November 2009 Archives

$6 bil/yr wasted on printers by focusing on price rather than total cost of ownership

In my previous post, I noted how frequently “smart” people make dumb decisions by focusing on the wrong information. Here’s a great example: Buying color printers.

Outraged by the price of printer ink and the tiny quantity of ink in each expensive cartridge, I recently began investigating color printers in hopes of finding one with a low cost per printed page.

It’s shockingly difficult to compare printers by cost of ownership, which should be a top buyer concern. Instead, buyers focus on the cost of buying the printer, largely ignoring the much more substantial photo paper and ink cost of operating the printer.

Printer manufacturers know we focus on the printer’s sticker price, so they keep printer prices artificially low and ink prices artificially high. Many printers sell for even less than they cost to manufacture because profit margins on ink are so high.

The American Consumer Institute last year estimated that consumers waste $6 billion a year through distorted printer purchase decisions:

Consumers [a]re being lured into buying inexpensive printers, only later to pay substantially more for ink. In a recent ConsumerGram, we concluded that giving all consumers more information on the cost of printing and printer ink would help them to make well-informed purchasing decisions and save $6 billion per year. However, without industry standards to help consumer know the cost of ink over the life of the printer, these savings will never be realized.

The Institute says “Lack of Information is a Market Failure,” but it’s actually a great market success. Buyers' dumb decision-making allows printer companies to get us to overspend by $6 billion a year. That’s $6 billion more in revenue for them. The sell-side of the market is operating extremely well.

Markets do not solve all problems, as this example demonstrates. Government has an important role to play in keeping markets fair, and the $6 billion in wasteful spending on printers is actually an appalling regulatory failure:

Ink is one of a handful of products that are exempt from Federal Trade Commission regulation under the Fair Packaging and Labeling Act. This means that printer manufacturers can “slack fill” their products and profit from them; and evidence suggests that this is happening today, as some ink jet cartridges contain only one-tenth of the volume that some cartridges contained in 1999. Because there is insufficient labeling on printers and cartridges, consumers do not know the true cost to operate a printer before buying one. According to a 2007 TeleNomic Research study released by the Institute, this lack of information has led to increased industry ink prices, excessive profits and high market concentration – all to the harm of consumer welfare.

Posted by James on Nov 17, 2009

Audit the Fed!

The Federal Reserve is arguably America’s most powerful institution. At least, it has been this past decade, with its loose money policies contributing to two bubble-crashes, the second of which the Fed responded to by showering TENS OF TRILLIONS OF DOLLARS on banks.

The Fed is controlled not by Congress or the President. It’s controlled by major banks… the very same major banks which became insolvent but were rescued — to the tune of TENS OF TRILLIONS OF DOLLARS — rather than allowed to fail and be restructured.

The Fed has refused to tell Congress or anyone who it has given its TENS OF TRILLIONS OF DOLLARS to and what it received in return.

It’s long past time Americans at least know how these TENS OF TRILLIONS OF DOLLARS have been handed out and to whom.

Republican Rep. Ron Paul of Texas and Democratic Rep. Alan Grayson of Florida have co-authored a bill calling for a Fed audit. It deserves every Congressman’s vote. A letter calling for a real audit of the Fed was recently signed by some superb pro-Main Street economists and top labor leaders:

  • SEIU President Andy Stern
  • AFL-CIO President Richard Trumka
  • James K. Galbraith (Lloyd M. Bentsen, Jr., Chair at the LBJ School of Public Affairs, University of Texas at Austin)
  • Author Naomi Klein
  • Blogger Yves Smith of Naked Capitalism
  • William Black (Associate Professor of Economics and Law at the University of Missouri–Kansas City)
  • Blogger Tyler Durden of Zero Hedge
  • Robert Johnson (former Chief Economist of the US Senate Banking Committee)
  • Randall Wray (Professor of Economics and Director of the Center for Full Employment and Price Stability at the University of Missouri–Kansas City)
  • Thomas Ferguson, Professor of Political Science, University of Massachusetts, Boston
  • Dean Baker, co-founder and co-director of the Center For Economic And Policy Research

Posted by James on Nov 19, 2009

Backlash against government of the bankers, by the bankers, for the bankers

The first half of Paul Krugman’s latest retraces the insanity of paying off bankrupt A.I.G.’s insane bets 100 cents on the dollar with taxpayer money. Krugman then describes the loaded gun the government refused to threaten banks with:

Major financial firms are a small club, with a shared interest in sustaining the system; ever since the days of J.P. Morgan, it has been common in times of crisis to call on the big players to forgo short-term profits for the industry’s common good. Back in 1998, it was a consortium of private bankers — not the government — that put up the funds to rescue the hedge fund Long Term Capital Management.

