Social event report by Mark Twain (allegedly):
"A woman giving the name of Mrs. James Jones, who is reported to be one of the society leaders of the city, is said to have given what purported to be a party yesterday to a number of alleged ladies. The hostess claims to be the wife of a reputed attorney."
News report on Philadelphia TV station:
" ... this alleged video" shows an unknown person displaying a gun on the street.
Extensive use of the term "alleged" and its variants doesn't really get you off the hook, according to lawyers. More to the journalistic point, however, it suggests that the video displayed on the TV screen may not be a video at all; it's only an "alleged" video, like someone (unknown) claims it's a video, but the news presenter doesn't have any proof that it is indeed a video. It may be a montage, or an outright fake. If there is some doubt about its authenticity, say so. Otherwise, our eyes tell us we see a person on the street displaying a gun. Who that person is would be the allegation, or the charge, or the accusation.
Some synonyms for the term "allege" include accuse, charge, suggest, hint, claim, assert, suppose.
By definition, to allege is to claim or assert without evidence or proof that an incident has taken place or that it has a specific illegal or undesirable quality.
In the case of the Philadelphia TV news program, the video itself is real. The incident it depicts -- in this case displaying a gun on the street -- is certainly undesirable, and in the case of a civilian, downright illegal. It's possible, of course, that the person with the gun was police or military, and in which case it's possible that waving the gun was legal. Not likely, but possible.
Monday, April 29, 2013
Saturday, April 27, 2013
Theory vs Reality
"All things are for the best in this best of all possible worlds." -- Dr. Pangloss, in "Candide," by Voltaire.
The business cycle theory is flawed.
People tend to have faith in what they want to believe in, regardless of history or reality.
Here's an example, based on this assumption: Market volatility is inevitable, and therefore it is a good thing, because if it exists it must be good. The secret to success is in taking advantage in this volatility, and the more you can manipulate this volatility, the more wealthy you become. Therefore, more volatility is better.
But here's the flaw: It's questionable whether more is better, especially when it conflicts with ethics. When people get hurt, volatility may not be a good thing.
Theory is seductive. We can want to believe in something strongly enough so that we select facts and information, and bend them, if need be, to conform to the theory -- what we want to believe. And this is as true of finance as it is of many other fields.
For years, finance wizards made use of the famous Bell-Shaped Curve of statistics to define outliers out of existence, and therefor their products could not possibly fail.
Background: The Bell-Shaped Curve maps the average of averages, and shows that nearly all of the example in a population come with three "standard deviations" from the mean, or the average. (A standard deviation is an average of the amount an individual deviates from the mean, or the overall average.)
The conclusion, then, is that if 97 percent of all individuals come within that acceptable range, any that do not are "outliers," and not really worth considering. From there, it's a very short step to saying that these outlying factors don't really exist, and cannot possibly affect the rest of the population.
The flaw in that reasoning is ignoring the fact that they do exist. Granted, the chances of them affecting the rest of the population is minuscule. But it is there, and therefore there can be no guarantees.
To act as if something can never happen is to ignore the reality that it can happen. And in the financial world, it did, leading to the collapse in the last decade. The finance wizards dismissed the outlying events as "impossible outcomes" that could never happen. In fact, not just one of these "impossible outcomes" happened, but several did indeed come in at the same time. The "irrational exuberance" that led to such complexicated financial packages being sold by overconfident brokers to underinformed investors caused the financial market to collapse like the house of cards it was.
Volatility can be useful, because in enables observant investors to take advantage of changes, and therefore values, in markets. But it remains speculation -- another word for gamble.
Wild volatility, however, can only hurt those who can least afford to participate, or who cannot participate at all. When a market collapses, these are the ones who are severely hurt.
One answer, then, is to smooth out the cycle. And this is one function of government, because in doing so it helps ensure the health and safety of all.
The business cycle theory is flawed.
People tend to have faith in what they want to believe in, regardless of history or reality.
Here's an example, based on this assumption: Market volatility is inevitable, and therefore it is a good thing, because if it exists it must be good. The secret to success is in taking advantage in this volatility, and the more you can manipulate this volatility, the more wealthy you become. Therefore, more volatility is better.
But here's the flaw: It's questionable whether more is better, especially when it conflicts with ethics. When people get hurt, volatility may not be a good thing.
Theory is seductive. We can want to believe in something strongly enough so that we select facts and information, and bend them, if need be, to conform to the theory -- what we want to believe. And this is as true of finance as it is of many other fields.
For years, finance wizards made use of the famous Bell-Shaped Curve of statistics to define outliers out of existence, and therefor their products could not possibly fail.
Background: The Bell-Shaped Curve maps the average of averages, and shows that nearly all of the example in a population come with three "standard deviations" from the mean, or the average. (A standard deviation is an average of the amount an individual deviates from the mean, or the overall average.)
The conclusion, then, is that if 97 percent of all individuals come within that acceptable range, any that do not are "outliers," and not really worth considering. From there, it's a very short step to saying that these outlying factors don't really exist, and cannot possibly affect the rest of the population.
The flaw in that reasoning is ignoring the fact that they do exist. Granted, the chances of them affecting the rest of the population is minuscule. But it is there, and therefore there can be no guarantees.
To act as if something can never happen is to ignore the reality that it can happen. And in the financial world, it did, leading to the collapse in the last decade. The finance wizards dismissed the outlying events as "impossible outcomes" that could never happen. In fact, not just one of these "impossible outcomes" happened, but several did indeed come in at the same time. The "irrational exuberance" that led to such complexicated financial packages being sold by overconfident brokers to underinformed investors caused the financial market to collapse like the house of cards it was.
Volatility can be useful, because in enables observant investors to take advantage of changes, and therefore values, in markets. But it remains speculation -- another word for gamble.
Wild volatility, however, can only hurt those who can least afford to participate, or who cannot participate at all. When a market collapses, these are the ones who are severely hurt.
One answer, then, is to smooth out the cycle. And this is one function of government, because in doing so it helps ensure the health and safety of all.
Friday, April 26, 2013
Blooming Data
Early reports say the U.S. economy took an early spring leap of 2.5 percent during the first three months of 2013. This is a good sign, but it remains a preliminary first estimate from the U.S. Bureau of Economic Research, and two more revisions are to come.
Some say the numbers show a snap-back from a weak performance in the winter doldrums of the previous three months, and the good signs come mainly from the most healthy first responders to the government survey. Others are more cautious, noting that conditions are still iffy elsewhere.
The UK, for example, posted first-quarter GDP growth of three-tenths of one percent -- barely more than zero, but enough to forestall an official recession, defined as two successive negative quarters.
France, which has the second largest economy in the euro zone, hopes to post a positive number for the first quarter, according to published reports, but it's still likely to be less than 1 percent.
Germany likewise foresees a struggle to stay positive, with at least one research group setting a growth pattern of less than 1 percent for the entire year.
Canada's economy is growing, according to data from the official agency Statistics Canada, but also at a rate of less than 1 percent.
In Japan, the economy is stagnant, showing no movement either way, according to government reports.
On Friday, a deputy prime minister in Spain was reported as saying the national economy would shrink by 1.3 percent this year.
And last month, a government official in Italy -- an outgoing official -- said a decline of more than 1 percent may be optimistic. A report from Reuters news agency quoted Enrico Giovannini, the national statistics chief, as seeing "no recovery until the last quarter of the year, or early 2014."
So the question becomes whether the U.S. can bolster production on its own, withstanding influences from around the world, or will exports drop as international customers struggle through recessionary pressures and stop buying American goods and services?
One answer: Americans could increase their own spending to make up for any decline in exports. That would depend, of course, on whether Americans have jobs to enable them to buy stuff.
Austerity is not the answer. Increasing consumption is.
Some say the numbers show a snap-back from a weak performance in the winter doldrums of the previous three months, and the good signs come mainly from the most healthy first responders to the government survey. Others are more cautious, noting that conditions are still iffy elsewhere.
The UK, for example, posted first-quarter GDP growth of three-tenths of one percent -- barely more than zero, but enough to forestall an official recession, defined as two successive negative quarters.
France, which has the second largest economy in the euro zone, hopes to post a positive number for the first quarter, according to published reports, but it's still likely to be less than 1 percent.
Germany likewise foresees a struggle to stay positive, with at least one research group setting a growth pattern of less than 1 percent for the entire year.
Canada's economy is growing, according to data from the official agency Statistics Canada, but also at a rate of less than 1 percent.
In Japan, the economy is stagnant, showing no movement either way, according to government reports.
On Friday, a deputy prime minister in Spain was reported as saying the national economy would shrink by 1.3 percent this year.
And last month, a government official in Italy -- an outgoing official -- said a decline of more than 1 percent may be optimistic. A report from Reuters news agency quoted Enrico Giovannini, the national statistics chief, as seeing "no recovery until the last quarter of the year, or early 2014."
So the question becomes whether the U.S. can bolster production on its own, withstanding influences from around the world, or will exports drop as international customers struggle through recessionary pressures and stop buying American goods and services?
One answer: Americans could increase their own spending to make up for any decline in exports. That would depend, of course, on whether Americans have jobs to enable them to buy stuff.
Austerity is not the answer. Increasing consumption is.
Thursday, April 25, 2013
Signs of Hope?
