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Weiye Loh

Uwe E. Reinhardt: How Convincing Is the Economists' Case for Free Trade? - NYTimes.com - 0 views

  • “Emerging Markets as Partners, Not Rivals,” a fine commentary in The New York Times on Sunday by N. Gregory Mankiw of Harvard prompted me to take a vacation from the dreariness of health policy to visit one of the economic profession’s intellectual triumphs: the theory that every country gains by unfettered international trade.
  • That theory is less popular among noneconomists, especially politicians and unions. They wring their hands at what is called offshoring of jobs and often have no problem obstructing free trade with such barriers as tariffs or import quotas, which they deem in the national interest. (Two blogs recently offered examples of this posture.)
  • Economists assert that over the longer run, the owners of businesses that lose their markets in international competition and their employees will shift into new economic endeavors in which they can function more competitively. Skeptics, of course, often respond with the retort of John Maynard Keynes: “In the long run, we’re all dead.”
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  • this truth, which economists hold self-evident: Relative to a status quo of no or limited international trade, permitting full free trade across borders will leave in its wake some immediate losers, but citizens who gain from such trade gain much more than the losers lose. On a net basis, therefore, each nation gains over all from such trade.
  • In their work, economists are typically are not nationalistic. National boundaries mean little to them, other than that much data happen to be collected on a national basis. Whether a fellow American gains from a trade or someone in Shanghai does not make any difference to most economists, nor does it matter to them where the losers from global competition live, in America or elsewhere.
  • I say most economists, because here and there one can find some who do seem to worry about how fellow Americans fare in the matter of free trade. In a widely noted column in The Washington Post, “Free Trade’s Great, but Offshoring Rattles Me,” for example, my Princeton colleague Alan Blinder wrote: I’m a free trader down to my toes. Always have been. Yet lately, I’m being treated as a heretic by many of my fellow economists. Why? Because I have stuck my neck out and predicted that the offshoring of service jobs from rich countries such as the United States to poor countries such as India may pose major problems for tens of millions of American workers over the coming decades. In fact, I think offshoring may be the biggest political issue in economics for a generation. When I say this, many of my fellow free traders react with a mixture of disbelief, pity and hostility. Blinder, have you lost your mind? Professor Blinder has estimated that 30 million to 40 million jobs in the United States are potentially offshorable — including those of scientists, mathematicians, radiologists and editors on the high end of the market, and those of telephone operators, clerks and typists on the low end. He says he is rattled by the question of how our country will cope with this phenomenon, especially in view of our tattered social safety net. “That is why I am going public with my concerns now,” he concludes. “If we economists stubbornly insist on chanting ‘free trade is good for you’ to people who know that it is not, we will quickly become irrelevant to the public debate. Compared with that, a little apostasy should be welcome.
Weiye Loh

