loh

BBC News - Graduates - the new measure of power - 0 views

www.bbc.co.uk/...business-12597811

Knowledge Power University Education

shared by Weiye Loh on 02 Mar 11 - No Cached
  • There are more universities operating in other countries, recruiting students from overseas, setting up partnerships, providing online degrees and teaching in other languages than ever before. Capturing the moment: South Korea has turned itself into a global player in higher education Chinese students are taking degrees taught in English in Finnish universities; the Sorbonne is awarding French degrees in Abu Dhabi; US universities are opening in China and South Korean universities are switching teaching to English so they can compete with everyone else. It's like one of those board games where all the players are trying to move on to everyone else's squares. It's not simply a case of western universities looking for new markets. Many countries in the Middle East and Asia are deliberately seeking overseas universities, as a way of fast-forwarding a research base.
  • "There's a world view that universities, and the most talented people in universities, will operate beyond sovereignty. "Much like in the renaissance in Europe, when the talent class and the creative class travelled among the great idea capitals, so in the 21st century, the people who carry the ideas that will shape the future will travel among the capitals.
  • "But instead of old European names it will be names like Shanghai and Abu Dhabi and London and New York. Those universities will be populated by those high-talent people." New York University, one of the biggest private universities in the US, has campuses in New York and Abu Dhabi, with plans for another in Shanghai. It also has a further 16 academic centres around the world. Mr Sexton sets out a different kind of map of the world, in which universities, with bases in several cities, become the hubs for the economies of the future, "magnetising talent" and providing the ideas and energy to drive economic innovation.
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  • Universities are also being used as flag carriers for national economic ambitions - driving forward modernisation plans. For some it's been a spectacularly fast rise. According to the OECD, in the 1960s South Korea had a similar national wealth to Afghanistan. Now it tops international education league tables and has some of the highest-rated universities in the world. The Pohang University of Science and Technology in South Korea was only founded in 1986 - and is now in the top 30 of the Times Higher's global league table, elbowing past many ancient and venerable institutions. It also wants to compete on an international stage so the university has decided that all its graduate programmes should be taught in English rather than Korean.
  • governments want to use universities to upgrade their workforce and develop hi-tech industries.
  • "Universities are being seen as a key to the new economies, they're trying to grow the knowledge economy by building a base in universities," says Professor Altbach. Families, from rural China to eastern Europe, are also seeing university as a way of helping their children to get higher-paid jobs. A growing middle-class in India is pushing an expansion in places. Universities also stand to gain from recruiting overseas. "Universities in the rich countries are making big bucks," he says. This international trade is worth at least $50 billion a year, he estimates, the lion's share currently being claimed by the US.
  • Technology, much of it hatched on university campuses, is also changing higher education and blurring national boundaries.
  • It raises many questions too. What are the expectations of this Facebook generation? They might have degrees and be able to see what is happening on the other side of the world, but will there be enough jobs to match their ambitions? Who is going to pay for such an expanded university system? And what about those who will struggle to afford a place?
  • The success of the US system is not just about funding, says Professor Altbach. It's also because it's well run and research is effectively organised. "Of course there are lots of lousy institutions in the US, but overall the system works well." Continue reading the main story “Start Quote Developed economies are already highly dependent on universities and if anything that reliance will increase” End Quote David Willetts UK universities minister The status of the US system has been bolstered by the link between its university research and developing hi-tech industries. Icons of the internet-age such Google and Facebook grew out of US campuses.
Weiye Loh

The messy business of cleaning up carbon policy (and how to sell it to the electorate) ... - 0 views

www.abc.net.au/...45810.html

Carbon Tax Global Warming Politics

shared by Weiye Loh on 04 Apr 11 - No Cached
  • 1. Putting a price on carbon is not only about the climate.Yes, humans are affecting the climate and reducing carbon dioxide emissions is a key commitment of this government, and indeed the stated views of the opposition. But there are other reasons to price carbon, primarily to put Australia at the forefront of a global energy technology revolution that is already underway.In future years and decades the world is going to need vastly more energy that is secure, reliable, clean and affordable. Achieving these outcomes will require an energy technology revolution. The purpose of pricing carbon is to raise the revenues needed to invest in this future, just as we invest in health, agriculture and defence.
  • 2. A price on carbon raises revenues to invest in stimulating that energy technology revolution.Australia emits almost 400 million tonnes of carbon dioxide into the atmosphere every year. In round numbers, every dollar carbon tax per tonne on those emissions would raise about A$100 million. A significant portion of the proceeds from a carbon tax should be used to invest in energy technology innovation, using today’s energy economy to build a bridge to tomorrow’s economy. This is exactly the strategy that India has adopted with a small levy on coal and Germany has adopted with a tax on nuclear fuel rods, with proceeds in both instances invested into energy innovation.
  • 3. The purpose of a carbon tax is not to make energy, food, petrol or consumer goods appreciably more expensive.Just as scientists are in broad agreement that humans are affecting the global climate, economists and other experts are in broad agreement that we cannot revolutionise our energy economy through pricing mechanisms alone. Thus, we propose starting with a low carbon tax - one that has broad political support - and then committing to increasing it in a predictable manner over time.The Coalition has proposed a “direct action plan” on carbon policy that would cost A$30 billion over the next 8 years, which is the equivalent of about a $2.50 per tonne carbon tax. The question to be put to the Coalition is not whether we should be investing in a carbon policy, as we agree on that point, but how much and how it should be paid for. The Coalition’s plans leave unanswered how they would pay for their plan.A carbon tax offers a responsible and effective manner to raise funds without harming the economy or jobs. In fact, to the extent that investments in energy innovation bear fruit, new markets will be opened and new jobs will be created. The Coalition’s plan is not focused on energy technology innovation.The question for the Coalition should thus be, at what level would you set a carbon tax (or what other taxes would you raise?), and how would you invest the proceeds in a manner that accelerates energy technology innovation?
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  • 4. Even a low carbon tax will make some goods cost a bit more, so it is important to help those who are most affected.Our carbon tax proposal is revenue neutral in the sense that we will lower other taxes in direct proportion to the impact, however modest, of a low carbon tax. We will do this with particular attention to those who may be most directly affected by a price on carbon.In addition, some portion of the revenue raised by a carbon tax will be returned to the public. But not all. It is important to invest in tomorrow’s energy technologies today and a carbon tax provides the mechanism for doing so.
Weiye Loh