Luck of the Irish: If it wasn't for bad luck, we'd have none at all.
If it's too big to fail, it's too big.
The unemployment rate in Ireland is 14 percent, and commentators see that as a good sign. At least it's not getting worse.
The jobless rate in the United Kingdom is 7.9 percent, and GDP figures just released indicate growth of 0.3 percent during the first quarter. That's a preliminary figure, and is seen as an indication the UK has avoided a triple-dip recession -- that is, the third in five years. Even so, the nation's economy is flat-lining -- stalled at near zero.
In Spain, the jobless rate has soared to a record 27.2 percent.
Italy has a new prime minister, who says an austerity program "is no longer enough."
In the U.S., some officials may be having second thoughts about rescuing giant financial firms that get into fiscal trouble with bad bets. The concept of moral hazard applies here: If someone knows he'll be bailed out, there's a tendency to take bigger risks.
GDP figures for America are to be released tomorrow, and it's anyone's guess for the direction. In the fourth quarter, growth was 0.4 percent; positive, yes, but still barely moving forward.
If it's too big to fail, it's too big.
The unemployment rate in Ireland is 14 percent, and commentators see that as a good sign. At least it's not getting worse.
The jobless rate in the United Kingdom is 7.9 percent, and GDP figures just released indicate growth of 0.3 percent during the first quarter. That's a preliminary figure, and is seen as an indication the UK has avoided a triple-dip recession -- that is, the third in five years. Even so, the nation's economy is flat-lining -- stalled at near zero.
In Spain, the jobless rate has soared to a record 27.2 percent.
Italy has a new prime minister, who says an austerity program "is no longer enough."
In the U.S., some officials may be having second thoughts about rescuing giant financial firms that get into fiscal trouble with bad bets. The concept of moral hazard applies here: If someone knows he'll be bailed out, there's a tendency to take bigger risks.
GDP figures for America are to be released tomorrow, and it's anyone's guess for the direction. In the fourth quarter, growth was 0.4 percent; positive, yes, but still barely moving forward.
Wednesday, April 24, 2013
Hard Money = Hard Times
Gold fever leaves a headache.
Returning to the gold standard may sound like a good idea, but its only real historical value has been in international trade, fixing currency values in terms of gold so traders don't get shafted with worthless paper. However, there is a limit to the available supply of gold in the world, and if nations peg their currencies to an agreed-upon gold price -- or the amount of gold in their vaults -- there can be major problems. Relying on gold as a standard of value can lead to wild gyrations in the prices of everything else. Unless, of course, governments agree to a specific value, in which case they and their central banks lose control over the supply of cash in circulation, and thereby lose influence on the economic health of the nation. If the money supply is limited, interest rates will rise and the economy in general will decline.
Historically, the gold standard was "a major contributory cause of the two worst economic depressions in world history: the 1870s and the 1930s," according to economist Mark Blyth, writing in his book "Austerity: The History of a Dangerous Idea" (Oxford, 2013). Moreover, "The global supply of gold puts a ceiling on growth," he adds.
There is a finite amount of gold available in the world, much of it in Fort Knox, Ky, and on deposit in the basement vault of the Federal Reserve Bank of New York. With a limited supply of gold, it follows that under a gold standard, there will be a limited supply of money in circulation. Therefore, central banks have no discretion or control over the money supply, and thus no influence over the economy.
Money is the lifeblood of an economy, and if the amount of money available is tied to the amount of gold a nation possesses, the health of its economy is directly tied to gold. So lots of gold means a nation is wealthy -- but it also means higher prices. Minimal gold means a nation is poor, and many of its citizens go hungry.
The gold standard is a remnant of mercantilist economic theory, which stipulates that whoever has the most gold wins. But when the conquistadors brought so much gold back to Spain in the 16th Century, the result was soaring inflation, as prices rose to absorb the amount of money (gold) available.
America already has a great deal of gold. Fort Knox holds 147.3 million ounces of the stuff, according to the U.S. Treasury, and the New York Fed says it has some 6,700 tons in its vault. Not all of it belongs to the government, however. Much of it was deposited for safekeeping decades ago during periods of world torment. None of belongs to the Fed; it's all owned by the U.S. government, foreign governments, central banks and other international organizations. No individuals or private sector entities can deposit gold with the Fed.
But even at its book value of $42.222 an ounce, that's a powerful lot of money. And calculated at the current market value of nearly $1,400 an ounce, the idea of converting all that gold into cash boggles the mind. You try doing the math.
So going to the gold standard, whether using the book value or the market value, would play havoc with prices, living standards and economics worldwide.
Returning to "hard money," then -- currency that is backed by the amount of gold a nation possesses -- would upset the entire system. Combining a return to the gold standard to an austerity program would lead to total economic disaster.
Austere measures to reduce spending may work for a family, and even for a firm for a short time. But there are repercussions when tried on a larger scale. When a major firm or a government (local, state or national) reduces expenses by laying off workers, that only increases unemployment. With more people out of work, that reduces consumption, which in turn slows production and the economy as a whole declines.
And some reductions, such as putting air traffic controllers on furlough, impose chaos on the general public.
Those nations that have tried austerity have chosen "to suffer massive deflation, migration and unemployment," while they wait for the economy to recover, economist Blyth points out.
"But we must ask," he adds, "if the candle was worth the game? The answer is no."
Meanwhile, the austerity advocates and gold standard bearers assure us, the business cycle will turn up again and the economy will recover, and we'll all have pie in the sky when we die.
We should live so long.
Returning to the gold standard may sound like a good idea, but its only real historical value has been in international trade, fixing currency values in terms of gold so traders don't get shafted with worthless paper. However, there is a limit to the available supply of gold in the world, and if nations peg their currencies to an agreed-upon gold price -- or the amount of gold in their vaults -- there can be major problems. Relying on gold as a standard of value can lead to wild gyrations in the prices of everything else. Unless, of course, governments agree to a specific value, in which case they and their central banks lose control over the supply of cash in circulation, and thereby lose influence on the economic health of the nation. If the money supply is limited, interest rates will rise and the economy in general will decline.
Historically, the gold standard was "a major contributory cause of the two worst economic depressions in world history: the 1870s and the 1930s," according to economist Mark Blyth, writing in his book "Austerity: The History of a Dangerous Idea" (Oxford, 2013). Moreover, "The global supply of gold puts a ceiling on growth," he adds.
There is a finite amount of gold available in the world, much of it in Fort Knox, Ky, and on deposit in the basement vault of the Federal Reserve Bank of New York. With a limited supply of gold, it follows that under a gold standard, there will be a limited supply of money in circulation. Therefore, central banks have no discretion or control over the money supply, and thus no influence over the economy.
Money is the lifeblood of an economy, and if the amount of money available is tied to the amount of gold a nation possesses, the health of its economy is directly tied to gold. So lots of gold means a nation is wealthy -- but it also means higher prices. Minimal gold means a nation is poor, and many of its citizens go hungry.
The gold standard is a remnant of mercantilist economic theory, which stipulates that whoever has the most gold wins. But when the conquistadors brought so much gold back to Spain in the 16th Century, the result was soaring inflation, as prices rose to absorb the amount of money (gold) available.
America already has a great deal of gold. Fort Knox holds 147.3 million ounces of the stuff, according to the U.S. Treasury, and the New York Fed says it has some 6,700 tons in its vault. Not all of it belongs to the government, however. Much of it was deposited for safekeeping decades ago during periods of world torment. None of belongs to the Fed; it's all owned by the U.S. government, foreign governments, central banks and other international organizations. No individuals or private sector entities can deposit gold with the Fed.
But even at its book value of $42.222 an ounce, that's a powerful lot of money. And calculated at the current market value of nearly $1,400 an ounce, the idea of converting all that gold into cash boggles the mind. You try doing the math.
So going to the gold standard, whether using the book value or the market value, would play havoc with prices, living standards and economics worldwide.
Returning to "hard money," then -- currency that is backed by the amount of gold a nation possesses -- would upset the entire system. Combining a return to the gold standard to an austerity program would lead to total economic disaster.
Austere measures to reduce spending may work for a family, and even for a firm for a short time. But there are repercussions when tried on a larger scale. When a major firm or a government (local, state or national) reduces expenses by laying off workers, that only increases unemployment. With more people out of work, that reduces consumption, which in turn slows production and the economy as a whole declines.
And some reductions, such as putting air traffic controllers on furlough, impose chaos on the general public.
Those nations that have tried austerity have chosen "to suffer massive deflation, migration and unemployment," while they wait for the economy to recover, economist Blyth points out.
"But we must ask," he adds, "if the candle was worth the game? The answer is no."
Meanwhile, the austerity advocates and gold standard bearers assure us, the business cycle will turn up again and the economy will recover, and we'll all have pie in the sky when we die.
We should live so long.
Tuesday, April 23, 2013
Spinmeisters
"This way to the egress." -- P.T. Barnum
"A rose by any other name ... " William Shakespeare
"... Would still smell." -- Gertrude Stein
How gullible do they think we are? Very. -- Resident philosopher Pug Mahoney
Marketers of every ilk -- and that includes political candidates and their advisors as well as advertisers and sales folk -- long ago learned that relabeling a product or service can take a negative sting off it. Likewise, making it sound positive can lead people to believe it is.