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

  • 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

Have you heard of the Koch Brothers? | the kent ridge common - 0 views

  • I return to the Guardian online site expressly to search for those elusive articles on Wisconsin. The main page has none. I click on News – US, and there are none. I click on ‘Commentary is Free’- US, and find one article on protests in Ohio. I go to the New York Times online site. Earlier, on my phone, I had seen one article at the bottom of the main page on Wisconsin. By the time I managed to get on my computer to find it again however, the NYT main page was quite devoid of any articles on the protests at all. I am stumped; clearly, I have to reconfigure my daily news sources and reading diet.
  • It is not that the media is not covering the protests in Wisconsin at all – but effective media coverage in the US at least, in my view, is as much about volume as it is about substantive coverage. That week, more prime-time slots and the bulk of the US national attention were given to Charlie Sheen and his crazy antics (whatever they were about, I am still not too sure) than to Libya and the rest of the Middle East, or more significantly, to a pertinent domestic issue, the teacher protests  - not just in Wisconsin but also in other cities in the north-eastern part of the US.
  • In the March 2nd episode of The Colbert Report, it was shown that the Fox News coverage of the Wisconsin protests had re-used footage from more violent protests in California (the palm trees in the background gave Fox News away). Bill O’Reilly at Fox News had apparently issued an apology – but how many viewers who had seen the footage and believed it to be on-the-ground footage of Wisconsin would have followed-up on the report and the apology? And anyway, why portray the teacher protests as violent?
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  • In this New York Times’ article, “Teachers Wonder, Why the scorn?“, the writer notes the often scathing comments from counter-demonstrators – “Oh you pathetic teachers, read the online comments and placards of counterdemonstrators. You are glorified baby sitters who leave work at 3 p.m. You deserve minimum wage.” What had begun as an ostensibly ‘economic reform’ targeted at teachers’ unions has gradually transmogrified into a kind of “character attack” to this section of American society – teachers are people who wage violent protests (thanks to borrowed footage from the West Coast) and they are undeserving of their economic benefits, and indeed treat these privileges as ‘rights’. The ‘war’ is waged on multiple fronts, economic, political, social, psychological even — or at least one gets this sort of picture from reading these articles.
  • as Singaporeans with a uniquely Singaporean work ethic, we may perceive functioning ‘trade unions’ as those institutions in the so-called “West” where they amass lots of membership, then hold the government ‘hostage’ in order to negotiate higher wages and benefits. Think of trade unions in the Singaporean context, and I think of SIA pilots. And of LKY’s various firm and stern comments on those issues. Think of trade unions and I think of strikes in France, in South Korea, when I was younger, and of my mum saying, “How irresponsible!” before flipping the TV channel.
  • The reason why I think the teachers’ protests should not be seen solely as an issue about trade-unions, and evaluated myopically and naively in terms of whether trade unions are ‘good’ or ‘bad’ is because the protests feature in a larger political context with the billionaire Koch brothers at the helm, financing and directing much of what has transpired in recent weeks. Or at least according to certain articles which I present here.
  • In this NYT article entitled “Billionaire Brothers’ Money Plays Role in Wisconsin Dispute“, the writer noted that Koch Industries had been “one of the biggest contributors to the election campaign of Gov. Scott Walker of Wisconsin, a Republican who has championed the proposed cuts.” Further, the president of Americans for Prosperity, a nonprofit group financed by the Koch brothers, had reportedly addressed counter-demonstrators last Saturday saying that “the cuts were not only necessary, but they also represented the start of a much-needed nationwide move to slash public-sector union benefits.” and in his own words -“ ‘We are going to bring fiscal sanity back to this great nation’ ”. All this rhetoric would be more convincing to me if they weren’t funded by the same two billionaires who financially enabled Walker’s governorship.
  • I now refer you to a long piece by Jane Mayer for The New Yorker titled, “Covert Operations: The billionaire brothers who are waging a war against Obama“. According to her, “The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation. These views dovetail with the brothers’ corporate interests.”
  • Their libertarian modus operandi involves great expenses in lobbying, in political contributions and in setting up think tanks. From 2006-2010, Koch Industries have led energy companies in political contributions; “[i]n the second quarter of 2010, David Koch was the biggest individual contributor to the Republican Governors Association, with a million-dollar donation.” More statistics, or at least those of the non-anonymous donation records, can be found on page 5 of Mayer’s piece.
  • Naturally, the Democrats also have their billionaire donors, most notably in the form of George Soros. Mayer writes that he has made ‘generous private contributions to various Democratic campaigns, including Obama’s.” Yet what distinguishes him from the Koch brothers here is, as Michael Vachon, his spokesman, argued, ‘that Soros’s giving is transparent, and that “none of his contributions are in the service of his own economic interests.” ‘ Of course, this must be taken with a healthy dose of salt, but I will note here that in Charles Ferguson’s documentary Inside Job, which was about the 2008 financial crisis, George Soros was one of those interviewed who was not portrayed negatively. (My review of it is here.)
  • Of the Koch brothers’ political investments, what interested me more was the US’ “first libertarian thinktank”, the Cato Institute. Mayer writes, ‘When President Obama, in a 2008 speech, described the science on global warming as “beyond dispute,” the Cato Institute took out a full-page ad in the Times to contradict him. Cato’s resident scholars have relentlessly criticized political attempts to stop global warming as expensive, ineffective, and unnecessary. Ed Crane, the Cato Institute’s founder and president, told [Mayer] that “global-warming theories give the government more control of the economy.” ‘
  • K Street refers to a major street in Washington, D.C. where major think tanks, lobbyists and advocacy groups are located.
  • with recent developments as the Citizens United case where corporations are now ‘persons’ and have no caps in political contributions, the Koch brothers are ever better-positioned to take down their perceived big, bad government and carry out their ideological agenda as sketched in Mayer’s piece
  • with much important news around the world jostling for our attention – earthquake in Japan, Middle East revolutions – the passing of an anti-union bill (which finally happened today, for better or for worse) in an American state is unlikely to make a headline able to compete with natural disasters and revolutions. Then, to quote Wisconsin Governor Scott Walker during that prank call conversation, “Sooner or later the media stops finding it [the teacher protests] interesting.”
  • What remains more puzzling for me is why the American public seems to buy into the Koch-funded libertarian rhetoric. Mayer writes, ‘ “Income inequality in America is greater than it has been since the nineteen-twenties, and since the seventies the tax rates of the wealthiest have fallen more than those of the middle class. Yet the brothers’ message has evidently resonated with voters: a recent poll found that fifty-five per cent of Americans agreed that Obama is a socialist.” I suppose that not knowing who is funding the political rhetoric makes it easier for the public to imbibe it.
Weiye Loh