The Black Swan of Cairo | Foreign Affairs - 0 views

www.foreignaffairs.com/...the-black-swan-of-cairo

Complex System Black Swan Falsifiability Politics Economics

shared by Weiye Loh on 01 May 11 - No Cached
  • It is both misguided and dangerous to push unobserved risks further into the statistical tails of the probability distribution of outcomes and allow these high-impact, low-probability "tail risks" to disappear from policymakers' fields of observation.
  • Such environments eventually experience massive blowups, catching everyone off-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state. Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems.
  • Seeking to restrict variability seems to be good policy (who does not prefer stability to chaos?), so it is with very good intentions that policymakers unwittingly increase the risk of major blowups. And it is the same misperception of the properties of natural systems that led to both the economic crisis of 2007-8 and the current turmoil in the Arab world. The policy implications are identical: to make systems robust, all risks must be visible and out in the open -- fluctuat nec mergitur (it fluctuates but does not sink) goes the Latin saying.
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  • Just as a robust economic system is one that encourages early failures (the concepts of "fail small" and "fail fast"), the U.S. government should stop supporting dictatorial regimes for the sake of pseudostability and instead allow political noise to rise to the surface. Making an economy robust in the face of business swings requires allowing risk to be visible; the same is true in politics.
  • Both the recent financial crisis and the current political crisis in the Middle East are grounded in the rise of complexity, interdependence, and unpredictability. Policymakers in the United Kingdom and the United States have long promoted policies aimed at eliminating fluctuation -- no more booms and busts in the economy, no more "Iranian surprises" in foreign policy. These policies have almost always produced undesirable outcomes. For example, the U.S. banking system became very fragile following a succession of progressively larger bailouts and government interventions, particularly after the 1983 rescue of major banks (ironically, by the same Reagan administration that trumpeted free markets). In the United States, promoting these bad policies has been a bipartisan effort throughout. Republicans have been good at fragilizing large corporations through bailouts, and Democrats have been good at fragilizing the government. At the same time, the financial system as a whole exhibited little volatility; it kept getting weaker while providing policymakers with the illusion of stability, illustrated most notably when Ben Bernanke, who was then a member of the Board of Governors of the U.S. Federal Reserve, declared the era of "the great moderation" in 2004.
  • Washington stabilized the market with bailouts and by allowing certain companies to grow "too big to fail." Because policymakers believed it was better to do something than to do nothing, they felt obligated to heal the economy rather than wait and see if it healed on its own.
  • The foreign policy equivalent is to support the incumbent no matter what. And just as banks took wild risks thanks to Greenspan's implicit insurance policy, client governments such as Hosni Mubarak's in Egypt for years engaged in overt plunder thanks to similarly reliable U.S. support.
  • Those who seek to prevent volatility on the grounds that any and all bumps in the road must be avoided paradoxically increase the probability that a tail risk will cause a major explosion.
  • In the realm of economics, price controls are designed to constrain volatility on the grounds that stable prices are a good thing. But although these controls might work in some rare situations, the long-term effect of any such system is an eventual and extremely costly blowup whose cleanup costs can far exceed the benefits accrued. The risks of a dictatorship, no matter how seemingly stable, are no different, in the long run, from those of an artificially controlled price.
  • Such attempts to institutionally engineer the world come in two types: those that conform to the world as it is and those that attempt to reform the world. The nature of humans, quite reasonably, is to intervene in an effort to alter their world and the outcomes it produces. But government interventions are laden with unintended -- and unforeseen -- consequences, particularly in complex systems, so humans must work with nature by tolerating systems that absorb human imperfections rather than seek to change them.
  • What is needed is a system that can prevent the harm done to citizens by the dishonesty of business elites; the limited competence of forecasters, economists, and statisticians; and the imperfections of regulation, not one that aims to eliminate these flaws. Humans must try to resist the illusion of control: just as foreign policy should be intelligence-proof (it should minimize its reliance on the competence of information-gathering organizations and the predictions of "experts" in what are inherently unpredictable domains), the economy should be regulator-proof, given that some regulations simply make the system itself more fragile. Due to the complexity of markets, intricate regulations simply serve to generate fees for lawyers and profits for sophisticated derivatives traders who can build complicated financial products that skirt those regulations.
  • The life of a turkey before Thanksgiving is illustrative: the turkey is fed for 1,000 days and every day seems to confirm that the farmer cares for it -- until the last day, when confidence is maximal. The "turkey problem" occurs when a naive analysis of stability is derived from the absence of past variations. Likewise, confidence in stability was maximal at the onset of the financial crisis in 2007.