Here's an example from a car commercial: "The six-speed transmission allows a lower shift point." Using the verb "allows" helps to make it sound positive. Translate the entire phrase and you get this: You have to shift sooner.
Here's another: Cheerful, chipper, charming voices for new medications proclaim that "serious, sometimes fatal events can occur." Note the use of the passive. They don't come flat out and say this drug can kill you, but they indicate that a "fatal event" sometimes "can occur." All by itself, perhaps?
Using unfamiliar words can help water down the message. Financiers are still doing it, relabeling their "products" (not investments, mind you, but "products") in an increasingly maze-like fashion so that even they don't understand what they're selling. At least, in this instance, relabeling their activities so that they are selling "product" shows an emphasis on sales and commissions rather than helping the consumer.
Among politicians and military types, there's the use of "enemy combatant" and "fighter," both of which avoid using the more traditional term "soldier." The implication is that being a soldier is honorable, while the others are merely dishonorable rabble.
Do the spinmeisters lie? Not really, since there may be a grain of truth in what they say.
Are they disingenuous? Often, since by definition, disingenuous means insincere, not totally honest, or lacking in candor or frankness.
Do they mislead? Yes.
Do they speak truth? Only partly, because they use words and phrases meant to spin out the negative aspect of an issue and encourage a positive perception. The information is still negative, but it's presented in such a way as sound positive.
"A rose by any other name ... " William Shakespeare
"... Would still smell." -- Gertrude Stein
How gullible do they think we are? Very. -- Resident philosopher Pug Mahoney
Marketers of every ilk -- and that includes political candidates and their advisors as well as advertisers and sales folk -- long ago learned that relabeling a product or service can take a negative sting off it. Likewise, making it sound positive can lead people to believe it is.
Here's an example from a car commercial: "The six-speed transmission allows a lower shift point." Using the verb "allows" helps to make it sound positive. Translate the entire phrase and you get this: You have to shift sooner.
Here's another: Cheerful, chipper, charming voices for new medications proclaim that "serious, sometimes fatal events can occur." Note the use of the passive. They don't come flat out and say this drug can kill you, but they indicate that a "fatal event" sometimes "can occur." All by itself, perhaps?
Using unfamiliar words can help water down the message. Financiers are still doing it, relabeling their "products" (not investments, mind you, but "products") in an increasingly maze-like fashion so that even they don't understand what they're selling. At least, in this instance, relabeling their activities so that they are selling "product" shows an emphasis on sales and commissions rather than helping the consumer.
Among politicians and military types, there's the use of "enemy combatant" and "fighter," both of which avoid using the more traditional term "soldier." The implication is that being a soldier is honorable, while the others are merely dishonorable rabble.
Do the spinmeisters lie? Not really, since there may be a grain of truth in what they say.
Are they disingenuous? Often, since by definition, disingenuous means insincere, not totally honest, or lacking in candor or frankness.
Do they mislead? Yes.
Do they speak truth? Only partly, because they use words and phrases meant to spin out the negative aspect of an issue and encourage a positive perception. The information is still negative, but it's presented in such a way as sound positive.
Saturday, April 20, 2013
Guns and Money
"The fact is that the NRA does not represent gun owners anymore. This is not your father’s NRA. It represents gun manufacturers." -- Sen Christopher Murphy, D CT.
"The NRA appears to have evolved into the lobby for gun ammunition manufacturers rather than gun owners." -- Adolphus Busch IV.
The National Rifle Association claims to represent gun owners. This is true as far as it goes. But it doesn't really go very far.
Consider: The NRA claims to have nearly 4.5 million -- perhaps as many as 5 million -- members, and has a total budget of more than $300 million. During the most recent election cycle, the group spent nearly $20 million to influence voters and politicians. With individual member dues starting at $35, that makes a total of $140 million. Other categories of membership are higher, and the NRA admits that about half of its budget comes from membership dues. How likely is it, then, that individual membership dues can support $20 million in lobbying activity in a single election cycle? Not likely.
It's not at all likely that the average individual gun owner has that much money to spare. So where does the rest of the money come from? More likely, therefore, the bulk of the money comes from other sources, and that means gun manufacturers.
The Smith & Wesson company recently became a member of the NRA's "Golden Ring of Freedom" -- an honor bestowed on those who give more than $1 million. Four years ago, the Beretta Group, another gun maker, gave more than $2 million. And a year ago, gun maker Sturm, Ruger & Co. said it had raised some $1.25 million for the NRA through a program in which it donated $1 for each gun it sold. Where do these numbers come from? Published sources, company press releases and the NRA's own web site.
As for a membership of more than 4.5 million, Mother Jones magazine reports that the group habitually inflates its rolls, and that a more accurate number is closer to 3 million. And with average membership dues of $50, that brings the total revenue from dues to $150 million, still half the total budget.
So if that money comes from other sources than individual membership dues, it follows that the NRA is the political lobbying arm of firearms manufacturers, not individual gun owners. And Wayne LaPierre, the NRA's executive vice president, is the group's chief publicity agent.
His knee-jerk reaction to any effort to intervene in a totally free-market industry is common among PR agents and corporate spokesmen. But resorting to name-calling and insults -- for example, labeling government investigators "jack-booted thugs" after the Oklahoma City bombing -- only hurts his credibility and his cause.
That incident led to former President George Bush Sr. canceling his life membership in the NRA.
And this week, brewery magnate Adolphus Busch IV canceled his NRA membership, protesting the group's influence in getting Congress to vote down stricter gun control laws.
"Your current strategic focus places a priority on the needs of gun and ammunition manufacturers while disregarding the opinions of your 4 million individual members," Busch wrote.
"One only has to look at the makeup of the 75-member board of directors, dominated by manufacturing interests, to confirm my point. The NRA appears to have evolved into the lobby for gun ammunition manufacturers rather than gun owners," Busch said.
The NRA claims to represent responsible gun owners. No doubt that's true. Many, if not most, gun owners are indeed responsible, law abiding citizens. As for the NRA accusation that government wants these "law abiding citizens" to give up their gun ownership rights, nobody asked them to. The legislation is aimed at those who are not law abiding citizens. Laws in general, and gun control laws in particular, are aimed at those who are irresponsible. Criminals, assassins and mass murderers are not likely to be card-carrying members of the National Rifle Association.
As for assault weapons, they are just that -- weapons to be used for assault. They are of no value as a defense against Bambi.
And when the NRA claims the proper response to gun violence in America is "more guns," an equally valid response is "fewer guns."
"The NRA appears to have evolved into the lobby for gun ammunition manufacturers rather than gun owners." -- Adolphus Busch IV.
The National Rifle Association claims to represent gun owners. This is true as far as it goes. But it doesn't really go very far.
Consider: The NRA claims to have nearly 4.5 million -- perhaps as many as 5 million -- members, and has a total budget of more than $300 million. During the most recent election cycle, the group spent nearly $20 million to influence voters and politicians. With individual member dues starting at $35, that makes a total of $140 million. Other categories of membership are higher, and the NRA admits that about half of its budget comes from membership dues. How likely is it, then, that individual membership dues can support $20 million in lobbying activity in a single election cycle? Not likely.
It's not at all likely that the average individual gun owner has that much money to spare. So where does the rest of the money come from? More likely, therefore, the bulk of the money comes from other sources, and that means gun manufacturers.
The Smith & Wesson company recently became a member of the NRA's "Golden Ring of Freedom" -- an honor bestowed on those who give more than $1 million. Four years ago, the Beretta Group, another gun maker, gave more than $2 million. And a year ago, gun maker Sturm, Ruger & Co. said it had raised some $1.25 million for the NRA through a program in which it donated $1 for each gun it sold. Where do these numbers come from? Published sources, company press releases and the NRA's own web site.
As for a membership of more than 4.5 million, Mother Jones magazine reports that the group habitually inflates its rolls, and that a more accurate number is closer to 3 million. And with average membership dues of $50, that brings the total revenue from dues to $150 million, still half the total budget.
So if that money comes from other sources than individual membership dues, it follows that the NRA is the political lobbying arm of firearms manufacturers, not individual gun owners. And Wayne LaPierre, the NRA's executive vice president, is the group's chief publicity agent.
His knee-jerk reaction to any effort to intervene in a totally free-market industry is common among PR agents and corporate spokesmen. But resorting to name-calling and insults -- for example, labeling government investigators "jack-booted thugs" after the Oklahoma City bombing -- only hurts his credibility and his cause.
That incident led to former President George Bush Sr. canceling his life membership in the NRA.
And this week, brewery magnate Adolphus Busch IV canceled his NRA membership, protesting the group's influence in getting Congress to vote down stricter gun control laws.
"Your current strategic focus places a priority on the needs of gun and ammunition manufacturers while disregarding the opinions of your 4 million individual members," Busch wrote.
"One only has to look at the makeup of the 75-member board of directors, dominated by manufacturing interests, to confirm my point. The NRA appears to have evolved into the lobby for gun ammunition manufacturers rather than gun owners," Busch said.
The NRA claims to represent responsible gun owners. No doubt that's true. Many, if not most, gun owners are indeed responsible, law abiding citizens. As for the NRA accusation that government wants these "law abiding citizens" to give up their gun ownership rights, nobody asked them to. The legislation is aimed at those who are not law abiding citizens. Laws in general, and gun control laws in particular, are aimed at those who are irresponsible. Criminals, assassins and mass murderers are not likely to be card-carrying members of the National Rifle Association.