The Great Organ Bazaar - Susanne Lundin - Project Syndicate - 0 views

  • All of this Internet activity is but the tip of the iceberg of a new and growing global human-tissue economy. Indeed, the World Health Organization (WHO) has estimated that about 10% of organ transplants around the world stem from purely commercial transactions.
  • Trade in organs follows a clear, geographically linked pattern: people from rich countries buy the organs, and people in poor countries sell them. In my research on organ trafficking, I have entered some of these shadow markets, where body parts from the poor, war victims, and prisoners are commodities, bought or stolen for transplant into affluent ill people.
  • Organ trafficking depends on several factors. One is people in distress. They are economically or socially disadvantaged, or live in war-torn societies with prevalent crime and a thriving black market. On the demand side are people who are in danger of dying unless they receive an organ transplant. Additionally, there are organ brokers who arrange the deals between sellers and buyers.
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  • Trade in humans and their bodies is not a new phenomenon, but today’s businesses are historically unique, because they require advanced biomedicine, as well as ideas and values that enhance the trade in organs. Western medicine starts from the view that human illness and death are failures to be combated. It is within this conceptual climate – the dream of the regenerative body – that transplantation technology develops and demand for biological replacement parts grows.
  • In an era of transplants on demand, there is no way around this dilemma. The biological imperatives that guide the priority system of transplant waiting lists are easily transformed into economic values. As always where demand exceeds supply, people may not accept waiting their turn – and other countries and other peoples’ bodies give them the alternative they seek.
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    The Web site 88DB.com Philippines is an active online portal that allows service providers and consumers to find and interact with each other. Naoval, an Indonesian man with "AB blood type, no drugs and no alcohol," wants to sell his kidney. Another man says, "I am a Filipino. I am willing to sell my kidney for my wife. She has breast cancer and I can't afford her medications." Then there is Enrique, who is "willing to donate my kidney for an exchange. 21 years old and healthy." Other offers of this type could, just a few years ago, be found at www.liver4you.org, which promised kidneys for $80,000-$110,000. The costs of the operation, including the fees of the surgeons - licensed in the United States, Great Britain, or the Philippines - would be included in the price.
Weiye Loh

Roger Pielke Jr.'s Blog: Core Questions in the Governance of Innovation - 0 views

  • Today's NYT has a couple interesting articles about technological innovations that we may not want, and that we may wish to regulate in some manner, formally or informally.  These technologies suggest some core questions that lie at the heart of the management of innovation.
  • The first article discusses Google' Goggles which is an application allows people to search the internet based on an image taken by a smartphone.  Google has decided not to allow this technology to include face recognition in its software, even though people have requested it.
  • Google could have put face recognition into the Goggles application; indeed, many users have asked for it. But Google decided against it because smartphones can be used to take pictures of individuals without their knowledge, and a face match could retrieve all kinds of personal information — name, occupation, address, workplace.
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  • “It was just too sensitive, and we didn’t want to go there,” said Eric E. Schmidt, the chief executive of Google. “You want to avoid enabling stalker behavior.”
  • The second article focuses on innovations in high frequency trading in financial markets, which bears some responsibility for the so-called "flash crash" of May 6th last year, in which the DJIA plunged more than 700 points in just minutes.
  • One debate has focused on whether some traders are firing off fake orders thousands of times a second to slow down exchanges and mislead others. Michael Durbin, who helped build high-frequency trading systems for companies like Citadel and is the author of the book “All About High-Frequency Trading,” says that most of the industry is legitimate and benefits investors. But, he says, the rules need to be strengthened to curb some disturbing practices.
  • This situation raises what I see to be core questions in the governance of innovation -- to what degree can innovation be shaped for achieving intended purposes? and, To what degree can the consequences of innovation be anticipated?
Weiye Loh

Small answers to the big questions - Chris Blattman - 0 views

  • A reporter emailed me this morning to see if I could answer a few questions about poverty. Sure I said. The emailed questions that followed?It is realistic to think that poverty can one day end?What, in your view, are the best global solutions?How urgent is it to act (in the context of climate change)?
  • My first reaction: thanks for asking the easy questions, lady. Was this serious? How can one possibly answer the grand questions of development in a few sentences?
  • It is realistic to think that poverty can one day end?In America, you can be poor but own a car, a television, and have food on the table every day. In northern Uganda, that would make you a very wealthy man.Do I see a world where nearly every household has their basic needs covered, plus some of the comforts of life? Absolutely. I imagine most places on the planet will get to what we now think of as middle-income status—perhaps $8,000 to $14,000 per head in 2011 dollars and purchasing ability. The poorest nations will probably be in those places least advantageous to trade (the landlocked, for instance) and where cultures or political systems restrict innovation and freedoms.But poverty is a relative measure, and short of a Star Trek world where you can summon food and items out of a wall unit, there will always be people who struggle to keep up.
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  • What, in your view, are the best global solutions?
  • There are plenty aid programs that seem to work, from de-worming to small business grants to incentives to send children to school. But none of these programs are likely to have transformative effects.
  • The difference between a country with $1,500 and $15,000 of income a head a head is simple: industry. All the microfinance and microenterprise programs in the world are not going to build large firms and import technology and provide most people with what they really want: a stable job, regular wages, and a decent work environment.
  • How you get these firms is the tricky question. Only a few firms will be home grown; most will be firms that spread across borders, because they have the markets and know-how. Probably we’ll need to see wages rise in China and India before manufacturing ever spreads to the poorest places on the planet, like Central Asia and Africa.The countries that will get them first are the ones that are close to trade routes, have stable political climates, make it easy to get finance, are open to trade, have large domestic markets, have able and educated workforces (i.e. secondary education), and have leaders in charge who don’t see the industrial sector as either a threat to their power or a garden from which they get to select the sweetest fruits for themselves.
  • How urgent is it to act (in the context of climate change)?The short answer: I wouldn’t know. For the US and China and Europe and India, they must change because if they don’t nothing will.For the Ugandas or Uzbekistans or Bolivias of the world, I can’t see it making a difference. Let them develop as green as possible, but let’s not impede their growth because of it, and rob them of the opportunity we took ourselves.
Weiye Loh