  • The turkey problem for humans is the result of mistaking one environment for another. Humans simultaneously inhabit two systems: the linear and the complex. The linear domain is characterized by its predictability and the low degree of interaction among its components, which allows the use of mathematical methods that make forecasts reliable. In complex systems, there is an absence of visible causal links between the elements, masking a high degree of interdependence and extremely low predictability. Nonlinear elements are also present, such as those commonly known, and generally misunderstood, as "tipping points." Imagine someone who keeps adding sand to a sand pile without any visible consequence, until suddenly the entire pile crumbles. It would be foolish to blame the collapse on the last grain of sand rather than the structure of the pile, but that is what people do consistently, and that is the policy error.
  • Engineering, architecture, astronomy, most of physics, and much of common science are linear domains. The complex domain is the realm of the social world, epidemics, and economics. Crucially, the linear domain delivers mild variations without large shocks, whereas the complex domain delivers massive jumps and gaps. Complex systems are misunderstood, mostly because humans' sophistication, obtained over the history of human knowledge in the linear domain, does not transfer properly to the complex domain. Humans can predict a solar eclipse and the trajectory of a space vessel, but not the stock market or Egyptian political events. All man-made complex systems have commonalities and even universalities. Sadly, deceptive calm (followed by Black Swan surprises) seems to be one of those properties.
  • The system is responsible, not the components. But after the financial crisis of 2007-8, many people thought that predicting the subprime meltdown would have helped. It would not have, since it was a symptom of the crisis, not its underlying cause. Likewise, Obama's blaming "bad intelligence" for his administration's failure to predict the crisis in Egypt is symptomatic of both the misunderstanding of complex systems and the bad policies involved.
  • Obama's mistake illustrates the illusion of local causal chains -- that is, confusing catalysts for causes and assuming that one can know which catalyst will produce which effect. The final episode of the upheaval in Egypt was unpredictable for all observers, especially those involved. As such, blaming the CIA is as foolish as funding it to forecast such events. Governments are wasting billions of dollars on attempting to predict events that are produced by interdependent systems and are therefore not statistically understandable at the individual level.
  • Political and economic "tail events" are unpredictable, and their probabilities are not scientifically measurable. No matter how many dollars are spent on research, predicting revolutions is not the same as counting cards; humans will never be able to turn politics into the tractable randomness of blackjack.
  • Most explanations being offered for the current turmoil in the Middle East follow the "catalysts as causes" confusion. The riots in Tunisia and Egypt were initially attributed to rising commodity prices, not to stifling and unpopular dictatorships. But Bahrain and Libya are countries with high gdps that can afford to import grain and other commodities. Again, the focus is wrong even if the logic is comforting. It is the system and its fragility, not events, that must be studied -- what physicists call "percolation theory," in which the properties of the terrain are studied rather than those of a single element of the terrain.
  • When dealing with a system that is inherently unpredictable, what should be done? Differentiating between two types of countries is useful. In the first, changes in government do not lead to meaningful differences in political outcomes (since political tensions are out in the open). In the second type, changes in government lead to both drastic and deeply unpredictable changes.
  • Humans fear randomness -- a healthy ancestral trait inherited from a different environment. Whereas in the past, which was a more linear world, this trait enhanced fitness and increased chances of survival, it can have the reverse effect in today's complex world, making volatility take the shape of nasty Black Swans hiding behind deceptive periods of "great moderation." This is not to say that any and all volatility should be embraced. Insurance should not be banned, for example.
  • But alongside the "catalysts as causes" confusion sit two mental biases: the illusion of control and the action bias (the illusion that doing something is always better than doing nothing). This leads to the desire to impose man-made solutions
  • Variation is information. When there is no variation, there is no information. This explains the CIA's failure to predict the Egyptian revolution and, a generation before, the Iranian Revolution -- in both cases, the revolutionaries themselves did not have a clear idea of their relative strength with respect to the regime they were hoping to topple. So rather than subsidize and praise as a "force for stability" every tin-pot potentate on the planet, the U.S. government should encourage countries to let information flow upward through the transparency that comes with political agitation. It should not fear fluctuations per se, since allowing them to be in the open, as Italy and Lebanon both show in different ways, creates the stability of small jumps.
  • As Seneca wrote in De clementia, "Repeated punishment, while it crushes the hatred of a few, stirs the hatred of all . . . just as trees that have been trimmed throw out again countless branches." The imposition of peace through repeated punishment lies at the heart of many seemingly intractable conflicts, including the Israeli-Palestinian stalemate. Furthermore, dealing with seemingly reliable high-level officials rather than the people themselves prevents any peace treaty signed from being robust. The Romans were wise enough to know that only a free man under Roman law could be trusted to engage in a contract; by extension, only a free people can be trusted to abide by a treaty. Treaties that are negotiated with the consent of a broad swath of the populations on both sides of a conflict tend to survive. Just as no central bank is powerful enough to dictate stability, no superpower can be powerful enough to guarantee solid peace alone.
  • As Jean-Jacques Rousseau put it, "A little bit of agitation gives motivation to the soul, and what really makes the species prosper is not peace so much as freedom." With freedom comes some unpredictable fluctuation. This is one of life's packages: there is no freedom without noise -- and no stability without volatility.∂
Weiye Loh