As for assault weapons, they are just that -- weapons to be used for assault. They are of no value as a defense against Bambi.
And when the NRA claims the proper response to gun violence in America is "more guns," an equally valid response is "fewer guns."
Thursday, April 18, 2013
Donkey Dust Detectives
An important function of academics and journalists is to determine when and how a politician or corporate executive is metaphorically Blowing Smoke (note the initial capital letters) at the general public.
As members in good standing of the 3-D Squad, these academics and journalists not only report what is said, but gather background and factual information that shows whether the public figure really knows what he or she is talking about, and whether he or she is speaking truthfully.
It's possible, of course, that some claimants to leadership genuinely believe what they say, and have convinced themselves that they alone have the one Great Truth that will save society from itself.
It's also possible that these same claimants are misinformed, delusional, incompetent, power hungry, or just plain wrong.
It then is the duty of the Donkey Dust Detectives on the 3-D Squad to point out the inconsistencies and errors -- to put it gently -- in what the claimants to public leadership say and do. Some in the media call their researchers "fact checkers." At another level, the fact checkers are Donkey Dust Detectives, and have no agenda other than to note the reliability and truthfulness of what is being said and done.
Some claimants to public notice are fond of taking one small detail of a larger issue, emphasizing that one detail and ignoring other points that fill out the concept and provide context.
Is this lying? Sometimes.
Is it misleading? Often.
Is it a tactical attempt to undermine the opposition? Almost always.
One example would be the campaign by the so-called Swift Boat Veterans for Truth to criticize the then-Sen. John Kerry during a presidential campaign. Many, if not most, of the "witnesses" in that that campaign were nowhere near Kerry and his activities in Vietnam.
Another would be the so-called Birthers, who propound the citizenship issue in their insistence that Barack Obama is not eligible to be President because 1/ his father was from Kenya, 2/ he was not born in the U.S., and 3/ his Hawaii birth certificate is likely a forgery. Ignored in all this is the fact that Obama's mother was from Kansas, so no matter where Barack was born, he is a U.S. citizen.
Do these strategies show incompetence? Perhaps. In any case, it is the responsibility of the 3-D Squad of detectives to get past those who Blow Smoke to cloud the issues, and expose the donkey dust beneath.
As members in good standing of the 3-D Squad, these academics and journalists not only report what is said, but gather background and factual information that shows whether the public figure really knows what he or she is talking about, and whether he or she is speaking truthfully.
It's possible, of course, that some claimants to leadership genuinely believe what they say, and have convinced themselves that they alone have the one Great Truth that will save society from itself.
It's also possible that these same claimants are misinformed, delusional, incompetent, power hungry, or just plain wrong.
It then is the duty of the Donkey Dust Detectives on the 3-D Squad to point out the inconsistencies and errors -- to put it gently -- in what the claimants to public leadership say and do. Some in the media call their researchers "fact checkers." At another level, the fact checkers are Donkey Dust Detectives, and have no agenda other than to note the reliability and truthfulness of what is being said and done.
Some claimants to public notice are fond of taking one small detail of a larger issue, emphasizing that one detail and ignoring other points that fill out the concept and provide context.
Is this lying? Sometimes.
Is it misleading? Often.
Is it a tactical attempt to undermine the opposition? Almost always.
One example would be the campaign by the so-called Swift Boat Veterans for Truth to criticize the then-Sen. John Kerry during a presidential campaign. Many, if not most, of the "witnesses" in that that campaign were nowhere near Kerry and his activities in Vietnam.
Another would be the so-called Birthers, who propound the citizenship issue in their insistence that Barack Obama is not eligible to be President because 1/ his father was from Kenya, 2/ he was not born in the U.S., and 3/ his Hawaii birth certificate is likely a forgery. Ignored in all this is the fact that Obama's mother was from Kansas, so no matter where Barack was born, he is a U.S. citizen.
Do these strategies show incompetence? Perhaps. In any case, it is the responsibility of the 3-D Squad of detectives to get past those who Blow Smoke to cloud the issues, and expose the donkey dust beneath.
Phone Privacy
Note to mobile phone users: In a public place, nobody's interested in your private conversation. Wandering around the tables at a Starbucks while talking business strategy with a colleague on your mobile phone is not only rude and distracting to other customers, it can also be dangerous. You never know if a news reporter is in the room. FYI, good reporters are never off duty.
Example 2: A lawyer and clients are discussing their case on the sidewalk outside a courthouse when the lawyer notices a reporter standing nearby. Lawyer calls out to reporter: "You can't eavesdrop." Reporter replies: "This is a public sidewalk. There are no eaves."
Example 3: Corporate executive comes out of his office commenting to his visitor on a pending issue, then returns to his office. A news reporter happens to be in the staff room and later contacts the exec for additional comment.
Exec says, "You can't use that. That was a private conversation."
Reporter replies, "It was in a public place, and I heard you say it."
Exec insists, "But I thought you were one of the secretaries."
Reporter points out, "You thought wrong. It was said publicly, I heard you say it, and I'm using it."
Moral: If you want a private conversation, go someplace private.
Example 2: A lawyer and clients are discussing their case on the sidewalk outside a courthouse when the lawyer notices a reporter standing nearby. Lawyer calls out to reporter: "You can't eavesdrop." Reporter replies: "This is a public sidewalk. There are no eaves."
Example 3: Corporate executive comes out of his office commenting to his visitor on a pending issue, then returns to his office. A news reporter happens to be in the staff room and later contacts the exec for additional comment.
Exec says, "You can't use that. That was a private conversation."
Reporter replies, "It was in a public place, and I heard you say it."
Exec insists, "But I thought you were one of the secretaries."
Reporter points out, "You thought wrong. It was said publicly, I heard you say it, and I'm using it."
Moral: If you want a private conversation, go someplace private.
Tuesday, April 16, 2013
Sensitive Speech
Ignorance provokes persecution.
Freedom of Speech is not absolute. There are some topics that are so sensitive as to be off limits. But where is the line?
The line is movable and variable over time, culture and circumstance. In general, however, researching and investigating opposition views can be a very useful and productive educational tool, as well as a means to reach a compromise, if not an accommodation.
You don't have to agree with alternate views, but it is important to understand them.
For example, we can understand how and why certain events happened in Germany in the 1930s, without agreeing with them. But in learning about and understanding the background of events, we can develop means to prevent them from happening again.
A high school teacher in Albany, N.Y., recently ran afoul of the sensitive speech issue when students were assigned to write a five-paragraph essay defending Nazi treatment of Jews, and explaining why many Nazis believed "Jews are evil."
The events of that period are long past the memories of 10th grade students, so one of the most effective ways of learning about them is to do individual research and writing. Should the teacher not have assigned the topic, allowing students to remain ignorant? Should the teacher have assigned only the modern "correct" viewpoint be covered in the essay? Should the teacher have dictated that only the non-Nazi viewpoint be written about?
Or is it possible that in sending the students to research and write about an unpopular position, the students learn to think, and not be told to blindly accept a single position?
As for defending unpopular causes or people, lawyers do it every day, even when they don't agree with their client's beliefs or actions. It is basic to our legal system that everyone, even those who perpetrate the most heinous crimes, is entitled to defense counsel. And in order for a lawyer to defend a client, the lawyer must understand the defendant's thoughts and beliefs.
Understanding the how and why is a basic goal of history studies. Otherwise, as George Santayana noted, "Those who do not learn from history are condemned to repeat it."
Meanwhile, consider this: In a discussion, those who maintain, "You have to understand ... " are operating on a false premise. That is, the idea that once you understand their position, you therefore agree with it. 'Tain't necessarily so. A reply from this corner is, "I do understand, and I still think you're full of donkey dust."
Or this strategy: "Don't you think that ... ?" They're not asking for opinion, but for agreement.
The prime directive of Editor's Revenge is not to persuade, but to prompt thought. If that means those who disagree reinforce their positions by thinking about them, that's fine. There is danger in those who believe without thinking.
Freedom of Speech is not absolute. There are some topics that are so sensitive as to be off limits. But where is the line?
The line is movable and variable over time, culture and circumstance. In general, however, researching and investigating opposition views can be a very useful and productive educational tool, as well as a means to reach a compromise, if not an accommodation.
You don't have to agree with alternate views, but it is important to understand them.
For example, we can understand how and why certain events happened in Germany in the 1930s, without agreeing with them. But in learning about and understanding the background of events, we can develop means to prevent them from happening again.
A high school teacher in Albany, N.Y., recently ran afoul of the sensitive speech issue when students were assigned to write a five-paragraph essay defending Nazi treatment of Jews, and explaining why many Nazis believed "Jews are evil."
The events of that period are long past the memories of 10th grade students, so one of the most effective ways of learning about them is to do individual research and writing. Should the teacher not have assigned the topic, allowing students to remain ignorant? Should the teacher have assigned only the modern "correct" viewpoint be covered in the essay? Should the teacher have dictated that only the non-Nazi viewpoint be written about?
Or is it possible that in sending the students to research and write about an unpopular position, the students learn to think, and not be told to blindly accept a single position?