China used prisoners in lucrative internet gaming work | World news | guardian.co.uk - 0 views

  • "Prison bosses made more money forcing inmates to play games than they do forcing people to do manual labour," Liu told the Guardian. "There were 300 prisoners forced to play games. We worked 12-hour shifts in the camp. I heard them say they could earn 5,000-6,000rmb [£470-570] a day. We didn't see any of the money. The computers were never turned off."
  • "If I couldn't complete my work quota, they would punish me physically. They would make me stand with my hands raised in the air and after I returned to my dormitory they would beat me with plastic pipes. We kept playing until we could barely see things," he said.
  • "gold farming", the practice of building up credits and online value through the monotonous repetition of basic tasks in online games such as World of Warcraft. The trade in virtual assets is very real, and outside the control of the games' makers. Millions of gamers around the world are prepared to pay real money for such online credits, which they can use to progress in the online games.The trading of virtual currencies in multiplayer games has become so rampant in China that it is increasingly difficult to regulate. In April, the Sichuan provincial government in central China launched a court case against a gamer who stole credits online worth about 3000rmb.
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  • lack of regulations has meant that even prisoners can be exploited in this virtual world for profit.
  • The emergence of gold farming as a business in China – whether in prisons or sweatshops could raise new questions over the exporting of goods real or virtual from the country."Prison labour is still very widespread – it's just that goods travel a much more complex route to come to the US these days. And it is not illegal to export prison goods to Europe, said Nicole Kempton from the Laogai foundation, a Washington-based group which opposes the forced labour camp system in China.
Weiye Loh

Google to be formally investigated over potential abuse of web dominance | Technology |... - 0 views

  • The inquiry will examine the heart of Google's search-advertising business, and the source of most of Google's revenue. Google accounts for around two-thirds of internet searches in the US (and close to 90% in the UK) and according to critics unfairly uses that dominance to favour its own growing network of services.Last November, the European commission opened its own formal investigation into allegations that Google discriminated against competing services in its search results and prevented some websites from using ads by Google competitors.
  • Legal experts said the investigation could be similar in scale to the massive antitrust probe of Microsoft, which started in 1991 and ended in a settlement a decade later. Professor Joshua Wright of George Mason Law School said: "The investigation will be of a comparable scale to that of Microsoft."But he said the chances of Google being found guilty of antitrust behaviour, as Microsoft was, were far smaller. Wright said for the US to bring a successful case against Google, it would have to prove the company was harming consumers. "As an outsider I would say that obstacle is far higher for them today with Google than it was back then with Microsoft," he said.
  • He said Google faced a higher risk in the EU case but that in either case the investigations were likely to have a profound impact on the firm."Even if the charges are ultimately bogus, they will occupy many, many hours of managements time and attention," he said.The FTC's investigations are likely to widen to other companies as official requests for information about their dealings with Google.The company has long denied any anticompetitive behaviour, arguing that users can easily click on other choices on the web.
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    US regulators are poised to launch a formal investigation into whether Google has abused its dominance on the web, according to reports. The Federal Trade Commission (FTC) is days away from serving subpoenas on the internet giant in what could be the biggest investigation yet of the search company's business, according to The Wall Street Journal. Both Google and the FTC declined to comment. A wide-ranging investigation into Google has been discussed for months. Google has faced several antitrust probes in recent years, and is already the subject of a similar investigation in Europe. In the US inquiries have so far largely been limited to reviews of the company's mergers and acquisitions.
Weiye Loh

Balderdash: Links - 26th March 2012 - 0 views

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    "We are in the midst of a technological upheaval; and financial rewards are flowing to the elites who create and control the new machines. Almost everybody else is threatened - including sophisticated bank executives at Citi and WellPoint's healthcare analysts... Even if displaced workers do find jobs, will these jobs be dignified? A society divided between master-programmers and servants may not appeal to the servants, who will be the majority. But neo-Marxist visions of burger flippers on the barricades seem a touch too paranoid. In the 19th century, the shift from farm to factory was decried as dehumanising. But the supposedly alienated proletariat soon morphed into proud welders and machinists and today it is the decline of factories that is perceived as a problem. The lesson is that attitudes adjust and job status is elastic. There may be real unhappiness during the adjustment phase, but eventually the nannies of yesterday will be the respected childcare professionals of tomorrow. Cooks will turn into executive chefs. And so, in the last analysis, Watson's most enduring impact will be to accentuate the trade-off between equity and growth"
Weiye Loh

