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Bhrigu's actions are surprising, but probably not unique. There are few firm numbers showing the prevalence of research sabotage, but conversations with graduate students, postdocs and research-misconduct experts suggest that such misdeeds occur elsewhere, and that most go unreported or unpoliced. In this case, the episode set back research, wasted potentially tens of thousands of dollars and terrorized a young student. More broadly, acts such as Bhrigu's — along with more subtle actions to hold back or derail colleagues' work — have a toxic effect on science and scientists. They are an affront to the implicit trust between scientists that is necessary for research endeavours to exist and thrive.

Despite all this, there is little to prevent perpetrators re-entering science.

federal bodies that provide research funding have limited ability and inclination to take action in sabotage cases because they aren't interpreted as fitting the federal definition of research misconduct, which is limited to plagiarism, fabrication and falsification of research data.

In Bhrigu's case, administrators at the University of Michigan worked with police to investigate, thanks in part to the persistence of Ames and her supervisor, Theo Ross. "The question is, how many universities have such procedures in place that scientists can go and get that kind of support?" says Christine Boesz, former inspector-general for the US National Science Foundation in Arlington, Virginia, and now a consultant on scientific accountability. "Most universities I was familiar with would not necessarily be so responsive."

Some labs are known to be hyper-competitive, with principal investigators pitting postdocs against each other. But Ross's lab is a small, collegial place. At the time that Ames was noticing problems, it housed just one other graduate student, a few undergraduates doing projects, and the lab manager, Katherine Oravecz-Wilson, a nine-year veteran of the lab whom Ross calls her "eyes and ears". And then there was Bhrigu, an amiable postdoc who had joined the lab in April 2009.

Some people whom Ross consulted with tried to convince her that Ames was hitting a rough patch in her work and looking for someone else to blame. But Ames was persistent, so Ross took the matter to the university's office of regulatory affairs, which advises on a wide variety of rules and regulations pertaining to research and clinical care. Ray Hutchinson, associate dean of the office, and Patricia Ward, its director, had never dealt with anything like it before. After several meetings and two more instances of alcohol in the media, Ward contacted the department of public safety — the university's police force — on 9 March. They immediately launched an investigation — into Ames herself. She endured two interrogations and a lie-detector test before investigators decided to look elsewhere.

At 4:00 a.m. on Sunday 18 April, officers installed two cameras in the lab: one in the cold room where Ames's blots had been contaminated, and one above the refrigerator where she stored her media. Ames came in that day and worked until 5:00 p.m. On Monday morning at around 10:15, she found that her medium had been spiked again. When Ross reviewed the tapes of the intervening hours with Richard Zavala, the officer assigned to the case, she says that her heart sank. Bhrigu entered the lab at 9:00 a.m. on Monday and pulled out the culture media that he would use for the day. He then returned to the fridge with a spray bottle of ethanol, usually used to sterilize lab benches. With his back to the camera, he rummaged through the fridge for 46 seconds. Ross couldn't be sure what he was doing, but it didn't look good. Zavala escorted Bhrigu to the campus police department for questioning. When he told Bhrigu about the cameras in the lab, the postdoc asked for a drink of water and then confessed. He said that he had been sabotaging Ames's work since February. (He denies involvement in the December and January incidents.)

Some say that the structure of the scientific enterprise is to blame. The big rewards — tenured positions, grants, papers in stellar journals — are won through competition. To get ahead, researchers need only be better than those they are competing with. That ethos, says Brian Martinson, a sociologist at HealthPartners Research Foundation in Minneapolis, Minnesota, can lead to sabotage. He and others have suggested that universities and funders need to acknowledge the pressures in the research system and try to ease them by means of education and rehabilitation, rather than simply punishing perpetrators after the fact.

Bhrigu says that he felt pressure in moving from the small college at Toledo to the much bigger one in Michigan. He says that some criticisms he received from Ross about his incomplete training and his work habits frustrated him, but he doesn't blame his actions on that. "In any kind of workplace there is bound to be some pressure," he says. "I just got jealous of others moving ahead and I wanted to slow them down."

At Washtenaw County Courthouse in July, having reviewed the case files, Pollard Hines delivered Bhrigu's sentence. She ordered him to pay around US$8,800 for reagents and experimental materials, plus $600 in court fees and fines — and to serve six months' probation, perform 40 hours of community service and undergo a psychiatric evaluation.