Keen On… Michael Fertik: Why Data is the New Oil and Why We, the Consumer, Ar... - 0 views

techcrunch.com/...fertik-why-data-is-the-new-oil

Data Power Open Privacy

shared by Weiye Loh on 15 Jul 11 - No Cached
  • Weiye Loh on 15 Jul 11
     
    In today's Web 3.0 personal data rich economy, reputation is replacing cash, Fertik believes. And he is confident that his company, Reputation.com, is well placed to become the new rating index of this digital ecosystem. But Fertik isn't ecstatic about the way in which new online products, such as facial recognition technology, are exploiting the privacy of online consumers. Arguing that "data is the new oil," Fertik believes that the only people not benefitting from today's social economy are consumers themselves. Rather than government legislation, however, the solution, Fertik told me, are more start-up entrepreneurs like himself providing paid products that empower consumers in our Web 3.0 world of pervasive personalized data. This is the second and final part of my interview with Fertik. Yesterday, he explained to me why people will pay for privacy.
Weiye Loh

What is the role of the state? | Martin Wolf's Exchange | FT.com - 0 views

blogs.ft.com/...what-is-the-role-of-the-state

Political Economy Politics State

shared by Weiye Loh on 11 Sep 10 - Cached
  • This question has concerned western thinkers at least since Plato (5th-4th century BCE). It has also concerned thinkers in other cultural traditions: Confucius (6th-5th century BCE); China’s legalist tradition; and India’s Kautilya (4th-3rd century BCE). The perspective here is that of the contemporary democratic west.
  • The core purpose of the state is protection. This view would be shared by everybody, except anarchists, who believe that the protective role of the state is unnecessary or, more precisely, that people can rely on purely voluntary arrangements.
  • Contemporary Somalia shows the horrors that can befall a stateless society. Yet horrors can also befall a society with an over-mighty state. It is evident, because it is the story of post-tribal humanity that the powers of the state can be abused for the benefit of those who control it.
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  • In his final book, Power and Prosperity, the late Mancur Olson argued that the state was a “stationary bandit”. A stationary bandit is better than a “roving bandit”, because the latter has no interest in developing the economy, while the former does. But it may not be much better, because those who control the state will seek to extract the surplus over subsistence generated by those under their control.
  • In the contemporary west, there are three protections against undue exploitation by the stationary bandit: exit, voice (on the first two of these, see this on Albert Hirschman) and restraint. By “exit”, I mean the possibility of escaping from the control of a given jurisdiction, by emigration, capital flight or some form of market exchange. By “voice”, I mean a degree of control over, the state, most obviously by voting. By “restraint”, I mean independent courts, division of powers, federalism and entrenched rights.
  • defining what a democratic state, viewed precisely as such a constrained protective arrangement, is entitled to do.
  • There exists a strand in classical liberal or, in contemporary US parlance, libertarian thought which believes the answer is to define the role of the state so narrowly and the rights of individuals so broadly that many political choices (the income tax or universal health care, for example) would be ruled out a priori. In other words, it seeks to abolish much of politics through constitutional restraints. I view this as a hopeless strategy, both intellectually and politically. It is hopeless intellectually, because the values people hold are many and divergent and some of these values do not merely allow, but demand, government protection of weak, vulnerable or unfortunate people. Moreover, such values are not “wrong”. The reality is that people hold many, often incompatible, core values. Libertarians argue that the only relevant wrong is coercion by the state. Others disagree and are entitled to do so. It is hopeless politically, because democracy necessitates debate among widely divergent opinions. Trying to rule out a vast range of values from the political sphere by constitutional means will fail. Under enough pressure, the constitution itself will be changed, via amendment or reinterpretation.
  • So what ought the protective role of the state to include? Again, in such a discussion, classical liberals would argue for the “night-watchman” role. The government’s responsibilities are limited to protecting individuals from coercion, fraud and theft and to defending the country from foreign aggression. Yet once one has accepted the legitimacy of using coercion (taxation) to provide the goods listed above, there is no reason in principle why one should not accept it for the provision of other goods that cannot be provided as well, or at all, by non-political means.
  • Those other measures would include addressing a range of externalities (e.g. pollution), providing information and supplying insurance against otherwise uninsurable risks, such as unemployment, spousal abandonment and so forth. The subsidisation or public provision of childcare and education is a way to promote equality of opportunity. The subsidisation or public provision of health insurance is a way to preserve life, unquestionably one of the purposes of the state. Safety standards are a way to protect people against the carelessness or malevolence of others or (more controversially) themselves. All these, then, are legitimate protective measures. The more complex the society and economy, the greater the range of the protections that will be sought.
  • What, then, are the objections to such actions? The answers might be: the proposed measures are ineffective, compared with what would happen in the absence of state intervention; the measures are unaffordable and might lead to state bankruptcy; the measures encourage irresponsible behaviour; and, at the limit, the measures restrict individual autonomy to an unacceptable degree. These are all, we should note, questions of consequences.
  • The vote is more evenly distributed than wealth and income. Thus, one would expect the tenor of democratic policymaking to be redistributive and so, indeed, it is. Those with wealth and income to protect will then make political power expensive to acquire and encourage potential supporters to focus on common enemies (inside and outside the country) and on cultural values. The more unequal are incomes and wealth and the more determined are the “haves” to avoid being compelled to support the “have-nots”, the more politics will take on such characteristics.
  • In the 1970s, the view that democracy would collapse under the weight of its excessive promises seemed to me disturbingly true. I am no longer convinced of this: as Adam Smith said, “There is a great deal of ruin in a nation”. Moreover, the capacity for learning by democracies is greater than I had realised. The conservative movements of the 1980s were part of that learning. But they went too far in their confidence in market arrangements and their indifference to the social and political consequences of inequality. I would support state pensions, state-funded health insurance and state regulation of environmental and other externalities. I am happy to debate details. The ancient Athenians called someone who had a purely private life “idiotes”. This is, of course, the origin of our word “idiot”. Individual liberty does indeed matter. But it is not the only thing that matters. The market is a remarkable social institution. But it is far from perfect. Democratic politics can be destructive. But it is much better than the alternatives. Each of us has an obligation, as a citizen, to make politics work as well as he (or she) can and to embrace the debate over a wide range of difficult choices that this entails.
  • Weiye Loh on 11 Sep 10
     
    What is the role of the state?
Weiye Loh

Report: Piracy a "global pricing problem" with only one solution - 0 views

arstechnica.com/...lem-with-only-one-solution.ars

Piracy Pricing Capitalism Globalization Income Inequality

shared by Weiye Loh on 14 Mar 11 - No Cached
  • Over the last three years, 35 researchers contributed to the Media Piracy Project, released last week by the Social Science Research Council. Their mission was to examine media piracy in emerging economies, which account for most of the world's population, and to find out just how and why piracy operates in places like Russia, Mexico, and India.
  • Their conclusion is not that citizens of such piratical societies are somehow morally deficient or opposed to paying for content. Instead, they write that “high prices for media goods, low incomes, and cheap digital technologies are the main ingredients of global media piracy. If piracy is ubiquitous in most parts of the world, it is because these conditions are ubiquitous.”
  • When legitimate CDs, DVDs, and computer software are five to ten times higher (relative to local incomes) than they are in the US and Europe, simply ratcheting up copyright enforcement won't do enough to fix the problem. In the view of the report's authors, the only real solution is the creation of local companies that “actively compete on price and services for local customers” as they sell movies, music, and more.
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  • Some markets have local firms that compete on price to offer legitimate content (think the US, which has companies like Hulu, Netflix, Apple, and Microsoft that compete to offer legal video content). But the authors conclude that, in most of the world, legitimate copyrighted goods are only distributed by huge multinational corporations whose dominant goals are not to service a large part of local markets but to “protect the pricing structure in the high-income countries that generate most of their profits.”
  • This might increase profits globally, but it has led to disaster in many developing economies, where piracy may run north of 90 percent. Given access to cheap digital tools, but charged terrific amounts of money for legitimate versions of content, users choose piracy.
  • In Russia, for instance, researchers noted that legal versions of the film The Dark Knight went for $15. That price, akin to what a US buyer would pay, might sound reasonable until you realize that Russians make less money in a year than US workers. As a percentage of their wages, that $15 price is actually equivalent to a US consumer dropping $75 on the film. Pirate versions can be had for one-third the price.
  • Simple crackdowns on pirate behavior won't work in the absence of pricing and other reforms, say the report's authors (who also note that even "developed" economies routinely pirate TV shows and movies that are not made legally available to them for days, weeks, or months after they originally appear elsewhere).
  • The "strong moralization of the debate” makes it difficult to discuss issues beyond enforcement, however, and the authors slam the content companies for lacking any credible "endgame" to their constant requests for more civil and police powers in the War on Piracy.
  • piracy is a “signal of unmet consumer demand.
  • Our studies raise concerns that it may be a long time before such accommodations to reality reach the international policy arena. Hardline enforcement positions may be futile at stemming the tide of piracy, but the United States bears few of the costs of such efforts, and US companies reap most of the modest benefits. This is a recipe for continued US pressure on developing countries, very possibly long after media business models in the United States and other high-income countries have changed.
  • Weiye Loh on 14 Mar 11
     
    A major new report from a consortium of academic researchers concludes that media piracy can't be stopped through "three strikes" Internet disconnections, Web censorship, more police powers, higher statutory damages, or tougher criminal penalties. That's because the piracy of movies, music, video games, and software is "better described as a global pricing problem." And the only way to solve it is by changing the price.
Weiye Loh