As for defending unpopular causes or people, lawyers do it every day, even when they don't agree with their client's beliefs or actions. It is basic to our legal system that everyone, even those who perpetrate the most heinous crimes, is entitled to defense counsel. And in order for a lawyer to defend a client, the lawyer must understand the defendant's thoughts and beliefs.
Understanding the how and why is a basic goal of history studies. Otherwise, as George Santayana noted, "Those who do not learn from history are condemned to repeat it."
Meanwhile, consider this: In a discussion, those who maintain, "You have to understand ... " are operating on a false premise. That is, the idea that once you understand their position, you therefore agree with it. 'Tain't necessarily so. A reply from this corner is, "I do understand, and I still think you're full of donkey dust."
Or this strategy: "Don't you think that ... ?" They're not asking for opinion, but for agreement.
The prime directive of Editor's Revenge is not to persuade, but to prompt thought. If that means those who disagree reinforce their positions by thinking about them, that's fine. There is danger in those who believe without thinking.
Jackie Robinson
Beware of Absolutes
The new movie "42" has been billed and promoted as the first film celebrating the career of Jackie Robinson, who in 1947 broke the color barrier in Major League Baseball. Most recently, Frank Bruni of the New York Times wrote he was "shocked" that Hollywood had not dealt with his story before.
In fact, it had, in 1950, with the release of "The Jackie Robinson Story," starring the Brooklyn Dodgers first baseman as himself and with Ruby Dee as his wife.
Bruni was not the first to perpetuate the error. In the past few weeks, there have been several, on TV as well as in print, promoting the new movie as the only one ever to document Robinson's life and career.
Caution: Beware of absolutes, especially in PR pitches. Be doubtful of claims such as first, only, never before, etc. Remember that old newsroom adage: "When in doubt, check it out."
The Internet is a great resource for gathering and verifying information, but be sure the Web site you choose is reliable.
The new movie "42" has been billed and promoted as the first film celebrating the career of Jackie Robinson, who in 1947 broke the color barrier in Major League Baseball. Most recently, Frank Bruni of the New York Times wrote he was "shocked" that Hollywood had not dealt with his story before.
In fact, it had, in 1950, with the release of "The Jackie Robinson Story," starring the Brooklyn Dodgers first baseman as himself and with Ruby Dee as his wife.
Bruni was not the first to perpetuate the error. In the past few weeks, there have been several, on TV as well as in print, promoting the new movie as the only one ever to document Robinson's life and career.
Caution: Beware of absolutes, especially in PR pitches. Be doubtful of claims such as first, only, never before, etc. Remember that old newsroom adage: "When in doubt, check it out."
The Internet is a great resource for gathering and verifying information, but be sure the Web site you choose is reliable.
Sunday, April 14, 2013
Thoughts Are Free
"Die gedanken sind frei." -- Anti-Nazi song, 1942.
"You can't criticize him, he's the President." -- Student with Republican leanings.
"Not only do I have the right, I have an obligation to criticize when I disagree." -- Professor with Democratic leanings.
To be faithful to an idea is one thing. To be an ideologue is quite another. Those who honor a commitment to their beliefs deserve respect, even when we disagree. But that commitment and respect works both ways. Ideologues too often demand not only respect, but also agreement and obedience, as if theirs is the only Great Truth.
The U.S. Constitution guarantees freedom of religion (First Amendment). But it also guarantees freedom from religion, and that came first (Article VI in the main body of that document). The Universal Declaration of Human Rights, issued by the United Nations in 1948, has a similar guarantee.
Both documents also guarantee freedom of speech and of the press. This implies the right to disagree and criticize others. But as with so many things, there are limits. There are lines -- some legal, some customary -- which one should not cross. A basic guideline, set out by John Stuart Mill in his essay On Liberty in 1859 is that of causing harm, verbal or physical, to others. Famously, one example is not being able to shout "Fire!" in a crowded theater, as set out in a U.S. Supreme Court ruling in 1919 dealing with limits to freedom of speech. Curiously, the relevant case involved those who advocated resistance to a military draft in World War I. As it turned out, the war was over when the free speech issue was dealt with.
Just to be clear, the U.S. Constitution does not grant the rights referred to the Bill of Rights. It guarantees protection of rights we already have. We are born with them, and government cannot take them away. There have been attempts, surely, and some have been successful for a time. But it's worth remembering the phrasing in the Constitution: "Congress shall make no law abridging ..." these rights. The Constitution prohibits the government from limiting or interfering with human rights already there.
Recent news reports have described efforts in Cairo to silence or imprison a comedian for criticizing or insulting the president of Egypt. In the U.S., people criticize and make fun of the President every day. Especially Republicans, who routinely block, assail and criticize anything and everything President Obama, a Democrat, says and does. But when the president is a Republican, they claim criticism is not allowed.
You can't have it both ways.
"You can't criticize him, he's the President." -- Student with Republican leanings.
"Not only do I have the right, I have an obligation to criticize when I disagree." -- Professor with Democratic leanings.
To be faithful to an idea is one thing. To be an ideologue is quite another. Those who honor a commitment to their beliefs deserve respect, even when we disagree. But that commitment and respect works both ways. Ideologues too often demand not only respect, but also agreement and obedience, as if theirs is the only Great Truth.
The U.S. Constitution guarantees freedom of religion (First Amendment). But it also guarantees freedom from religion, and that came first (Article VI in the main body of that document). The Universal Declaration of Human Rights, issued by the United Nations in 1948, has a similar guarantee.
Both documents also guarantee freedom of speech and of the press. This implies the right to disagree and criticize others. But as with so many things, there are limits. There are lines -- some legal, some customary -- which one should not cross. A basic guideline, set out by John Stuart Mill in his essay On Liberty in 1859 is that of causing harm, verbal or physical, to others. Famously, one example is not being able to shout "Fire!" in a crowded theater, as set out in a U.S. Supreme Court ruling in 1919 dealing with limits to freedom of speech. Curiously, the relevant case involved those who advocated resistance to a military draft in World War I. As it turned out, the war was over when the free speech issue was dealt with.
Just to be clear, the U.S. Constitution does not grant the rights referred to the Bill of Rights. It guarantees protection of rights we already have. We are born with them, and government cannot take them away. There have been attempts, surely, and some have been successful for a time. But it's worth remembering the phrasing in the Constitution: "Congress shall make no law abridging ..." these rights. The Constitution prohibits the government from limiting or interfering with human rights already there.
Recent news reports have described efforts in Cairo to silence or imprison a comedian for criticizing or insulting the president of Egypt. In the U.S., people criticize and make fun of the President every day. Especially Republicans, who routinely block, assail and criticize anything and everything President Obama, a Democrat, says and does. But when the president is a Republican, they claim criticism is not allowed.
You can't have it both ways.
Friday, April 12, 2013
Nationalism Trumps Economics
Central banks and national governments compete to gain an advantage in international trade, partly by manipulating their currency values. Who benefits? Sellers, not buyers.
A "strong dollar" may sound like a good thing and appeal to patriotism, but to tourists it means they have to spend more. If dollars are "cheap" -- that is, if someone can acquire dollars at a lower cost, then those dollars can be used to buy more America-made stuff. This benefits the seller (the American manufacturer) and the overseas buyer. The American consumer, however, must use more dollars to buy imported stuff -- imports become more expensive.
So while "strong" is often perceived as a positive, good thing (as opposed to "weak), in international finance it may not be. Why? Because you have to use more dollars to buy the same amount of stuff. If the dollar is "weak" in terms of another currency, you use fewer dollars to make your purchase.
Some countries, when in economic distress, "devalue" their currencies to their vendors can sell more stuff internationally, and this increase in activity means more jobs for its citizens, making stuff to be exported. The downside is that these workers can't afford imported stuff.
As long as a nation retains control over its monetary values, it can use devaluation as a strategy to boost its economy. Or it can use other monetary policy measures, such as increasing or decreasing the stock of its money available.
But when a nation surrenders or otherwise loses control of its money stock -- for instance, joining the European Union and using the euro as a common currency -- the situation can get sticky. By joining the group and using a common currency, a nation also surrenders monetary policy to others in the group. Now, "strong" governments can dictate policy to "weak" nations in economic difficulty. And this is what's happening in parts of Europe today. Not all members of the European Union have this problem, however. The UK still uses own pound sterling rather than the euro, and thus cannot be dictated to by nations with "strong" economies that do use the euro. "Weaker" members of the 17-nation euro zone, however, -- such as Greece, Cyprus, Spain, Italy and Portugal -- encounter bigger difficulties, as an economically "strong" nation (Germany) puts pressure on them to change their policies.
Therefore, they face the choice of yielding to the strong EU members nations, or leaving the EU and abandoning the euro.
The issue is not new. Other nations that have used a stronger nation's currency as a base for its financing, such as Argentina when it used the U.S. dollar, have switched back to their own monetary unit to regain control.
There are several nations that tie their monetary unit's health to the U.S. dollar and don't issue their own currency. Typically, however, this is voluntary and does not involve political ties.
But when it comes to international trade and monetary values, nationalism can trump economics.
A "strong dollar" may sound like a good thing and appeal to patriotism, but to tourists it means they have to spend more. If dollars are "cheap" -- that is, if someone can acquire dollars at a lower cost, then those dollars can be used to buy more America-made stuff. This benefits the seller (the American manufacturer) and the overseas buyer. The American consumer, however, must use more dollars to buy imported stuff -- imports become more expensive.