But the threat of a worse sentence hung over Bhrigu's head. At the request of the prosecutor, Ross had prepared a more detailed list of damages, including Bhrigu's entire salary, half of Ames's, six months' salary for a technician to help Ames get back up to speed, and a quarter of the lab's reagents. The court arrived at a possible figure of $72,000, with the final amount to be decided upon at a restitution hearing in September.

Ross, though, is happy that the ordeal is largely over. For the month-and-a-half of the investigation, she became reluctant to take on new students or to hire personnel. She says she considered packing up her research programme. She even questioned her own sanity, worrying that she was the one sabotaging Ames's work via "an alternate personality". Ross now wonders if she was too trusting, and urges other lab heads to "realize that the whole spectrum of humanity is in your lab. So, when someone complains to you, take it seriously."

She also urges others to speak up when wrongdoing is discovered. After Bhrigu pleaded guilty in June, Ross called Trempe at the University of Toledo. He was shocked, of course, and for more than one reason. His department at Toledo had actually re-hired Bhrigu. Bhrigu says that he lied about the reason he left Michigan, blaming it on disagreements with Ross. Toledo let Bhrigu go in July, not long after Ross's call.

Now that Bhrigu is in India, there is little to prevent him from getting back into science. And even if he were in the United States, there wouldn't be much to stop him. The National Institutes of Health in Bethesda, Maryland, through its Office of Research Integrity, will sometimes bar an individual from receiving federal research funds for a time if they are found guilty of misconduct. But Bhigru probably won't face that prospect because his actions don't fit the federal definition of misconduct, a situation Ross finds strange. "All scientists will tell you that it's scientific misconduct because it's tampering with data," she says.

Ames says that the experience shook her trust in her chosen profession. "I did have doubts about continuing with science. It hurt my idea of science as a community that works together, builds upon each other's work and collaborates."

government financing agencies as the National Institutes of Health and the National Science Foundation are like the managers of a stock index fund: they buy everything in the market, and the few spectacular winners make up for all the disasters. But just as index fund managers often go astray when they try to improve on the index’s performance by overweighting the stocks they favor, the government can go wrong when it tries to pick winners.

the emergence of the blogosphere requires significantly more openness from scientists. However, providing the details necessary to validate large datasets can be difficult and time-consuming, and how FoI laws apply to research is still an evolving area. Meanwhile, the public needs to understand that science cannot and does not produce absolutely precise answers. Though the uncertainties may become smaller and better constrained over time, uncertainty in science is a fact of life which policymakers have to deal with. The chapter concludes: “the Review would urge all scientists to learn to communicate their work in ways that the public can access and understand”.

email is less formal than other forms of communication: “Extreme forms of language are frequently applied to quite normal situations by people who would never use it in other communication channels.” The CRU scientists assumed their emails to be private, so they used “slang, jargon and acronyms” which would have been more fully explained had they been talking to the public. And although some emails suggest CRU went out of their way to make life difficult for their critics, there are others which suggest they were bending over backwards to be honest. Therefore the Review found “the e-mails cannot always be relied upon as evidence of what actually occurred, nor indicative of actual behaviour that is extreme, exceptional or unprofessional.” [section 4.3]

when put into the proper context, what do these emails actually reveal about the behaviour of the CRU scientists? The report concluded (its emphasis):

we find that their rigour and honesty as scientists are not in doubt.

we did not find any evidence of behaviour that might undermine the conclusions of the IPCC assessments.

The argument that Climategate reveals an international climate science conspiracy is not really a very skeptical one. Sure, it is skeptical in the weak sense of questioning authority, but it stops there. Unlike true skepticism, it doesn’t go on to objectively examine all the evidence and draw a conclusion based on that evidence. Instead, it cherry-picks suggestive emails, seeing everything as incontrovertible evidence of a conspiracy, and concludes all of mainstream climate science is guilty by association. This is not skepticism; this is conspiracy theory.

The media dropped the ball There is a famous quotation attributed to Mark Twain: “A lie can travel halfway around the world while the truth is putting on its shoes.” This is more true in the internet age than it was when Mark Twain was alive. Unfortunately, it took months for the Climategate inquiries to put on their shoes, and by the time they reported, the damage had already been done. The media acted as an uncritical loudspeaker for the initial allegations, which will now continue to circulate around the world forever, then failed to give anywhere near the same amount of coverage to the inquiries clearing the scientists involved. For instance, Rupert Murdoch’s The Australian published no less than 85 stories about Climategate, but not one about the Muir Russell inquiry.