Is 'More Efficient' Always Better? - NYTimes.com - 1 views

  • Efficiency is the seemingly value-free standard economists use when they make the case for particular policies — say, free trade, more liberal immigration policies, cap-and-trade policies on environmental pollution, the all-volunteer army or congestion tolls. The concept of efficiency is used to justify a reliance on free-market principles, rather than the government, to organize the health care sector, or to make recommendations on taxation, government spending and monetary policy. All of these public policies have one thing in common: They create winners and losers among members of society.
  • can it be said that a more efficient resource allocation is better than a less efficient one, given the changes in the distribution of welfare among members of society that these allocations imply?
  • Suppose a restructuring of the economy has the effect of increasing the growth of average gross domestic product per capita, but that the benefits of that growth accrue disproportionately disproportionately to a minority of citizens, while others are worse off as a result, as appears to have been the case in the United States in the last several decades. Can economists judge this to be a good thing?
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  • Indeed, how useful is efficiency as a normative guide to public policy? Can economists legitimately base their advocacy of particular policies on that criterion? That advocacy, especially when supported by mathematical notation and complex graphs, may look like economic science. But when greater efficiency is accompanied by a redistribution of economic privilege in society, subjective ethical dimensions inevitably get baked into the economist’s recommendations.
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    Is 'More Efficient' Always Better?
Weiye Loh

Search Optimization and Its Dirty Little Secrets - NYTimes.com - 0 views

  • Search experts, however, say Penney likely reaped substantial rewards from the paid links. If you think of Google as the entrance to the planet’s largest shopping center, the links helped Penney appear as though it was the first and most inviting spot in the mall, to millions and millions of online shoppers.
  • A study last May by Daniel Ruby of Chitika, an online advertising network of 100,000 sites, found that, on average, 34 percent of Google’s traffic went to the No. 1 result, about twice the percentage that went to No. 2.
  • The Keyword Estimator at Google puts the number of searches for “dresses” in the United States at 11.1 million a month, an average based on 12 months of data. So for “dresses” alone, Penney may have been attracting roughly 3.8 million visits every month it showed up as No. 1. Exactly how many of those visits translate into sales, and the size of each sale, only Penney would know.
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  • in January, the company was crowing about its online holiday sales. Kate Coultas, a company spokeswoman, wrote to a reporter in January, “Internet sales through jcp.com posted strong growth in December, with significant increases in traffic and orders for the key holiday shopping periods of the week after Thanksgiving and the week before Christmas.”
  • Penney also issued a statement: “We are disappointed that Google has reduced our rankings due to this matter,” Ms. Brossart wrote, “but we will continue to work actively to retain our high natural search position.”
  • She added that while the collection of links surely brought in additional revenue, it was hardly a bonanza. Just 7 percent of JCPenney.com’s traffic comes from clicks on organic search results, she wrote.
  • MANY owners of Web sites with Penney links seem to relish their unreachability. But there were exceptions, and they included cocaman.ch. (“Geekness — closer to the world” is the cryptic header atop the site.) It turned out to be owned and run by Corsin Camichel, a chatty 25-year-old I.T. security analyst in Switzerland.
  • The link came through a Web site, TNX.net, which pays Mr. Camichel with TNX points, which he then trades for links that drive traffic to his other sites, like cookingutensils.net. He earns money when people visit that site and click on the ads. He could also, he said, get cash from TNX. Currently, Cocaman is home to 403 links, all of them placed there by TNX on behalf of clients.
  • “You do pretty well,” he wrote, referring to income from his links trading. “The thing is, the more you invest (time and money) the better results you get. Right now I get enough to buy myself new test devices for my Android apps (like $150/month) with zero effort. I have to do nothing. Ads just sit there and if people click, I make money.”
Weiye Loh

How tech tools have changed today's prostitution business - 0 views

  • Sudhir Venkatesh, a professor of sociology at Columbia University, along with his students, has been studying the sex work industry since the 1990s. In a recent article for Wired, Venkatesh describes how the business has changed over the past couple of decades.
  • Technology has played a fundamental role in this change. No self-respecting cosmopolitan man looking for an evening of companionship is going to lean out his car window and call out to a woman at a traffic light. The Internet and the rise of mobile phones have enabled some sex workers to professionalize their trade. Today they can control their image, set their prices, and sidestep some of the pimps, madams, and other intermediaries who once took a share of the revenue. As the trade has grown less risky and more lucrative, it has attracted some middle-class women seeking quick tax-free income.
Weiye Loh

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

  • 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: Wanted: Less Spin, More Informed Debate - 0 views