Furthermore, big financial firms have a long-term relationship, both with the government and with each other, and can pay a price if they act selfishly in times of crisis. Bear Stearns, the investment bank, earned itself a lot of ill will by refusing to participate in that 1998 rescue, and it’s widely believed that this ill will played a major factor in the demise of Bear Stearns itself, 10 years later.

So officials could have called on bankers to offer a better deal, for their own sake, and simultaneously threatened to name and shame those who balked. It was their choice not to do that, just as it was their choice not to push for more control over bailed-out banks in early 2009.

Krugman also notes the horrible political and economic consequences of government of the bankers, by the bankers, for the bankers:

Unemployment is in double-digits; we desperately need more government spending on job creation. Banks are still weak, and credit is still tight; we desperately need more government aid to the financial sector. But try to talk to an ordinary voter about this, and the response you’re likely to get is: “No way. All they’ll do is hand out more money to Wall Street.”

So here’s the real tragedy of the botched bailout: Government officials, perhaps influenced by spending too much time with bankers, forgot that if you want to govern effectively you have retain the trust of the people. And by treating the financial industry — which got us into this mess in the first place — with kid gloves, they have squandered that trust.

Posted by James on Nov 20, 2009

Before 20th Century, doctors did more harm than good

It’s David Leonhardt Day at my blog! I found the opening of his Sunday article “Making Health Care Better” thought-provoking:

Brent James told me a story that you wouldn’t necessarily expect to hear from a doctor. For most of human history, James explained, doctors have done more harm than good. Their treatments consisted of inducing vomiting or diarrhea and, most common of all, bleeding their patients. James, who is the chief quality officer at Intermountain Healthcare, a network of hospitals and clinics in Utah and Idaho that President Obama and others have described as a model for health reform, then rattled off a list of history books that told the fuller story. Sure enough, these books recount that from the time of Hippocrates into the 19th century, medicine made scant progress. “The amount of death and disease would be less,” Jacob Bigelow, a prominent doctor, said in 1835, “if all disease were left to itself.”

Yet patients continued to go to doctors, and many continued to put great in faith in medicine. They did so in part because they had no good alternative and in part because, as James put it, they wanted a spiritual counselor with whom they could talk about their health. But there was something else, too. There was a strong intuitive logic behind those old treatments; they seemed to be ridding the body of its ills. They made a lot more sense on their face than the abstract theories about germs and viruses that began to appear in the late 19th century.

So the victory of those theories would require a struggle. The doctors and scientists who tried to overturn centuries of intuitive wisdom were often met with scorn. Hippocrates himself wrote that a physician’s judgment mattered more than any external measurement, and the practice of medicine was long organized accordingly.

This illustrates three immensely important and disturbingly depressing realities about humanity:

  • We can ignore mountains of evidence that we’re wrong, instead collectively deluding ourselves for centuries — even millenia — based on superstition, wishful thinking, (unfounded) trust in authority figures, and cultural tradition

  • We tend to stick with what we know, even when it’s wrong — even to the point of killing us — rather than open our minds to alternative viewpoints

  • We effortlessly rationalize away facts that don’t conform to our current beliefs and readily believe in completely unscientific theories and embrace harmful treatments because we so unquestioningly accept stories that “explain” why something (false) is true

Posted by James on Nov 11, 2009

China is not the next America

Most Westerners assume China is on the road to democratization because emergent middle classes generally force their nations to democratize. Martin Jacques writes that China will avoid democratizing for much longer than we presume:

Again and again, our predictions and beliefs about China have proved wrong: that the Chinese Communist Party would fall after 1989, that the country would divide, that its economic growth could not be sustained, that its growth figures were greatly exaggerated, that China was not sincere about its offer of “one country two systems” at the time of the hand-over of Hong Kong from Britain — and, of course, that it would steadily Westernize. We have a long track record of getting China wrong.