Even the Guardian, who have a relatively good track record on environmental reporting and were quick to criticize the worst excesses of climate conspiracy theorists, could not resist the lure of stolen emails. As George Monbiot writes, journalists see FoI requests and email hacking as a way of keeping people accountable, rather than the distraction from actual science which they are to scientists. In contrast, CRU director Phil Jones says: “I wish people would spend as much time reading my scientific papers as they do reading my e-mails.”

This is part of a broader problem with climate change reporting: the media holds scientists to far higher standards than it does contrarians. Climate scientists have to be right 100% of the time, but contrarians apparently can get away with being wrong nearly 100% of the time. The tiniest errors of climate scientists are nitpicked and blown out of all proportion, but contrarians get away with monstrous distortions and cherry-picking of evidence. Around the same time The Australian was bashing climate scientists, the same newspaper had no problem publishing Viscount Monckton’s blatant misrepresentations of IPCC projections (not to mention his demonstrably false conspiracy theory that the Copenhagen summit was a plot to establish a world government).

In the current model of environmental reporting, the contrarians do not lose anything by making baseless accusations. In fact, it is in their interests to throw as much mud at scientists as possible to increase the chance that some of it will stick in the public consciousness. But there is untold damage to the reputation of the scientists against whom the accusations are being made. We can only hope that in future the media will be less quick to jump to conclusions. If only editors and producers would stop and think for a moment about what they’re doing: they are playing with the future of the planet.

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.

Somewhere down the line, achieving an impact in the media seems to have become the goal in itself, rather than what it should be: a way to inform and engage the public with clarity and objectivity, without bias or prejudice. Our obsession with impact is not one-sided. The craving of scientists for publicity is fuelled by a hurried and unquestioning media, an academic community that disproportionately rewards publication in "high impact" journals such as Nature, and by research councils that emphasise the importance of achieving "impact" while at the same time delivering funding cuts. Academics are now pushed to attend media training courses, instructed about "pathways to impact", required to include detailed "impact summaries" when applying for grant funding, and constantly reminded about the importance of media engagement to further their careers. Yet where in all of this strategising and careerism is it made clear why public engagement is important? Where is it emphasised that the most crucial consideration in our interactions with the media is that we are accurate, honest and open about the limitations of our research?

Dr. Wakefield sued him and The Sunday Times for libel, but later withdrew the charges and was forced to pay Mr. Deer’s legal costs, which amounted to £1.4 million (almost $3-million). In the subsequent medical inquiry, Dr. Wakefield was shown to have had “a callous disregard” for the “distress and pain” of the developmentally challenged children, some of whom were subjected to invasive “high risk” procedures, including lumbar punctures, without clinical reasons.After the first story ran in 2004, Mr. Deer, who is unmarried and has no children, also revealed that Dr. Wakefield had patented a single measles vaccine after creating fear about the standard MMR shot.

To this day, Dr. Wakefield remains unrepentant. He boycotted the legal inquiry just as he has avoided any interview with Mr. Deer. A father of four children, he has a large ranch in Austin, Texas. Some parents in the anti-vaccine community, enabled by the Internet, have falsely accused Mr. Deer of mounting a kangaroo court against Dr. Wakefield.

While the consequences of Dr. Wakefield’s research were serious – immunization rates in Britain dropped dramatically and measles outbreaks ensued – it also gave parents of autistic children a purpose (however ill-founded) in which to find solace. How does he feel about taking that away?“I can’t think through the consequences of trying to tell the truth,” he stutters, seemingly surprised by the question. After a thoughtful pause he adds: “I think those parents are freer for having the truth than being caught in denial and deception.”

How can we assess the competence of a scientist? Past performance is, realistically, the only way to judge future performance. Past performance can only be assessed by looking at their publications. Were they in a similar area? Are they considered significant? Are they numerous? Curiously, though, the second question is also answered by looking at publications—if a topic is considered significant, then there will be lots of publications in that area, and those publications will be of more general interest, and so end up in higher ranking journals.

So we end up in the situation that the editors of major journals are in the position to influence the direction of scientific funding, meaning that there is a huge incentive for everyone to make damn sure that their work ends up in Science or Nature. But why are Science, Nature, and PNAS considered the place to put significant work? Why isn't a new optical phenomena, published in Optics Express, as important as a new optical phenomena published in Science?

The big three try to be general; they will, in principle, publish reports from any discipline, and they anticipate readership from a range of disciplines. This explicit generality means that the scientific results must not only be of general interest, but also highly significant. The remaining journals become more specialized, covering perhaps only physics, or optics, or even just optical networking. However, they all claim to only publish work that is highly original in nature.