Breakthrough Europe: Emerging Economies Reassert Commitment to Nuclear Power - 0 views

breakthrougheurope.org/...hina_india_japan_nuclear.shtml

Greenhoues Gases Green Energy Nuclear Risk

shared by Weiye Loh on 16 Mar 11 - No Cached
  • Nearly half a billion of India's 1.2 billion citizens continue to live in energy poverty. According to the Chairman of the Indian Atomic Energy Commission, Srikumar Banerjee, "ours is a very power-hungry country. It is essential for us to have further electricity generation." The Chinese have cited similar concerns in sticking to their major expansion plans of its nuclear energy sector. At its current GDP growth, China's electricity demands rise an average of 12 percent per year.
  • the Japanese nuclear crisis demonstrates the vast chasm in political priorities between the developing world and the post-material West.
  • Other regions that have reiterated their plans to stick to nuclear energy are Eastern Europe and the Middle East. The Prime Minister of Poland, the fastest growing country in the EU, has said that "fears of a nuclear disaster in Japan following last Friday's earthquake and tsunami would not disturb Poland's own plans to develop two nuclear plants." Russia and the Czech Republic have also restated their commitment to further nuclear development, while the Times reports that "across the Middle East, countries have been racing to build up nuclear power, as a growth and population boom has created unprecedented demand for energy." The United Arab Emirates is building four plants that will generate roughly a quarter of its power by 2020.
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  • Some European leaders, including Angela Merkel, may be backtracking fast on their commitment to nuclear power, but despite yesterday's escalation of the ongoing crisis in Fukushima, Japan, there appear to be no signs that India, China and other emerging economies will succumb to a similar backlash. For the emerging economies, overcoming poverty and insecurity of supply remain the overriding priorities of energy policy.
  • Weiye Loh on 16 Mar 11
     
    As the New York Times reports: The Japanese disaster has led some energy officials in the United States and in industrialized European nations to think twice about nuclear expansion. And if a huge release of radiation worsens the crisis, even big developing nations might reconsider their ambitious plans. But for now, while acknowledging the need for safety, they say their unmet energy needs give them little choice but to continue investing in nuclear power.
Weiye Loh

Roger Pielke Jr.'s Blog: Continued Deceleration of the Decarbonization of the Global Ec... - 0 views

rogerpielkejr.blogspot.com/...ontinued-ddeceleration-of.html

Carbon Emission Decarbonization Climate Science Data

shared by Weiye Loh on 01 Jun 11 - No Cached
  • Weiye Loh on 01 Jun 11
     
    data shows that in 2010 the world saw the rate of change in its carbon dioxide emissions per unit of economic activity continue to decrease -- to zero.  (The data that I use are global GDP data from Angus Maddison extended using IMF global GDP growth rates and NEAA carbon dioxide data extended to 2010 using the 2010 growth rate released by the IEA yesterday).  The deceleration of the decarbonization of the global economy means that the world is moving away from stabilization of concentrations of carbon dioxide in the atmosphere, and despite the various reports issued and assertions made, there is no evidence to support claims to the contrary. 
Weiye Loh

In Japan, a Culture That Promotes Nuclear Dependency - NYTimes.com - 0 views

www.nytimes.com/...31japan.html

Nuclear Economy Japan Green Energy

shared by Weiye Loh on 31 May 11 - No Cached
  • look no further than the Fukada Sports Park, which serves the 7,500 mostly older residents here with a baseball diamond, lighted tennis courts, a soccer field and a $35 million gymnasium with indoor pool and Olympic-size volleyball arena. The gym is just one of several big public works projects paid for with the hundreds of millions of dollars this community is receiving for acce
  • the aid has enriched rural communities that were rapidly losing jobs and people to the cities. With no substantial reserves of oil or coal, Japan relies on nuclear power for the energy needed to drive its economic machine. But critics contend that the largess has also made communities dependent on central government spending — and thus unwilling to rock the boat by pushing for robust safety measures.
  • Tsuneyoshi Adachi, a 63-year-old fisherman, joined the huge protests in the 1970s and 1980s against the plant’s No. 2 reactor. He said many fishermen were angry then because chlorine from the pumps of the plant’s No. 1 reactor, which began operating in 1974, was killing seaweed and fish in local fishing grounds. However, Mr. Adachi said, once compensation payments from the No. 2 reactor began to flow in, neighbors began to give him cold looks and then ignore him. By the time the No. 3 reactor was proposed in the early 1990s, no one, including Mr. Adachi, was willing to speak out against the plant. He said that there was the same peer pressure even after the accident at Fukushima, which scared many here because they live within a few miles of the Shimane plant. “Sure, we are all worried in our hearts about whether the same disaster could happen at the Shimane nuclear plant,” Mr. Adachi said. However, “the town knows it can no longer survive economically without the nuclear plant.”
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  • 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.
Weiye Loh

Roger Pielke Jr.'s Blog: Global Temperature Trends - 0 views

rogerpielkejr.blogspot.com/...global-temperature-trends.html

Climate Change Climate Science Politics Policy

shared by Weiye Loh on 31 Mar 11 - No Cached
  • My concern about the potential effects of human influences on the climate system are not a function of global average warming over a long-period of time or of predictions of continued warming into the future.
  • what maters are the effects of human influences on the climate system on human and ecological scales, not at the global scale. No one experiences global average temperature and it is very poorly correlated with things that we do care about in specific places at specific times.
  • Consider the following thought experiment. Divide the world up into 1,000 grid boxes of equal area. Now imagine that the temperature in each of 500 of those boxes goes up by 20 degrees while the temperature in the other 500 goes down by 20 degrees. The net global change is exactly zero (because I made it so). However, the impacts would be enormous. Let's further say that the changes prescribed in my thought experiment are the direct consequence of human activity. Would we want to address those changes? Or would we say, ho hum, it all averages out globally, so no problem? The answer is obvious and is not a function of what happens at some global average scale, but what happens at human and ecological scales.
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  • In the real world, the effects of increasing carbon dioxide on human and ecological scales are well established, and they include a biogechemical effect on land ecosystems with subsequent effects on water and climate, as well as changes to the chemistry of the oceans. Is it possible that these effects are benign? Sure. Is it also possible that these effects have some negatives? Sure. These two factors alone would be sufficient for one to begin to ask questions about the worth of decarbonizing the global energy system. But greenhouse gas emissions also have a radiative effect that, in the real world, is thought to be a net warming, all else equal and over a global scale. However, if this effect were to be a net cooling, or even, no net effect at the global scale, it would not change my views about a need to consider decarbonizing the energy system one bit. There is an effect -- or effects to be more accurate -- and these effects could be negative.
  • The debate over climate change has many people on both sides of the issue wrapped up in discussing global average temperature trends. I understand this as it is an icon with great political symbolism. It has proved a convenient political battleground, but the reality is that it should matter little to the policy case for decarbonization. What matters is that there is a human effect on the climate system and it could be negative with respect to things people care about. That is enough to begin asking whether we want to think about accelerating decarbonization of the global economy.
  • Weiye Loh on 31 Mar 11
     
    one needs to know only two things about the science of climate change to begin asking whether accelerating decarbonization of the economy might be worth doing: Carbon dioxide has an influence on the climate system. This influence might well be negative for things many people care about. That is it. An actual decision to accelerate decarbonization and at what rate will depend on many other things, like costs and benefits of particular actions unrelated to climate and technological alternatives. In this post I am going to further explain my views, based on an interesting question posed in that earlier thread. What would my position be if it were to be shown, hypothetically, that the global average surface temperature was not warming at all, or in fact even cooling (over any relevant time period)? Would I then change my views on the importance of decarbonizing the global energy system?
Weiye Loh