The fundamental reason for our inability to accurately predict China’s future is our failure to understand its past….

The Chinese state enjoys a very different kind of relationship with society compared with the Western state. It enjoys much greater natural authority, legitimacy and respect, even though not a single vote is cast for the government. The reason is that the state is seen by the Chinese as the guardian, custodian and embodiment of their civilization. The duty of the state is to protect its unity.

Perhaps an even stronger argument for the China-won’t-democratize-any-time-soon claim is that ordinary Chinese — and even many elites — value economic growth above political freedom. Political freedoms have expanded in recent decades, but the Chinese are most concerned with their pocketbooks. The Chinese Communist Party’s legitimacy is based as much on its excellent economic leadership in recent decades as on the Chinese people’s long-standing interest in stability.

Many are surprised China played Obama so tough during his visit, largely shutting him out of the Chinese media and giving him no trophies to bring home. But Jacques believes Chinese hubris — already apparent — will only continue to grow:

China, moreover, is possessed, like the West, with its own form of universalism. It long believed that it was “the land under heaven,” the center of the world, superior to all other cultures. That sense of self, which has engendered a powerful self-confidence, has been persistently evident over the last 40 years, but with China’s rise, it is becoming more apparent as the country’s sense of achievement and restoration gains pace. Or to put it another way, when the presidents of China and the United States meet in Beijing in 2019, with the Chinese economy fast approaching the size of the American economy, we can be sure that the Chinese sense of hubris will be far stronger than in 2009.

The Chinese do not view themselves as a weak power growing into a strong power. They view themselves as long the world’s most successful nation. Sure, they’ve suffered several hundred years of setbacks — largely caused by foreign invaders — but they’ve gotten past that speed bump and are now regaining their rightful place as the world’s greatest country.

America’s failure to pursue smart policies is due in no small part to some very serious flaws of our democracy; Washington is owned by large corporations, so laws advantage mega-companies at the expense of ordinary Americans. In theory, a communist nation — or a benevolent dictatorship like Singapore under Lee Kuan Yew — can impose wise policies faster and more effectively than a nation ruled by a Congress and a Presidency addicted to and utterly dependent on corporate campaign contributions. China’s economy has indeed greatly benefitted from its government’s generally smart economic policies and does not look admiringly on American-style “democracy.”

Posted by James on Nov 25, 2009

Entire nation of Slovenia shames Nicholas Kristof into apology

NY Times columnist Nicholas Kristof apologizes to the entire nation of Solvenia for offending them in his past columns:

In several columns, I’ve noted indignantly that we have worse health statistics than Slovenia. For example, I noted that an American child is twice as likely to die in its first year as a Slovenian child. The tone — worse than Slovenia! — gravely offended Slovenians. They resent having their fine universal health coverage compared with the notoriously dysfunctional American system.

As far as I can tell, every Slovenian has written to me. Twice. So, to all you Slovenians, I apologize profusely for the invidious comparison of our health systems. Yet I still don’t see anything wrong with us Americans aspiring for health care every bit as good as yours.

Posted by James on Nov 06, 2009

Europe froze in just months: "like taking Ireland today and moving it up to [the Arctic]"

Europe and North America are kept artificially warm by a “conveyor belt” that moves warm, tropical surface water northward. That conveyor belt can — and has repeatedly — shut itself off, with civilization-destroying consequences.

Now, horrifying news from climate researchers about the speed with which the “conveyor belt” can shut down: the “Big Freeze” ice age that struck North America and Europe 12,800 years ago and then held the northern hemisphere in its icy grip for 1,300 years engulfed the continents in ice in a matter of just months:

Until now, it was thought that the mini ice age took a decade or so to take hold, on the evidence provided by Greenland ice cores. Not so, say William Patterson of the University of Saskatchewan in Saskatoon, Canada, and his colleagues.

The group studied a mud core from an ancient lake, Lough Monreagh, in western Ireland. Using a scalpel they sliced off layers 0.5 to 1 millimetre thick, each representing up to three months of time. No other measurements from the period have approached this level of detail.

Carbon isotopes in each slice revealed how productive the lake was and oxygen isotopes gave a picture of temperature and rainfall. They show that at the start of the Big Freeze, temperatures plummeted and lake productivity stopped within months, or a year at most. “It would be like taking Ireland today and moving it up to Svalbard” in the Arctic, says Patterson.