Are standards really so different? Naturally, the more specialized a journal is, the fewer people it appeals to. However, the major difference in determining originality is one of degree and referee. A more specialized journal has more detailed articles, so the differences between experiments stand out more obviously, while appealing to general interest changes the emphasis of the article away from details toward broad conclusions.

as the audience becomes broader, more technical details get left by the wayside. Note that none of the gene sequences published in Science have the actual experimental and analysis details. What ends up published is really a broad-brush description of the work, with the important details either languishing as supplemental information, or even published elsewhere, in a more suitable journal. Yet, the high profile paper will get all the citations, while the more detailed—the unkind would say accurate—description of the work gets no attention.

And that is how journals are ranked. Count the number of citations for each journal per volume, run it through a magic number generator, and the impact factor jumps out (make your checks out to ISI Thomson please). That leaves us with the following formula: grants require high impact publications, high impact publications need citations, and that means putting research in a journal that gets lots of citations. Grants follow the concepts that appear to be currently significant, and that's decided by work that is published in high impact journals.

This system would be fine if it did not ignore the fact that performing science and reporting scientific results are two very different skills, and not everyone has both in equal quantity. The difference between a Nature-worthy finding and a not-Nature-worthy finding is often in the quality of the writing. How skillfully can I relate this bit of research back to general or topical interests? It really is this simple. Over the years, I have seen quite a few physics papers with exaggerated claims of significance (or even results) make it into top flight journals, and the only differences I can see between those works and similar works published elsewhere is that the presentation and level of detail are different.

articles from the big three are much easier to cover on Nobel Intent than articles from, say Physical Review D. Nevertheless, when we do cover them, sometimes the researchers suddenly realize that they could have gotten a lot more mileage out of their work. It changes their approach to reporting their results, which I see as evidence that writing skill counts for as much as scientific quality.

If that observation is generally true, then it raises questions about the whole process of evaluating a researcher's competence and a field's significance, because good writers corrupt the process by publishing less significant work in journals that only publish significant findings. In fact, I think it goes further than that, because Science, Nature, and PNAS actively promote themselves as scientific compasses. Want to find the most interesting and significant research? Read PNAS.

The publishers do this by extensively publicizing science that appears in their own journals. Their news sections primarily summarize work published in the same issue of the same magazine. This lets them create a double-whammy of scientific significance—not only was the work published in Nature, they also summarized it in their News and Views section.

Very few of the other journals do this. I don't get early access to the Physical Review series, even though I love reporting from them. In fact, until this year, they didn't even highlight interesting papers for their own readers. This makes it incredibly hard for a science reporter to cover science outside of the major journals. The knock-on effect is that Applied Physics Letters never appears in the news, which means you can't evaluate recent news coverage to figure out what's of general interest, leaving you with... well, the big three journals again, which mostly report on themselves. On the other hand, if a particular scientific topic does start to receive some press attention, it is much more likely that similar work will suddenly be acceptable in the big three journals.

That said, I should point out that judging the significance of scientific work is a process fraught with difficulty. Why do you think it takes around 10 years from the publication of first results through to obtaining a Nobel Prize? Because it can take that long for the implications of the results to sink in—or, more commonly, sink without trace.

I don't think that we can reasonably expect journal editors and peer reviewers to accurately assess the significance (general or otherwise) of a new piece of research. There are, of course, exceptions: the first genome sequences, the first observation that the rate of the expansion of the universe is changing. But the point is that these are exceptions, and most work's significance is far more ambiguous, and even goes unrecognized (or over-celebrated) by scientists in the field.

The conclusion is that the top three journals are significantly gamed by scientists who are trying to get ahead in their careers—citations always lag a few years behind, so a PNAS paper with less than ten citations can look good for quite a few years, even compared to an Optics Letters with 50 citations. The top three journals overtly encourage this, because it is to their advantage if everyone agrees that they are the source of the most interesting science. Consequently, scientists who are more honest in self-assessing their work, or who simply aren't word-smiths, end up losing out.

scientific competence should not be judged by how many citations the author's work has received or where it was published. Instead, we should consider using a mathematical graph analysis to look at the networks of publications and citations, which should help us judge how central to a field a particular researcher is. This would have the positive influence of a publication mattering less than who thought it was important.

Science and Nature should either eliminate their News and Views section, or implement a policy of not reporting on their own articles. This would open up one of the major sources of "science news for scientists" to stories originating in other journals.