So while "strong" is often perceived as a positive, good thing (as opposed to "weak), in international finance it may not be. Why? Because you have to use more dollars to buy the same amount of stuff. If the dollar is "weak" in terms of another currency, you use fewer dollars to make your purchase.
Some countries, when in economic distress, "devalue" their currencies to their vendors can sell more stuff internationally, and this increase in activity means more jobs for its citizens, making stuff to be exported. The downside is that these workers can't afford imported stuff.
As long as a nation retains control over its monetary values, it can use devaluation as a strategy to boost its economy. Or it can use other monetary policy measures, such as increasing or decreasing the stock of its money available.
But when a nation surrenders or otherwise loses control of its money stock -- for instance, joining the European Union and using the euro as a common currency -- the situation can get sticky. By joining the group and using a common currency, a nation also surrenders monetary policy to others in the group. Now, "strong" governments can dictate policy to "weak" nations in economic difficulty. And this is what's happening in parts of Europe today. Not all members of the European Union have this problem, however. The UK still uses own pound sterling rather than the euro, and thus cannot be dictated to by nations with "strong" economies that do use the euro. "Weaker" members of the 17-nation euro zone, however, -- such as Greece, Cyprus, Spain, Italy and Portugal -- encounter bigger difficulties, as an economically "strong" nation (Germany) puts pressure on them to change their policies.
Therefore, they face the choice of yielding to the strong EU members nations, or leaving the EU and abandoning the euro.
The issue is not new. Other nations that have used a stronger nation's currency as a base for its financing, such as Argentina when it used the U.S. dollar, have switched back to their own monetary unit to regain control.
There are several nations that tie their monetary unit's health to the U.S. dollar and don't issue their own currency. Typically, however, this is voluntary and does not involve political ties.
But when it comes to international trade and monetary values, nationalism can trump economics.
Thursday, April 11, 2013
Shallow News
Journalism's duty is to report not only what a politician says, but also what he does, especially when one conflicts with the other.
National reporters who stay in Washington, however, trailing political leaders and relaying what they say, too often have no idea what the pols are doing on their home territories.
Bob Teague, a pioneering journalist who worked in New York City television after learning his trade in print media, assailed the shallowness of TV news. And Rachel Maddow, a liberal TV commentator today, lamented the tendency of national reporters to stay inside Washington's Beltway, unaware of what their subjects are doing at home.
Quick question: Who gets more air time on your local TV news program, the mayor or the football coach? The answer to that says a great deal about 1/ the "news" division of the local station, and 2/ the audience.
TV execs defend their choices with the claim that this is what the audience wants: sports, weather and traffic reports, as well as shootings and fires. Besides, reports on the economy are too hard to do, people don't care about business, and they have lost faith in politicians.
Perhaps. All the more reason to do them, and make them interesting.
Meanwhile, those who really want local news -- town council, school board, zoning and planning board meetings, or anything else that directly affects a resident's wallet -- must go to print media in the form of a daily or weekly newspaper. These are the folks who cover the stories that are important, but not glamorous enough to attract a TV news crew.
National reporters who stay in Washington, however, trailing political leaders and relaying what they say, too often have no idea what the pols are doing on their home territories.
Bob Teague, a pioneering journalist who worked in New York City television after learning his trade in print media, assailed the shallowness of TV news. And Rachel Maddow, a liberal TV commentator today, lamented the tendency of national reporters to stay inside Washington's Beltway, unaware of what their subjects are doing at home.
Quick question: Who gets more air time on your local TV news program, the mayor or the football coach? The answer to that says a great deal about 1/ the "news" division of the local station, and 2/ the audience.
TV execs defend their choices with the claim that this is what the audience wants: sports, weather and traffic reports, as well as shootings and fires. Besides, reports on the economy are too hard to do, people don't care about business, and they have lost faith in politicians.
Perhaps. All the more reason to do them, and make them interesting.
Meanwhile, those who really want local news -- town council, school board, zoning and planning board meetings, or anything else that directly affects a resident's wallet -- must go to print media in the form of a daily or weekly newspaper. These are the folks who cover the stories that are important, but not glamorous enough to attract a TV news crew.
Economic Muddling
The American economy expanded moderately in the first quarter of this year, the Federal Reserve Board reported, but "In the euro area, real GDP contracted for the fifth consecutive quarter," according to the Fed's minutes of its March meeting.
Solid numbers for U.S. output during the first quarter won't be released for another two weeks, but buried in the Fed's prose was a hint that things are muddling through, meaning the board doesn't see explosive growth, but they don't see a crash, either (not that they would say so if they did).
Fed Chairman Ben Bernanke acknowledged in a speech in London last month that "most advanced industrial economies remain, to varying degrees, in the grip of slow recoveries from the Great Recession." And he warned of international competition as central banks adjust their monetary policies to gain an advantage in trade.
Christine Lagarde, managing director of the International Monetary Fund, warned of "uncertainty" that "casts a shadow on the recovery." Sequestration, she told the Economic Club of New York on Wednesday, is "an extremely blunt instrument, imposing deep cuts in many vital programs -- including those that help the most vulnerable," while leaving untouched the things that drive other spending. And she called for "a global financial system" to coordinate and support stability and growth.
"We simply cannot have pre-crisis banking in a post-crisis world," Lagarde added.
Meanwhile, the money mavens of the financial world are watching and waiting.
Upcoming events to watch: The IMF will gather representatives of its 188 member nations April 19-21 in Washington. And later that week, official GDP figures for the U.S. first quarter are due to be released.
Solid numbers for U.S. output during the first quarter won't be released for another two weeks, but buried in the Fed's prose was a hint that things are muddling through, meaning the board doesn't see explosive growth, but they don't see a crash, either (not that they would say so if they did).
Fed Chairman Ben Bernanke acknowledged in a speech in London last month that "most advanced industrial economies remain, to varying degrees, in the grip of slow recoveries from the Great Recession." And he warned of international competition as central banks adjust their monetary policies to gain an advantage in trade.
Christine Lagarde, managing director of the International Monetary Fund, warned of "uncertainty" that "casts a shadow on the recovery." Sequestration, she told the Economic Club of New York on Wednesday, is "an extremely blunt instrument, imposing deep cuts in many vital programs -- including those that help the most vulnerable," while leaving untouched the things that drive other spending. And she called for "a global financial system" to coordinate and support stability and growth.
"We simply cannot have pre-crisis banking in a post-crisis world," Lagarde added.
Meanwhile, the money mavens of the financial world are watching and waiting.
Upcoming events to watch: The IMF will gather representatives of its 188 member nations April 19-21 in Washington. And later that week, official GDP figures for the U.S. first quarter are due to be released.
Wednesday, April 10, 2013
Perspective
We hear a lot about the international trade deficit, and what a terrible thing it is that there is a negative balance of payments in international trade, to the tune of $43 billion in February alone. Which is pretty big number. Like the man said, a billion here, a billion there, soon you're talking about real money.
But let's put it into some perspective. One big reason why America buys more stuff from overseas suppliers than the country sells to overseas buyers is that Americans have more money. It's a pretty rich country, after all, with a total value of everything produced (GDP) coming to $16 trillion a year.
Consider this: That $43 billion is one-quarter of one percent of America's yearly output -- 0.26 percent, to be exact. And over the course of a year, that's about 3 percent. Meanwhile, all the goods and services America exported during February came to a value of $186.0 billion, up from $184.4 billion in January, according to the government's Commerce Department. And over the past 12 months, that added up to $2.2 trillion in stuff and services sold to overseas buyers. That's a bit more than 12 percent of total output. Not bad. The deficit in balance of payments, meanwhile, even though it totaled $475 billion last year, was still only 3 percent of the total economy.
Politicians like to make a lot of noise about "negative" numbers, partly as a way to lambaste incumbents and make it look like they're doing a terrible job. And while some countries have an advantage in making stuff, partly because of lower wages and availability of raw materials, other countries have an advantage in providing services, such as design, marketing, analysis, distribution and sales. And some regions can increase their production despite higher labor costs by using technology. It's called comparative advantage, and was identified by Adam Smith in 1776.
It's also true of regions within nations. At the turn of the 20th Century, about half of New Jersey's labor force was involved in agriculture -- that's why it's called the garden state. A similar percentage was applicable nationwide. Today, however, the number of people working in agriculture is well below 10 percent, and the country still grows enough stuff so that it can export food. Reason: Technology, mechanization, and efficiency, thus enabling agriculture workers to move off the farm and into the cities, where higher-paying jobs in manufacturing, distribution, sales, finance and other fields were growing.
So is there a trade deficit, and do Americans buy more stuff than they sell? Yes. Will it last? No. International trade is like an ocean tide -- it comes and goes, but the shoreline remains pretty much the same. Barring natural disasters, of course, but what happens then? We rebuild.
But let's put it into some perspective. One big reason why America buys more stuff from overseas suppliers than the country sells to overseas buyers is that Americans have more money. It's a pretty rich country, after all, with a total value of everything produced (GDP) coming to $16 trillion a year.