  • , the rejection of proposals that suggest starting with a low carbon price is thus a pretty good guarantee against any carbon pricing at all.  It is rather remarkable to see advocates for climate action arguing against a policy that recommends implementing a carbon price, simply because it does not start high enough for their tastes.  For some, idealism trumps pragmatism, even if it means no action at all.
  • Ward writes: . . . climate change is the result of a number of market failures, the largest of which arises from the fact that the prices of products and services involving emissions of greenhouse gases do not reflect the true costs of the damage caused through impacts on the climate. . . All serious economic analyses of how to tackle climate change identify the need to correct this market failure through a carbon price, which can be implemented, for instance, through cap and trade schemes or carbon taxes. . . A carbon price can be usefully supplemented by improvements in innovation policies, but it needs to be at the core of action on climate change, as this paper by Carolyn Fischer and Richard Newell points out.
  • First, the criticism is off target. A low and rising carbon price is in fact a central element to the policy recommendations advanced by the Hartwell Group in Climate Pragmatism, the Hartwell Paper, and as well, in my book The Climate Fix.  In Climate Pragmatism, we approvingly cite Japan's low-but-rising fossil fuels tax and discuss a range of possible fees or taxes on fossil fuels, implemented, not to penalize energy use or price fossil fuels out of the market, but rather to ensure that as we benefit from today’s energy resources we are setting aside the funds necessary to accelerate energy innovation and secure the nation’s energy future.
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  • Here is another debating lesson -- before engaging in public not only should one read the materials that they are critiquing, they should also read the materials that they cite in support of their own arguments. This is not the first time that Bob Ward has put out misleading information related to my work.  Ever since we debated in public at the Royal Institution, Bob has adopted guerrilla tactics, lobbing nonsense into the public arena and then hiding when challenged to support or defend his views.  As readers here know, I am all for open and respectful debate over these important topics.  Why is that instead, all we get is poorly informed misdirection and spin? Despite the attempts at spin, I'd welcome Bob's informed engagement on this topic. Perhaps he might start by explaining which of the 10 statements that I put up on the mathematics and logic underlying climate pragmatism is incorrect.
  • In comments to another blog, I've identified Bob as a PR flack. I see no reason to change that assessment. In fact, his actions only confirm it. Where does he fit into a scientific debate?
  • Thanks for the comment, but I'll take the other side ;-)First, this is a policy debate that involves various scientific, economic, political analyses coupled with various values commitments including monied interests -- and as such, PR guys are as welcome as anyone else.That said, the problem here is not that Ward is a PR guy, but that he is trying to make his case via spin and misrepresentation. That gets noticed pretty quickly by anyone paying attention and is easily shot down.
Weiye Loh

Bloggers take legal action over Huffington Post sale | Media | guardian.co.uk - 0 views

  • Arianna Huffington, her website and AOL were on the receiving end of a $105m (£64.5m) lawsuit by a group of angry bloggers unhappy that she sold the Huffington Post for $315m without them being paid a penny.The class action is led by Jonathan Tasini, a writer and trade unionist, who wrote more than 250 posts for Huffington Post on an unpaid basis until he dropped out shortly after the news and comment site was sold to AOL earlier this year.
  • "Huffington bloggers have essentially been turned into modern day slaves on Arianna Huffington's plantation" and said he was bringing the action because "people who create content ... have to be compensated" for their efforts.
  • The complainant and his lawyers estimate about 9,000 people wrote for the Huffington Post on an unpaid basis – and argue that their writings helped contribute about a third of the sale value of the site, the basis of their $105m claim for compensation.
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  • A spokesman for the Huffington Post said the lawsuit was without merit. He added: "Bloggers use our platform – as well as other unpaid group blogs across the web – to connect and help their work be seen by as many people as possible. It's the same reason people go on TV shows: to promote their views and ideas. HuffPost bloggers can cross-post their work on other sites, including their own."
Weiye Loh

Office of Science & Technology - Democracy's Open Secret - 0 views

  • there is a deeper issue here that spans political parties across nations:  a lack of recognition among policy makers of their dependence on experts in making wise decisions.  Experts do not, of course, determine how policy decisions ought to be made but they do add considerable value to wise decision making.
  • The deeper issue at work here is an open secret in the practice of democracy, and that is the fact that our elected leaders are chosen from among us, the people.  As such, politicians tend to reflect the views of the general public on many subjects - not just those subjects governed solely by political passions, but also those that are traditionally the province of experts.  Elected officials are not just a lot like us, they are us.
  • For example, perhaps foreshadowing contemporary US politics, in 1996 a freshman member of the US Congress proposed eliminating the US government's National Weather Service , declaring that the agency was not needed because "I get my weather from The Weather Channel."  Of course the weather informaton found on The Weather Channel comes from a sophisticated scientific and technological infrastructure built by the federal government over many decades which supports a wide range of economic activity, from agriculture to airlines, as well as from the private sector weather services.
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  • European politicians have their own blind spots at the interface of science and policy.  For instance, several years ago former German environment minister Sigmar Gabriel claimed rather implausibly that: "You can build 100 coal-fired power plants and don't have to have higher CO2 emissions."  His explanation was that Germany participates in emissions trading and this would necessarily limit carbon dioxide no matter how much was produced. Obviously, emissions trading cannot make the impossible possible.
  • We should expect policy makers to face difficulties when it comes to governance when it involves considerations of science, technology, and innovation for the simple reason that they are just like everyone else -- mostly ignorant about mostly everything.
  • in 2010, the US NSF reported that 28% of Americans and 34% of Europeans believed that the sun goes around the earth.  Similarly, 30% of Americans and 41% of Europeans believe that radioactivity results only from human activities.  It should not be so surprising when we learn that policy makers may share such perspectives.
  • A popular view is that more education about science and technology will lead to better decisions.  While education is, of course, important to a healthy democracy, it will never result in a populace (or their representatives) with expertise in everything.  
  • Achieving such heroic levels of expertise is not realistic for anyone.  Instead, we must rely on specialized experts to inform decision making. Just as you and I often need to consult with experts when dealing with our health, home repairs, finances, and other tasks, so too do policy makers need to tap into expertise in order to make good decisions.
  • it should be far less worrisome that the public or policy makers do not understand this or that information that experts may know well.  What should be of more concern is that policy makers appear to lack an understanding of how they can tap into expertise to inform decision making.  This situation is akin to flying blind. Specialized expertise typically does not compel particular decisions, but it does help to make decisions more informed.  This distinction lies behind Winston Churchill's oft-cited advice that science should be "on tap, but not on top." Effective governance does not depend upon philosopher kings in governments or in the populace, but rather on the use of effective mechanisms for bringing expertise into the political process.
  • It is the responsibility - even the special expertise - of policy makers to know how to use the instruments of government to bring experts into the process of governance. The troubling aspect of the statements and actions by the Gummers, Gabriels, and Bachmanns of the political world lies not in their lack of knowledge about science, but in their lack of knowledge about government.
Weiye Loh