“Different scientific disciplines share their information very differently.  The human genome project was incredibly open in how data were shared. But in biomedical science you also have drug trials conducted where no results are made public.” 

one would think that libertarians could make a distinction between evidence-based interpretation of reality (global warming is happening), and whatever policies we might want to enact to avoid catastrophe. Qua Qua libertarians, they would obviously resist any government-led effort at clean up, especially if internationally coordinated, preferring instead a coalition of the willing within the private sector

there certainly is plenty of room for reasonable discussions and disagreements about how best to proceed in confronting the problem. On the other hand, there doesn’t seem to be much room for reasonable disagreement about the very existence of the problem itself. So, what gives, my dear libertarians?

. In the case of major libertarian outlets, like the CATO Institute think tank, the rather unglamorous answer may simply be that they are in the pockets of the oil industry. A large amount of the funding for CATO comes from private corporations with obvious political agendas including, you guessed it, Exxon-Mobil (remember the Valdez?). No wonder CATO people trump the party line on this one.

The second reason, however, is more personal and widespread: libertarianism is committed to the high moral value of private enterprise

it follows naturally (if irrationally) that libertarians cannot admit to themselves, and even less to the world at large, that the much vaunted private sector may be responsible — out of both greed and downright incompetence — for a major environmental catastrophe of planetary proportions. The industry is the good guy in their movie, how then could they possibly have done something so horrible?

hat’s the problem with ideology in general (be it left, right, or libertarian), it provides us with thick blinders that very effectively shield us from reality. Of course, no one is actually free of bias, yours truly included. But a core principle of skepticism and critical thinking is that we do our best to be aware (and minimize) our own biases, and that we ought to open ourselves to honest criticism from different parties, in pursuit of the best approximation to the truth that we can muster.

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.

If, as Sacks argues, science is about the how and religion the why, then scientists are not authorities on religion at all. Hawking's opinions about God would carry no more weight than his taxi driver's. Believers and atheists should remove physicists from the front line and send in the philosophers and theologians as cannon fodder once again.

But is Sacks right? Science certainly trails a destructive path through a lot of what has traditionally passed for religion. People accuse Richard Dawkins of attacking a baby version of religion, but the fact is that there are still millions of people who do believe in the literal truth of Genesis, Noah's Ark and all. Clearly science does destroy this kind of religious faith, totally and mercilessly. Scientists are authorities on religion when they declare the earth is considerably more than 6,000 years old.

But they insist that religion is no longer, if it ever was, in the business of trying to come up with proto-scientific explanations of how the universe works. If that is accepted, science and religion can make their peace and both rule over their different magisteria, as the biologist Stephen Jay Gould put it.

People have been making a lot in the past few days of Hawking's famous sentence in A Brief History of Time: "If we discover a complete theory, it would be a triumph of human reason – for then we should know the mind of God."

Hawking's "mind of God" was never anything more than a metaphor for an understanding of the universe which is complete and objective. Indeed, it has been evident for some time that Hawking does not believe in anything like the traditional God of religion. "You can call the laws of science 'God' if you like," he told Channel 4 earlier this year, "but it wouldn't be a personal God that you could meet, and ask questions."

there is no room in the universe of Hawking or most other scientists for the activist God of the Bible. That's why so few leading scientists are religious in any traditional sense.

This point is often overlooked by apologists who grasp at any straw science will hold out for them. Such desperate clinging happened, disgracefully, in the last years of the philosopher Antony Flew's life. A famous atheist, Flew was said to have changed his mind, persuaded that the best explanation for the "fine-tuning"of the universe – very precise way that its conditions make life possible – was some kind of intentional design. But what was glossed over was that he was very clear that this designer was nothing like the traditional God of the Abrahamic faiths. It was, he clearly said, rather the Deist Deist God, or the God of Aristotle, one who might set the ball rolling but then did no more than watch it trundle off over the horizon. This is no mere quibble. The deist God does not occupy some halfway house between atheism and theism. Replace Yaweh with the deist God and the Bible would make less sense than if you'd substituted Brian for Jesus.

it is not true that science challenges only the most primitive, literal forms of religion. It is probably going too far to say that sciencemakes the God of Christianity, Judaism and Islam impossible, but it certainly makes him very unlikely indeed.

to think that their findings, and those of other scientists, have nothing to say about the credibility of religious faith is just wishful thinking. In the scientific universe, God is squeezed until his pips squeak. If he survives, then he can't do so without changing his form. Only faith makes it possible to look at such a distorted, scientifically respectable deity and claim to recognise the same chap depicted on the ceiling of the Sistine Chapel. For those without faith, that God is clearly dead, and, yes, science helped to kill him.