Posted by James on Nov 16, 2009

From "lawmakers" to "campaign contribution-whoring rubber-stamp wielders"

In an excellent, depressing article titled “Is the House Health Care Bill Better than Nothing?”, physician and Harvard Medical School senior lecturer Marcia Angell confirms my fears about the lousy health insurance bill and praises Dennis Kucinich for opposing it:

Conservative rhetoric notwithstanding, the House bill is not a “government takeover.” I wish it were. Instead, it enshrines and subsidizes the “takeover” by the investor-owned insurance industry that occurred after the failure of the Clinton reform effort in 1994. To be sure, the bill has a few good provisions (expansion of Medicaid, for example), but they are marginal. It also provides for some regulation of the industry (no denial of coverage because of pre-existing conditions, for example), but since it doesn’t regulate premiums, the industry can respond to any regulation that threatens its profits by simply raising its rates. The bill also does very little to curb the perverse incentives that lead doctors to over-treat the well-insured. And quite apart from its content, the bill is so complicated and convoluted that it would take a staggering apparatus to administer it and try to enforce its regulations.

What does the insurance industry get out of it? Tens of millions of new customers, courtesy of the mandate and taxpayer subsidies. And not just any kind of customer, but the youngest, healthiest customers — those least likely to use their insurance. The bill permits insurers to charge twice as much for older people as for younger ones. So older under-65’s will be more likely to go without insurance, even if they have to pay fines. That’s OK with the industry, since these would be among their sickest customers. (Shouldn’t age be considered a pre-existing condition?)

Insurers also won’t have to cover those younger people most likely to get sick, because they will tend to use the public option (which is not an “option” at all, but a program projected to cover only 6 million uninsured Americans). So instead of the public option providing competition for the insurance industry, as originally envisioned, it’s been turned into a dumping ground for a small number of people whom private insurers would rather not have to cover anyway…

First, health costs will continue to skyrocket, even faster than they are now, as taxpayer dollars are pumped into the private sector. The response of payers — government and employers — will be to shrink benefits and increase deductibles and co-payments. Yes, more people will have insurance, but it will cover less and less, and be more expensive to use…. [I]t does nothing to solve the problem of runaway inflation in the system.

If industry lobbyists sat down to write a bill that would transfer as much money to themselves as possible while maintaining a veneer of “reform” and helping some of the presently uninsured, this is exactly the junk legislation they would write. That’s unsurprising because most of this 2,000-page bill probably was drafted by health insurance lobbyists.

Can we retire the now invalid term “lawmakers” and instead refer to members of Congress as “campaign contribution-whoring rubber-stamp wielders”? A mouthful, for sure, but far more accurate.

The House has many real liberals whereas the Senate has virtually none, so if the House bill is this bad, I expect the final bill will be even worse than nothing.

Posted by James on Nov 09, 2009

Goldmine Sachs

Maureen Dowd takes on Goldman Sachs:

When Arlidge asked [Goldman CEO Lloyd Blankfein] whether it’s possible to make too much money, whether Goldman will ignore the people howling at the moon with rage and go on raking it in, getting richer than God, Blankfein grinned impishly and said he was “doing God’s work.”

…As many Americans continue to struggle, Goldman, Morgan Stanley and JPMorgan Chase, banks that took government bailout money after throwing the entire world into crisis, have said they will dish out $30 billion in bonuses — up 60 percent from last year….

As one former Goldman banker told Arlidge, the culture there is “completely money-obsessed. … There’s always room — need — for more. If you are not getting a bigger house or a bigger boat, you’re falling behind. It’s an addiction.”

…[Saturday Night Live’s] Amy Poehler [said] “When most people saw the headline ‘Goldman Sachs Gets Swine Flu Vaccine’ they were superhappy until they saw the word ‘vaccine.’ ”

Seth Meyers chimed in: “Also, Centers for Disease Control, you sent the vaccine to Wall Street before schools and hospitals? Really!?! Were you worried the swine flu might spread to the Hamptons and St. Barts? These are the least contagious people in the world. They don’t even touch their own car-door handles.”