Does "Inclusion" Matter for Open Government? (The Answer Is, Very Much Indeed... - 0 views

gurstein.wordpress.com/...the-answer-is-very-much-indeed

Internet New Media Income Inequality Open Government Open Open Information Power

shared by Weiye Loh on 18 Apr 12 - No Cached
  • But in the context of the Open Government Partnership and the 70 or so countries that have already committed themselves to this or are in the process I’m not sure that the world can afford to wait to see whether this correlation is direct, indirect or spurious especially if we can recognize that in the world of OGP, the currency of accumulation and concentration is not raw economic wealth but rather raw political power.
  • in the same way as there appears to be an association between the rise of the Internet and increasing concentrations of wealth one might anticipate that the rise of Internet enabled structures of government might be associated with the increasing concentration of political power in fewer and fewer hands and particularly the hands of those most adept at manipulating the artifacts and symbols of the new Internet age.
  • I am struck by the fact that while the OGP over and over talks about the importance and value and need for Open Government there is no similar or even partial call for Inclusive Government.  I’ve argued elsewhere how “Open”, in the absence of attention being paid to ensuring that the pre-conditions for the broadest base of participation will almost inevitably lead to the empowerment of the powerful. What I fear with the OGP is that by not paying even a modicum of attention to the issue of inclusion or inclusive development and participation that all of the idealism and energy that is displayed today in Brasilia is being directed towards the creation of the Governance equivalents of the Internet billionaires whatever that might look like.
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  • crowd sourced public policy
  • Weiye Loh on 18 Apr 12
     
    alongside the rise of the Internet and the empowerment of the Internet generation has emerged the greatest inequalities of wealth and privilege that any of the increasingly Internet enabled economies/societies have experienced at least since the great Depression and perhaps since the beginnings of systematic economic record keeping.  The association between the rise of inequality and the rise of the Internet has not yet been explained and if may simply be a coincidence but somehow I'm doubtful and we await a newer generation of rather more critical and less dewey economists to give us the models and explanations for this co-evolution.
Weiye Loh

Green Column - Rethinking the Measure of Growth - NYTimes.com - 0 views

www.nytimes.com/...19green.html

Growth Environment

shared by Weiye Loh on 19 Jul 10 - Cached
  • Asia is not invulnerable to an environmental disaster on the scale of the BP spill. Singapore is a major refining center and transshipment point for crude oil shipments between markets in East Asia and the other oil-rich Gulf region. The quest for more plentiful and less expensive oil for fast-growing Asian economies has also brought a wave of offshore drilling from India and the Gulf of Thailand, to Vietnam and Bohai Bay, on the northeast coast of China.
  • Asian governments have become particularly enthralled with gross domestic product statistics for validation
  • Gross domestic product has come in for some particularly hard knocks since the global financial crisis, notably after a report last year whose co-author was Joseph E. Stiglitz, a Nobel laureate in economics, that said reliance on gross domestic product had blinded governments to the increasing risks in the world economy since 2004.
  • Weiye Loh on 19 Jul 10
     
    Rethinking the Measure of Growth By WAYNE ARNOLD Published: July 18, 2010
Weiye Loh

Skepticblog » Investing in Basic Science - 0 views

skepticblog.org/...investing-in-basic-science

Science Uncertainty

shared by Weiye Loh on 16 Nov 10 - No Cached
  • A recent editorial in the New York Times by Nicholas Wade raises some interesting points about the nature of basic science research – primarily that its’ risky.
  • As I have pointed out about the medical literature, researcher John Ioaniddis has explained why most published studies turn out in retrospect to be wrong. The same is true of most basic science research – and the underlying reason is the same. The world is complex, and most of our guesses about how it might work turn out to be either flat-out wrong, incomplete, or superficial. And so most of our probing and prodding of the natural world, looking for the path to the actual answer, turn out to miss the target.
  • research costs considerable resources of time, space, money, opportunity, and people-hours. There may also be some risk involved (such as to subjects in the clinical trial). Further, negative studies are actually valuable (more so than terrible pictures). They still teach us something about the world – they teach us what is not true. At the very least this narrows the field of possibilities. But the analogy holds in so far as the goal of scientific research is to improve our understanding of the world and to provide practical applications that make our lives better. Wade writes mostly about how we fund research, and this relates to our objectives. Most of the corporate research money is interested in the latter – practical (and profitable) applications. If this is your goal, than basic science research is a bad bet. Most investments will be losers, and for most companies this will not be offset by the big payoffs of the rare winners. So many companies will allow others to do the basic science (government, universities, start up companies) then raid the winners by using their resources to buy them out, and then bring them the final steps to a marketable application. There is nothing wrong or unethical about this. It’s a good business model.
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  • What, then, is the role of public (government) funding of research? Primarily, Wade argues (and I agree), to provide infrastructure for expensive research programs, such as building large colliders.
  • the more the government invests in basic science and infrastructure, the more winners will emerge that private industry can then capitalize on. This is a good way to build a competitive dynamic economy.
  • But there is a pitfall – prematurely picking winners and losers. Wade give the example of California investing specifically into developing stem cell treatments. He argues that stem cells, while promising, do not hold a guarantee of eventual success, and perhaps there are other technologies that will work and are being neglected. The history of science and technology has clearly demonstrated that it is wickedly difficult to predict the future (and all those who try are destined to be mocked by future generations with the benefit of perfect hindsight). Prematurely committing to one technology therefore contains a high risk of wasting a great deal of limited resources, and missing other perhaps more fruitful opportunities.
  • The underlying concept is that science research is a long-term game. Many avenues of research will not pan out, and those that do will take time to inspire specific applications. The media, however, likes catchy headlines. That means when they are reporting on basic science research journalists ask themselves – why should people care? What is the application of this that the average person can relate to? This seems reasonable from a journalistic point of view, but with basic science reporting it leads to wild speculation about a distant possible future application. The public is then left with the impression that we are on the verge of curing the common cold or cancer, or developing invisibility cloaks or flying cars, or replacing organs and having household robot servants. When a few years go by and we don’t have our personal android butlers, the public then thinks that the basic science was a bust, when in fact there was never a reasonable expectation that it would lead to a specific application anytime soon. But it still may be on track for interesting applications in a decade or two.
  • this also means that the government, generally, should not be in the game of picking winners an losers – putting their thumb on the scale, as it were. Rather, they will get the most bang for the research buck if they simply invest in science infrastructure, and also fund scientists in broad areas.
  • The same is true of technology – don’t pick winners and losers. The much-hyped “hydrogen economy” comes to mind. Let industry and the free market sort out what will work. If you have to invest in infrastructure before a technology is mature, then at least hedge your bets and keep funding flexible. Fund “alternative fuel” as a general category, and reassess on a regular basis how funds should be allocated. But don’t get too specific.
  • Funding research but leaving the details to scientists may be optimal
  • The scientific community can do their part by getting better at communicating with the media and the public. Try to avoid the temptation to overhype your own research, just because it is the most interesting thing in the world to you personally and you feel hype will help your funding. Don’t make it easy for the media to sensationalize your research – you should be the ones trying to hold back the reigns. Perhaps this is too much to hope for – market forces conspire too much to promote sensationalism.
Weiye Loh