Consider this: That $43 billion is one-quarter of one percent of America's yearly output -- 0.26 percent, to be exact. And over the course of a year, that's about 3 percent. Meanwhile, all the goods and services America exported during February came to a value of $186.0 billion, up from $184.4 billion in January, according to the government's Commerce Department. And over the past 12 months, that added up to $2.2 trillion in stuff and services sold to overseas buyers. That's a bit more than 12 percent of total output. Not bad. The deficit in balance of payments, meanwhile, even though it totaled $475 billion last year, was still only 3 percent of the total economy.
Politicians like to make a lot of noise about "negative" numbers, partly as a way to lambaste incumbents and make it look like they're doing a terrible job. And while some countries have an advantage in making stuff, partly because of lower wages and availability of raw materials, other countries have an advantage in providing services, such as design, marketing, analysis, distribution and sales. And some regions can increase their production despite higher labor costs by using technology. It's called comparative advantage, and was identified by Adam Smith in 1776.
It's also true of regions within nations. At the turn of the 20th Century, about half of New Jersey's labor force was involved in agriculture -- that's why it's called the garden state. A similar percentage was applicable nationwide. Today, however, the number of people working in agriculture is well below 10 percent, and the country still grows enough stuff so that it can export food. Reason: Technology, mechanization, and efficiency, thus enabling agriculture workers to move off the farm and into the cities, where higher-paying jobs in manufacturing, distribution, sales, finance and other fields were growing.
So is there a trade deficit, and do Americans buy more stuff than they sell? Yes. Will it last? No. International trade is like an ocean tide -- it comes and goes, but the shoreline remains pretty much the same. Barring natural disasters, of course, but what happens then? We rebuild.
Saturday, April 6, 2013
Efficient Markets
Markets are efficient. (Or would be, if left alone.)
In the long run, things will work out.
"In the long run, we are all dead." -- J.M. Keynes
The Efficient Markets Hypothesis is based on several assumptions, and a conclusion stemming from these assumptions.
1/ All elements of an economy are equal.
2/ Everyone has identical skill sets.
3/ Everyone has equal access to information.
Therefore:
4/ The market will balance.
The theory, or hypothesis, is that if 1, 2 and 3 are true, then 4, the conclusion, must be true. This follows the rules according to Logic 101. However, in reality, 1, 2, and 3 are seldom, if ever, true. And even if they are, that status will be fleeting. Therefore, following the same rules of Logic 101, the conclusion cannot or will not be true. It's possible that a market may find a balance, but that balance will be momentary.
The word "hypothesis" comes from the Greek for "foundation" (hypo- "under," and the word -thesis, "idea.") A hypothesis, then, is by definition a proposal or an idea, an unproven supposition, proposing a possible explanation for something and inviting further investigation to develop a proof.
Economists often take on assumptions, sometimes heroic assumptions, for the sake of a theoretical discussion, and note that if other elements do not change, something specific will happen. But this ceteris paribus (other things equal) assumption is only to enable discussion, and is no guarantee of result.
However, many accept a hypothesis as true despite a lack of evidence, as if the very act of saying or declaring the idea is proof enough. Yet many economic fundamentalists accept the Efficient Markets Hypothesis as true even as they dismiss Darwin's ideas as "only an idea, and unproven."
There is a great deal of evidence to support Darwin's theory of evolution, and almost none to support the idea of "efficient markets." Economic fundamentalists have embraced the Efficient Markets Hypothesis to further their position that the best way to deal with business cycles is to leave them alone. The cycle is an economy's natural way of cleaning house, and washing out inefficient participants, be they firms or workers.
One function of government, however, is to smooth out the business cycle, intervening when and as appropriate. Otherwise, the cycle of boom and bust continues, with usually harmful and sometimes disastrous consequences to those unable to ride through the cycle.
Basic to American democracy is the concept that all people are equal, endowed with certain rights that cannot be taken away, including the rights to life, liberty, and the pursuit of happiness. But to leap from that premise to the notion that all have equal skills, talents, education, and the opportunity to develop those skills and talents through education is a heroic assumption, and a risky one to take.
So another function of government is to provide opportunities for all to develop -- through education and training -- their skills and talents.
Failure to feed public education is to starve society.
What might have been, could have been, should have been or would have been, if, if, if, and if -- wasn't. Deal with it.
"The saddest words of tongue or pen
Are just these four:
It might have been." -- Rudyard Kipling
In the long run, things will work out.
"In the long run, we are all dead." -- J.M. Keynes
The Efficient Markets Hypothesis is based on several assumptions, and a conclusion stemming from these assumptions.
1/ All elements of an economy are equal.
2/ Everyone has identical skill sets.
3/ Everyone has equal access to information.
Therefore:
4/ The market will balance.
The theory, or hypothesis, is that if 1, 2 and 3 are true, then 4, the conclusion, must be true. This follows the rules according to Logic 101. However, in reality, 1, 2, and 3 are seldom, if ever, true. And even if they are, that status will be fleeting. Therefore, following the same rules of Logic 101, the conclusion cannot or will not be true. It's possible that a market may find a balance, but that balance will be momentary.
The word "hypothesis" comes from the Greek for "foundation" (hypo- "under," and the word -thesis, "idea.") A hypothesis, then, is by definition a proposal or an idea, an unproven supposition, proposing a possible explanation for something and inviting further investigation to develop a proof.
Economists often take on assumptions, sometimes heroic assumptions, for the sake of a theoretical discussion, and note that if other elements do not change, something specific will happen. But this ceteris paribus (other things equal) assumption is only to enable discussion, and is no guarantee of result.
However, many accept a hypothesis as true despite a lack of evidence, as if the very act of saying or declaring the idea is proof enough. Yet many economic fundamentalists accept the Efficient Markets Hypothesis as true even as they dismiss Darwin's ideas as "only an idea, and unproven."
There is a great deal of evidence to support Darwin's theory of evolution, and almost none to support the idea of "efficient markets." Economic fundamentalists have embraced the Efficient Markets Hypothesis to further their position that the best way to deal with business cycles is to leave them alone. The cycle is an economy's natural way of cleaning house, and washing out inefficient participants, be they firms or workers.
One function of government, however, is to smooth out the business cycle, intervening when and as appropriate. Otherwise, the cycle of boom and bust continues, with usually harmful and sometimes disastrous consequences to those unable to ride through the cycle.
Basic to American democracy is the concept that all people are equal, endowed with certain rights that cannot be taken away, including the rights to life, liberty, and the pursuit of happiness. But to leap from that premise to the notion that all have equal skills, talents, education, and the opportunity to develop those skills and talents through education is a heroic assumption, and a risky one to take.
So another function of government is to provide opportunities for all to develop -- through education and training -- their skills and talents.
Failure to feed public education is to starve society.
What might have been, could have been, should have been or would have been, if, if, if, and if -- wasn't. Deal with it.
"The saddest words of tongue or pen
Are just these four:
It might have been." -- Rudyard Kipling
Friday, April 5, 2013
Statistics
"Figures don't lie, but liars do figure." -- Mark Twain
How to play political games with numbers:
The average weekly wage in America, according to government data, is about $900.
"Hah! For who?" said the neighborhood barista.
That statistically valid figure of $900 means a yearly income of nearly $47,000, about double the average starting salary for teachers. It also means that, by definition, beginning teachers are living in poverty, since poverty is defined as less than half the median income.
Moreover, with the federal minimum wage of $7.25 an hour, that brings yearly income to some $13,600, even lower than the defined poverty level.
But many folks earning the average income, or even half the median income, don't feel like they're living in poverty. (There's an important difference between average and median. The median is the thing in the middle. The average is calculated by totaling everyone's income, then dividing by the number of people. And depending on what you want to "prove," you can use either.)
The average can be easily skewed when a few ultra-high incomes are figured into the total. Fictional example: Bill Gates walks into a neighborhood bar, and statistically everyone in the room is a millionaire. He has a drink and leaves, and suddenly everyone else is back to low- or middle-income status.
Some political types can argue that the $900 figure is "proof" that there is no need for government assistance programs, since statistically everyone is making enough money to live well. But take out the 1 percent of ultra-high earners, and you then have a lot of folks who live at or below the poverty level.
One solution would be higher wages. But the counter argument is that higher wages would eat into profits, since companies would have to charge higher prices to absorb the expense of higher wages. That would satisfy management, guaranteeing the same level of profit. But when prices go up, the ratio of wage to price returns to its previous level, leaving workers in the same bind as before, even as owners have more money from higher profits.
Is a puzzlement, said the king.
Meanwhile, here's a news item: A mere 88,000 jobs were added to the nation's payrolls in March, compared to 268,000 in February, according to a U.S. Labor Department report. Separately, the unemployment rate eased a tenth of a percent, to 7.6 percent.
The implication is that a lot of folks have stopped looking for work.
At root is an important political-economic issue. Which is more important, a government budget balance or employment? A job is a job, whether the worker is paid through the private sector or by government.
Or, as was said during the Great Depression, "Buy now," said the politician. "With what?" replied the worker.
How to play political games with numbers:
The average weekly wage in America, according to government data, is about $900.
"Hah! For who?" said the neighborhood barista.
That statistically valid figure of $900 means a yearly income of nearly $47,000, about double the average starting salary for teachers. It also means that, by definition, beginning teachers are living in poverty, since poverty is defined as less than half the median income.
Moreover, with the federal minimum wage of $7.25 an hour, that brings yearly income to some $13,600, even lower than the defined poverty level.