Harvard professor spots Web search bias - Business - The Boston Globe - 0 views

  • Sweeney said she has no idea why Google searches seem to single out black-sounding names. There could be myriad issues at play, some associated with the software, some with the people searching Google. For example, the more often searchers click on a particular ad, the more frequently it is displayed subsequently. “Since we don’t know the reason for it,” she said, “it’s hard to say what you need to do.”
  • But Danny Sullivan, editor of SearchEngineLand.com, an online trade publication that tracks the Internet search and advertising business, said Sweeney’s research has stirred a tempest in a teapot. “It looks like this fairly isolated thing that involves one advertiser.” He also said that the results could be caused by black Google users clicking on those ads as much as white users. “It could be that black people themselves could be causing the stuff that causes the negative copy to be selected more,” said Sullivan. “If most of the searches for black names are done by black people . . . is that racially biased?”
  • On the other hand, Sullivan said Sweeney has uncovered a problem with online searching — the casual display of information that might put someone in a bad light. Rather than focusing on potential instances of racism, he said, search services such as Google might want to put more restrictions on displaying negative information about anyone, black or white.
Weiye Loh

Rod Beckstrom proposes ways to reclaim control over our online selves. - Project Syndicate - 0 views

  • As the virtual world expands, so, too, do breaches of trust and misuse of personal data. Surveillance has increased public unease – and even paranoia – about state agencies. Private companies that trade in personal data have incited the launch of a “reclaim privacy” movement. As one delegate at a recent World Economic Forum debate, noted: “The more connected we have become, the more privacy we have given up.”
  • Now that our personal data have become such a valuable asset, companies are coming under increasing pressure to develop online business models that protect rather than exploit users’ private information. In particular, Internet users want to stop companies befuddling their customers with convoluted and legalistic service agreements in order to extract and sell their data.
  • Hyper-connectivity not only creates new commercial opportunities; it also changes the way ordinary people think about their lives. The so-called FoMo (fear of missing out) syndrome reflects the anxieties of a younger generation whose members feel compelled to capture instantly everything they do and see.CommentsView/Create comment on this paragraphIronically, this hyper-connectivity has increased our insularity, as we increasingly live through our electronic devices. Neuroscientists believe that this may even have altered how we now relate to one another in the real world.
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  • At the heart of this debate is the need to ensure that in a world where many, if not all, of the important details of our lives – including our relationships – exist in cyber-perpetuity, people retain, or reclaim, some level of control over their online selves. While the world of forgetting may have vanished, we can reshape the new one in a way that benefits rather than overwhelms us. Our overriding task is to construct a digital way of life that reinforces our existing sense of ethics and values, with security, trust, and fairness at its heart.
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    "We must answer profound questions about the way we live. Should everyone be permanently connected to everything? Who owns which data, and how should information be made public? Can and should data use be regulated, and, if so, how? And what role should government, business, and ordinary Internet users play in addressing these issues?"
Weiye Loh