Cancer resembles life 1 billion years ago, say astrobiologists - microbiology, genomics... - 0 views

www.lifescientist.com.au/..._years_ago_say_astrobiologists

Cancer Evolution Life

shared by Weiye Loh on 17 Feb 11 - No Cached
  • astrobiologists, working with oncologists in the US, have suggested that cancer resembles ancient forms of life that flourished between 600 million and 1 billion years ago.
  • Read more about what this discovery means for cancer research.
  • The genes that controlled the behaviour of these early multicellular organisms still reside within our own cells, managed by more recent genes that keep them in check.It's when these newer controlling genes fail that the older mechanisms take over, and the cell reverts to its earlier behaviours and grows out of control.
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  • The new theory, published in the journal Physical Biology, has been put forward by two leading figures in the world of cosmology and astrobiology: Paul Davies, director of the Beyond Center for Fundamental Concepts in Science, Arizona State University; and Charles Lineweaver, from the Australian National University.
  • According to Lineweaver, this suggests that cancer is an atavism, or an evolutionary throwback.
  • In the paper, they suggest that a close look at cancer shows similarities with early forms of multicellular life.
  • “Unlike bacteria and viruses, cancer has not developed the capacity to evolve into new forms. In fact, cancer is better understood as the reversion of cells to the way they behaved a little over one billion years ago, when humans were nothing more than loose-knit colonies of only partially differentiated cells. “We think that the tumours that develop in cancer patients today take the same form as these simple cellular structures did more than a billion years ago,” he said.
  • One piece of evidence to support this theory is that cancers appear in virtually all metazoans, with the notable exception of the bizarre naked mole rat."This quasi-ubiquity suggests that the mechanisms of cancer are deep-rooted in evolutionary history, a conjecture that receives support from both paleontology and genetics," they write.
  • the genes that controlled this early multi-cellular form of life are like a computer operating system's 'safe mode', and when there are failures or mutations in the more recent genes that manage the way cells specialise and interact to form the complex life of today, then the earlier level of programming takes over.
  • Their notion is in contrast to a prevailing theory that cancer cells are 'rogue' cells that evolve rapidly within the body, overcoming the normal slew of cellular defences.
  • However, Davies and Lineweaver point out that cancer cells are highly cooperative with each other, if competing with the host's cells. This suggests a pre-existing complexity that is reminiscent of early multicellular life.
  • cancers' manifold survival mechanisms are predictable, and unlikely to emerge spontaneously through evolution within each individual in such a consistent way.
  • The good news is that this means combating cancer is not necessarily as complex as if the cancers were rogue cells evolving new and novel defence mechanisms within the body.Instead, because cancers fall back on the same evolved mechanisms that were used by early life, we can expect them to remain predictable, thus if they're susceptible to treatment, it's unlikely they'll evolve new ways to get around it.
  • If the atavism hypothesis is correct, there are new reasons for optimism," they write.
  • Weiye Loh on 17 Feb 11
     
    Feature: Inside DNA vaccines bioMD makes a bid for Andrew Forest's Allied Medical and Coridon Alexion acquires technology for MoCD therapy More > Most Popular Media Releases Cancer resembles life 1 billion years ago, say astrobiologists Feature: The challenge of a herpes simplex vaccine Feature: Proteomics power of pawpaw bioMD makes a bid for Andrew Forest's Allied Medical and Coridon Immune system boosting hormone might lead to HIV cure Biotechnology Directory Company Profile Check out this company's profile and more in the Biotechnology Directory! Biotechnology Directory Find company by name Find company by category Latest Jobs Senior Software Developer / Java Analyst Programm App Support Developer - Java / J2ee Solutions Consultant - VIC Technical Writer Product Manager (Fisheye/Crucible)   BUYING GUIDES Portable Multimedia Players Digital Cameras Digital Video Cameras LATEST PRODUCTS HTC Wildfire S Android phone (preview) Panasonic LUMIX DMC-GH2 digital camera HTC Desire S Android phone (preview) Qld ICT minister Robert Schwarten retires Movie piracy costs Aus economy $1.37 billion in 12 months: AFACT Wireless smartphones essential to e-health: CSIRO Aussie outsourcing CRM budgets to soar in 2011: Ovum Federal government to evaluate education revolution targets Business continuity planning - more than just disaster recovery Proving the value of IT - Part one 5 open source security projects to watch In-memory computing Information security in 2011 EFA shoots down 'unproductive' AFACT movie piracy study In Pictures: IBM hosts Galactic dinner Emerson Network Power launches new infrastructure solutions Consumers not smart enough for smartphones? Google one-ups Apple online media subscription service M2M offerings expand as more machines go online India cancels satellite spectrum deal after controversy Lenovo profit rises in Q3 on strong PC sales in China Taiwan firm to supply touch sensors to Samsung HP regains top position in India's PC market Copyright 20
Weiye Loh