But many folks earning the average income, or even half the median income, don't feel like they're living in poverty. (There's an important difference between average and median. The median is the thing in the middle. The average is calculated by totaling everyone's income, then dividing by the number of people. And depending on what you want to "prove," you can use either.)
The average can be easily skewed when a few ultra-high incomes are figured into the total. Fictional example: Bill Gates walks into a neighborhood bar, and statistically everyone in the room is a millionaire. He has a drink and leaves, and suddenly everyone else is back to low- or middle-income status.
Some political types can argue that the $900 figure is "proof" that there is no need for government assistance programs, since statistically everyone is making enough money to live well. But take out the 1 percent of ultra-high earners, and you then have a lot of folks who live at or below the poverty level.
One solution would be higher wages. But the counter argument is that higher wages would eat into profits, since companies would have to charge higher prices to absorb the expense of higher wages. That would satisfy management, guaranteeing the same level of profit. But when prices go up, the ratio of wage to price returns to its previous level, leaving workers in the same bind as before, even as owners have more money from higher profits.
Is a puzzlement, said the king.
Meanwhile, here's a news item: A mere 88,000 jobs were added to the nation's payrolls in March, compared to 268,000 in February, according to a U.S. Labor Department report. Separately, the unemployment rate eased a tenth of a percent, to 7.6 percent.
The implication is that a lot of folks have stopped looking for work.
At root is an important political-economic issue. Which is more important, a government budget balance or employment? A job is a job, whether the worker is paid through the private sector or by government.
Or, as was said during the Great Depression, "Buy now," said the politician. "With what?" replied the worker.
Thursday, April 4, 2013
Tautology
No one with credibility has challenged the prevailing view.
Therefore, the prevailing view is correct.
But no one who challenges the prevailing view is deemed credible.
Belief without thought endangers freedom
Tautology, from the Greek meaning "same words," is a redundancy by needless repetition. The strategy is often used by speakers to establish a position or present an argument or idea in a way that is true in and of itself. That is, one says the same thing twice using different words, using the different words to "prove" the validity of the first set of words.
Here's an example: "It is audible to the ear." (How else would it be audible?)
Here's another: "This premise must be valid because the concepts it contains are true." True and valid are synonyms, and neither proves the validity or truth of the premise.
But the most dangerous use of a tautology is outlined in the opening sentences of this posting. If anyone who challenges the accepted wisdom or the prevailing view is dismissed as a crank not having credibility, this only strengthens the prevailing view. Far better that the challenge is not ignored, but its argument evaluated and discussed. Only then can the challenge be legitimately dismissed.
Remember, Galileo was charged with heresy for teaching the heliocentric relationship of the sun and planets. But he was right.
Therefore, the prevailing view is correct.
But no one who challenges the prevailing view is deemed credible.
Belief without thought endangers freedom
Tautology, from the Greek meaning "same words," is a redundancy by needless repetition. The strategy is often used by speakers to establish a position or present an argument or idea in a way that is true in and of itself. That is, one says the same thing twice using different words, using the different words to "prove" the validity of the first set of words.
Here's an example: "It is audible to the ear." (How else would it be audible?)
Here's another: "This premise must be valid because the concepts it contains are true." True and valid are synonyms, and neither proves the validity or truth of the premise.
But the most dangerous use of a tautology is outlined in the opening sentences of this posting. If anyone who challenges the accepted wisdom or the prevailing view is dismissed as a crank not having credibility, this only strengthens the prevailing view. Far better that the challenge is not ignored, but its argument evaluated and discussed. Only then can the challenge be legitimately dismissed.
Remember, Galileo was charged with heresy for teaching the heliocentric relationship of the sun and planets. But he was right.
Tuesday, April 2, 2013
Euro Storm Clouds
Unemployment in Europe is spreading, according to new data from the EU, hitting 12 percent in January and February for the euro zone, the highest since 1999 when the euro was created. For the European Union as a whole, including those nations not using the euro, the unemployment rate was 10.9 percent in February.
So austerity isn't working. National and regional economies are fading, and millions are out of work. In Europe. More millions are out of work in America, but the clouds are not quite as dark here. This is not to say things are bright in America. GDP, the total value of all goods and services produced, dropped from a growth rate of 3.1 percent in the third quarter of last year to just 0.4 percent in the fourth quarter. First quarter figures are due out soon.
Meanwhile, manufacturing in America is slowing, with execs taking a watch and wait attitude as the government reduces its budget. Unemployment in the U.S. is nudging down -- barely, but it's still high.
What does it all mean? For starters, economic storm clouds are gathering worldwide, and it's not certain that April showers will bring May flowers. If and when a downturn takes hold, it won't be a short one.
So austerity isn't working. National and regional economies are fading, and millions are out of work. In Europe. More millions are out of work in America, but the clouds are not quite as dark here. This is not to say things are bright in America. GDP, the total value of all goods and services produced, dropped from a growth rate of 3.1 percent in the third quarter of last year to just 0.4 percent in the fourth quarter. First quarter figures are due out soon.
Meanwhile, manufacturing in America is slowing, with execs taking a watch and wait attitude as the government reduces its budget. Unemployment in the U.S. is nudging down -- barely, but it's still high.
What does it all mean? For starters, economic storm clouds are gathering worldwide, and it's not certain that April showers will bring May flowers. If and when a downturn takes hold, it won't be a short one.
Monday, April 1, 2013
Bubbles
"The United States is broke -- fiscally, morally, intellectually." -- David Stockman, New York Times, 31 March 2013
"The public be damned. My responsibility is to my stockholders." -- William H. Vanderbilt, 1883 railroad executive
"What's good for the country is good for General Motors and vice versa." -- Attributed to GM chief Charles Wilson, 1953.
"Greed is good." -- Gordon Gekko
"Greed is healthy." -- Ivan Boesky, 1986
Exuberance is rarely rational.
News item: Pay for bank board members soars amid staff cutbacks. (New York Times, 1 April 2013)
Consider this: The competitive nature of capitalism breeds a bigger concern for profit than for customers. It's a common attitude, and was first identified as an economic issue by Adam Smith in 1776. He wrote that people look to their own benefit, and in doing so they benefit society at large. Perhaps. But Smith may have been overly optimistic about what may be called the innate, subconscious altruism of people. Assuming, of course, that altruism exists at all.
We see the "me first" attitude among drivers in city auto traffic as well as among corporate directors, whose main concern is the stock price of the company, rather than sales and consumer welfare. It's called "increasing shareholder value," and often has nothing to do with benefits to consumers.
Currently, Wall Street performance indexes are topping new highs, and investors are again joyous. But there are some who are warning of a bubble about to burst. And there are some reports that hint at a downturn. Manufacturing "expanded less that forecast," according to a report in Bloomberg Business News, citing an index from the Institute for Supply Management. The Bureau of Labor Statistics said the average U.S. weekly wage decreased over the year by 1.1 percent during the third quarter of 2012, to $906. And the unemployment rate, according to the BLS, while edging down to 7.7 percent in February, has shown little movement since last September.
So while business leaders pay their board members big time as stock prices soar, those in the 99 percent see their job prospects and their pay stagnate.
More numbers come out almost daily, and it's sometimes hard to see a trend in the blizzard of statistics that are often volatile. A couple of sure numbers, however, to take the measure of the nation's economy, are average weekly pay, monthly employment, and quarterly GDP,
Stay tuned.
"The public be damned. My responsibility is to my stockholders." -- William H. Vanderbilt, 1883 railroad executive
"What's good for the country is good for General Motors and vice versa." -- Attributed to GM chief Charles Wilson, 1953.
"Greed is good." -- Gordon Gekko
"Greed is healthy." -- Ivan Boesky, 1986
Exuberance is rarely rational.
News item: Pay for bank board members soars amid staff cutbacks. (New York Times, 1 April 2013)
Consider this: The competitive nature of capitalism breeds a bigger concern for profit than for customers. It's a common attitude, and was first identified as an economic issue by Adam Smith in 1776. He wrote that people look to their own benefit, and in doing so they benefit society at large. Perhaps. But Smith may have been overly optimistic about what may be called the innate, subconscious altruism of people. Assuming, of course, that altruism exists at all.
We see the "me first" attitude among drivers in city auto traffic as well as among corporate directors, whose main concern is the stock price of the company, rather than sales and consumer welfare. It's called "increasing shareholder value," and often has nothing to do with benefits to consumers.
Currently, Wall Street performance indexes are topping new highs, and investors are again joyous. But there are some who are warning of a bubble about to burst. And there are some reports that hint at a downturn. Manufacturing "expanded less that forecast," according to a report in Bloomberg Business News, citing an index from the Institute for Supply Management. The Bureau of Labor Statistics said the average U.S. weekly wage decreased over the year by 1.1 percent during the third quarter of 2012, to $906. And the unemployment rate, according to the BLS, while edging down to 7.7 percent in February, has shown little movement since last September.
So while business leaders pay their board members big time as stock prices soar, those in the 99 percent see their job prospects and their pay stagnate.
More numbers come out almost daily, and it's sometimes hard to see a trend in the blizzard of statistics that are often volatile. A couple of sure numbers, however, to take the measure of the nation's economy, are average weekly pay, monthly employment, and quarterly GDP,
Stay tuned.
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