The Creativity Crisis - Newsweek - 0 views

  • The accepted definition of creativity is production of something original and useful, and that’s what’s reflected in the tests. There is never one right answer. To be creative requires divergent thinking (generating many unique ideas) and then convergent thinking (combining those ideas into the best result).
  • Torrance’s tasks, which have become the gold standard in creativity assessment, measure creativity perfectly. What’s shocking is how incredibly well Torrance’s creativity index predicted those kids’ creative accomplishments as adults.
  • The correlation to lifetime creative accomplishment was more than three times stronger for childhood creativity than childhood IQ.
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  • there is one crucial difference between IQ and CQ scores. With intelligence, there is a phenomenon called the Flynn effect—each generation, scores go up about 10 points. Enriched environments are making kids smarter. With creativity, a reverse trend has just been identified and is being reported for the first time here: American creativity scores are falling.
  • creativity scores had been steadily rising, just like IQ scores, until 1990. Since then, creativity scores have consistently inched downward.
  • It is the scores of younger children in America—from kindergarten through sixth grade—for whom the decline is “most serious.”
  • It’s too early to determine conclusively why U.S. creativity scores are declining. One likely culprit is the number of hours kids now spend in front of the TV and playing videogames rather than engaging in creative activities. Another is the lack of creativity development in our schools. In effect, it’s left to the luck of the draw who becomes creative: there’s no concerted effort to nurture the creativity of all children.
  • Around the world, though, other countries are making creativity development a national priority.
  • In China there has been widespread education reform to extinguish the drill-and-kill teaching style. Instead, Chinese schools are also adopting a problem-based learning approach.
  • When faculty of a major Chinese university asked Plucker to identify trends in American education, he described our focus on standardized curriculum, rote memorization, and nationalized testing.
  • Overwhelmed by curriculum standards, American teachers warn there’s no room in the day for a creativity class.
  • The age-old belief that the arts have a special claim to creativity is unfounded. When scholars gave creativity tasks to both engineering majors and music majors, their scores laid down on an identical spectrum, with the same high averages and standard deviations.
  • The argument that we can’t teach creativity because kids already have too much to learn is a false trade-off. Creativity isn’t about freedom from concrete facts. Rather, fact-finding and deep research are vital stages in the creative process.
  • The lore of pop psychology is that creativity occurs on the right side of the brain. But we now know that if you tried to be creative using only the right side of your brain, it’d be like living with ideas perpetually at the tip of your tongue, just beyond reach.
  • Creativity requires constant shifting, blender pulses of both divergent thinking and convergent thinking, to combine new information with old and forgotten ideas. Highly creative people are very good at marshaling their brains into bilateral mode, and the more creative they are, the more they dual-activate.
  • “Creativity can be taught,” says James C. Kaufman, professor at California State University, San Bernardino. What’s common about successful programs is they alternate maximum divergent thinking with bouts of intense convergent thinking, through several stages. Real improvement doesn’t happen in a weekend workshop. But when applied to the everyday process of work or school, brain function improves.
  • highly creative adults tended to grow up in families embodying opposites. Parents encouraged uniqueness, yet provided stability. They were highly responsive to kids’ needs, yet challenged kids to develop skills. This resulted in a sort of adaptability: in times of anxiousness, clear rules could reduce chaos—yet when kids were bored, they could seek change, too. In the space between anxiety and boredom was where creativity flourished.
  • highly creative adults frequently grew up with hardship. Hardship by itself doesn’t lead to creativity, but it does force kids to become more flexible—and flexibility helps with creativity.
  • In early childhood, distinct types of free play are associated with high creativity. Preschoolers who spend more time in role-play (acting out characters) have higher measures of creativity: voicing someone else’s point of view helps develop their ability to analyze situations from different perspectives. When playing alone, highly creative first graders may act out strong negative emotions: they’ll be angry, hostile, anguished.
  • In middle childhood, kids sometimes create paracosms—fantasies of entire alternative worlds. Kids revisit their paracosms repeatedly, sometimes for months, and even create languages spoken there. This type of play peaks at age 9 or 10, and it’s a very strong sign of future creativity.
  • From fourth grade on, creativity no longer occurs in a vacuum; researching and studying become an integral part of coming up with useful solutions. But this transition isn’t easy. As school stuffs more complex information into their heads, kids get overloaded, and creativity suffers. When creative children have a supportive teacher—someone tolerant of unconventional answers, occasional disruptions, or detours of curiosity—they tend to excel. When they don’t, they tend to underperform and drop out of high school or don’t finish college at high rates.
  • They’re quitting because they’re discouraged and bored, not because they’re dark, depressed, anxious, or neurotic. It’s a myth that creative people have these traits. (Those traits actually shut down creativity; they make people less open to experience and less interested in novelty.) Rather, creative people, for the most part, exhibit active moods and positive affect. They’re not particularly happy—contentment is a kind of complacency creative people rarely have. But they’re engaged, motivated, and open to the world.
  • A similar study of 1,500 middle schoolers found that those high in creative self-efficacy had more confidence about their future and ability to succeed. They were sure that their ability to come up with alternatives would aid them, no matter what problems would arise.
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    The Creativity Crisis For the first time, research shows that American creativity is declining. What went wrong-and how we can fix it.
Weiye Loh

Should This Be the Last Generation? - Opinionator Blog - NYTimes.com - 0 views

  • Have you ever thought about whether to have a child? If so, what factors entered into your decision? Was it whether having children would be good for you, your partner and others close to the possible child, such as children you may already have, or perhaps your parents?
  • Some may also think about the desirability of adding to the strain that the nearly seven billion people already here are putting on our planet’s environment. But very few ask whether coming into existence is a good thing for the child itself.
  • we think it is wrong to bring into the world a child whose prospects for a happy, healthy life are poor, but we don’t usually think the fact that a child is likely to have a happy, healthy life is a reason for bringing the child into existence. This has come to be known among philosophers as “the asymmetry” and it is not easy to justify.
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  • How good does life have to be, to make it reasonable to bring a child into the world? Is the standard of life experienced by most people in developed nations today good enough to make this decision unproblematic
  • Arthur Schopenhauer held that even the best life possible for humans is one in which we strive for ends that, once achieved, bring only fleeting satisfaction.
  • One of Benatar’s arguments trades on something like the asymmetry noted earlier. To bring into existence someone who will suffer is, Benatar argues, to harm that person, but to bring into existence someone who will have a good life is not to benefit him or her.
  • Hence continued reproduction will harm some children severely, and benefit none.
  • human lives are, in general, much less good than we think they are. We spend most of our lives with unfulfilled desires, and the occasional satisfactions that are all most of us can achieve are insufficient to outweigh these prolonged negative states.
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    June 6, 2010, 5:15 PM Should This Be the Last Generation? By PETER SINGER
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