'There Is No Values-Free Form Of Education,' Says U.S. Philosopher - Radio Fr... - 0 views

www.rferl.org/...2315794.html

Education Value Democracy Humanities

shared by Weiye Loh on 26 Feb 11 - No Cached
  • from the earliest years, education should be based primarily on exploration, understanding in depth, and the development of logical, critical thinking. Such an emphasis, she says, not only produces a citizenry capable of recognizing and rooting out political jingoism and intolerance. It also produces people capable of questioning authority and perceived wisdom in ways that enhance innovation and economic competitiveness. Nussbaum warns against a narrow educational focus on technical competence.
  • a successful, long-term democracy depends on a citizenry with certain qualities that can be fostered by education.
  • The first is the capacity we associate in the Western tradition with Socrates, but it certainly appears in all traditions -- that is, the ability to think critically about proposals that are brought your way, to analyze an argument, to distinguish a good argument from a bad argument. And just in general, to lead what Socrates called “the examined life.” Now that’s, of course, important because we know that people are very prone to go along with authority, with fashion, with peer pressure. And this kind of critical enlivened citizenry is the only thing that can keep democracy vital.
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  • it can be trained from very early in a child’s education. There’re ways that you can get quite young children to recognize what’s a good argument and what’s a bad argument. And as children grow older, it can be done in a more and more sophisticated form until by the time they’re undergraduates in universities they would be studying Plato’s dialogues for example and really looking at those tricky arguments and trying to figure out how to think. And this is important not just for the individual thinking about society, but it’s important for the way people talk to each other. In all too many public discussions people just throw out slogans and they throw out insults. And what democracy needs is listening. And respect. And so when people learn how to analyze an argument, then they look at what the other person’s saying differently. And they try to take it apart, and they think: “Well, do I share some of those views and where do I differ here?” and so on. And this really does produce a much more deliberative, respectful style of public interaction.
  • The second [quality] is what I call “the ability to think as a citizen of the whole world.” We’re all narrow and this is again something that we get from our animal heritage. Most non-human animals just think about the group. But, of course, in this world we need to think, first of all, our whole nation -- its many different groups, minority and majority. And then we need to think outside the nation, about how problems involving, let’s say, the environment or global economy and so on need cooperative resolution that brings together people from many different nations.
  • That’s complicated and it requires learning a lot of history, and it means learning not just to parrot some facts about history but to think critically about how to assess historical evidence. It means learning how to think about the global economy. And then I think particularly important in this era, it means learning something about the major world religions. Learning complicated, nonstereotypical accounts of those religions because there’s so much fear that’s circulating around in every country that’s based usually on just inadequate stereotypes of what Muslims are or whatever. So knowledge can at least begin to address that.
  • the third thing, which I think goes very closely with the other two, is what I call “the narrative imagination,” which is the ability to put yourself in the shoes of another person to have some understanding of how the world looks from that point of view. And to really have that kind of educated sympathy with the lives of others. Now again this is something we come into the world with. Psychologists have now found that babies less than a year old are able to take up the perspective of another person and do things, see things from that perspective. But it’s very narrow and usually people learn how to think about what their parents are thinking and maybe other family members but we need to extend that and develop it, and learn how the world looks from the point of view of minorities in our own culture, people outside our culture, and so on.
  • since we can’t go to all the places that we need to understand -- it’s accomplished by reading narratives, reading literature, drama, participating through the arts in the thought processes of another culture. So literature and the arts are the major ways we would develop and extend that capacity.
  • For many years, the leading model of development ... used by economists and international agencies measuring welfare was simply that for a country to develop means to increase [its] gross domestic product per capita. Now, in recent years, there has been a backlash to that because people feel that it just doesn’t ask enough about what goods are really doing for people, what can people really do and be.
  • so since 1990s the United Nations’ development program has produced annually what’s called a “Human Development Report” that looks at things like access to education, access to health care. In other words, a much richer menu of human chances and opportunities that people have. And at the theoretical end I’ve worked for about 20 years now with economist Amartya Sen, who won the Nobel Prize in 1998 for economics. And we’ve developed this as account of -- so for us what it is for a country to do better is to enhance the set of capabilities meaning substantial opportunities that people have to lead meaningful, fruitful lives. And then I go on to focus on a certain core group of those capabilities that I think ought to be protected by constitutional law in every country.
  • Life; health; bodily integrity; the development of senses, imagination, and thought; the development of practical reason; opportunities to have meaningful affiliations both friendly and political with other people; the ability to have emotional health -- not to be in other words dominated by overwhelming fear and so on; the ability to have a productive relationship with the environment and the world of nature; the ability to play and have leisure time, which is something that I think people don’t think enough about; and then, finally, control over one’s material and social environment, some measure of control. Now of course, each of these is very abstract, and I specify them further. Although I also think that each country needs to finally specify them with its own particular circumstances in view.
  • when kids learn in a classroom that just makes them sit in a chair, well, they can take in something in their heads, but it doesn’t make them competent at negotiating in the world. And so starting, at least, with Jean Jacques Rousseau in the 18th century, people thought: “Well, if we really want people to be independent citizens in a democracy that means that we can’t have whole classes of people who don’t know how to do anything, who are just simply sitting there waiting to be waited on in practical matters.” And so the idea that children should participate in their practical environment came out of the initial democratizing tendencies that went running through the 18th century.
  • even countries who absolutely do not want that kind of engaged citizenry see that for the success of business these abilities are pretty important. Both Singapore and China have conducted mass education reforms over the last five years because they realized that their business cultures don’t have enough imagination and they also don’t have enough critical thinking, because you can have awfully corrupt business culture if no one is willing to say the unpleasant word or make a criticism.
  • So they have striven to introduce more critical thinking and more imagination into their curricula. But, of course, for them, they want to cordon it off -- they want to do it in the science classroom, in the business classroom, but not in the politics classroom. Well, we’ll see -- can they do that? Can they segment it that way? I think democratic thinking is awfully hard to segment as current events in the Middle East are showing us. It does have the tendency to spread.
  • so maybe the people in Singapore and China will not like the end result of what they tried to do or maybe the reform will just fail, which is equally likely -- I mean the educational reform.
  • if you really don’t want democracy, this is not the education for you. It had its origins in the ancient Athenian democracy which was a very, very strong participatory democracy and it is most at home in really true democracy, where our whole goal is to get each and every person involved and to get them thinking about things. So, of course, if politicians have ambivalence about that goal they may well not want this kind of education.
  • when we bring up children in the family or in the school, we are always engineering. I mean, there is no values-free form of education in the world. Even an education that just teaches you a list of facts has values built into it. Namely, it gives a negative value to imagination and to the critical faculties and a very high value to a kind of rote, technical competence. So, you can't avoid shaping children.
  • ncreasingly the child should be in control and should become free. And that's what the critical thinking is all about -- it's about promoting freedom as the child goes on. So, the end product should be an adult who is really thinking for him- or herself about the direction of society. But you don't get freedom just by saying, "Oh, you are free." Progressive educators that simply stopped teaching found out very quickly that that didn't produce freedom. Even some of the very extreme forms of progressive school where children were just allowed to say every day what it was they wanted to learn, they found that didn't give the child the kind of mastery of self and of the world that you really need to be a free person.
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