Posted by James on Nov 12, 2009

Good discussion of human nature

The New York Times has a good discussion of scientific research into human nature.

One point in the article is immediately useful to parents:

When infants 18 months old see an unrelated adult whose hands are full and who needs assistance opening a door or picking up a dropped clothespin, they will immediately help, Michael Tomasello writes in “Why We Cooperate,” a book published in October. Dr. Tomasello, a developmental psychologist, is co-director of the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany.

The helping behavior seems to be innate because it appears so early and before many parents start teaching children the rules of polite behavior…

If children are naturally helpful and sociable, what system of child-rearing best takes advantage of this surprising propensity? Dr. Tomasello says that the approach known as inductive parenting works best because it reinforces the child’s natural propensity to cooperate with others. Inductive parenting is simply communicating with children about the effect of their actions on others and emphasizing the logic of social cooperation.

“Children are altruistic by nature,” he writes, and though they are also naturally selfish, all parents need do is try to tip the balance toward social behavior.

This is exactly the advice I’ve read in some good parenting books. When you notice behavior you’d like to encourage, acknowledge and praise it. I especially like to do this when talking with other parents and my son is within earshot. I’ve seen him smile as I’ve praised him to others.

Posted by James on Nov 30, 2009

Have you stopped beating your wife? A simple "yes" or "no" answer, please

Pox News' Glenn Beck loves spewing groundless, paranoid speculation about the supposedly sinister motives of others. When he’s not blatantly declaring President Obama a racist (“This president has exposed himself as a guy over and over and over again who has a deep-seated hatred for white people or the white culture… This guy is, I believe, a racist” — about which Rupert Murdoch just said “(Beck) was right”), Beck’s couching his absurd theories behind a defensive, “I’m just asking.”

But when a Florida programmer used the same technique on Beck — to spotlight Beck’s use of this cheap defamatory trick — Beck cried to WIPO to shut down the programmer’s website. Beck lost because WIPO saw the sarcastic parallel between Beck’s malicious, groundless attacks and the programmer’s. As Gawker.com puts it:

Maybe Glenn Beck raped and murdered a young girl in 1990, and maybe he didn’t. Wherever the truth lies, it’s clear that the World Intellectual Property Organization has decided that he can’t stop the internet from asking the question.

Because he is an idiot, Glenn Beck tried in September to shut down glennbeckrapedandmurderedayounggirlin1990.com, a satirical site that used Beck’s insidious “I’m just asking the question” pose to advance the Fark-inspired meme that Beck may have raped and murdered a young girl in 1990, because, well—have you ever heard him deny it?

Comments on the page are pretty funny:

  • I find it FASCINATING that he isn’t directly addressing these malicious charges! And now he’s trying to shut down a website for just answering the questions more patriotic American’s should be ask? NOW I’M NOT SAYING HE’S TRYING TO HIDE SOMETHING but don’t you think it’s interesting that he hasn’t defended himself?

  • I, personally, would like to see the evidence Glenn did not rape and murder a young girl in 1990. Why doesn’t Glenn Beck present that evidence? Is he hiding evidence that he did not rape and murder a young girl in 1990?

  • I’m not saying that Glenn Beck DID rape and murder a young girl in 1990. But isn’t it interesting that nobody in the Mainstream Media will ask these questions? Why isn’t anyone talking about this? Why are we the only ones who care about this potential rape and murder?

Kidding aside, I’m not sure which is more surprising:

1) That Glenn Beck responded so strongly to this patently absurd rape-and-murder claim; or,

2) That former Republican Congressman Joe Scarborough not only escaped scrutiny but has even become a mainstream media darling with a lucrative Starbucks endorsement deal after Scarborough’s intern, Lori Klausutis, was found dead in his office at virtually the same time Scarborough divorced his wife and shocked Washington by deciding to quit Congress, supposedly to spend more time with his boys.

Democratic Congressman Gary Condit was crucified by the media and lost his job over the murder of his intern, Chandra Levy, even though we now know Rep. Condit was completely innocent of Levy’s death. Scarborough’s name was kept squeaky clean, even though we still don’t know whether he’s innocent or guilty.

Posted by James on Nov 10, 2009

I dislike the Miami Dolphins but love this story

I’ve probably never written a kind word about my beloved Patriots' football rivals in Miami, but I can’t resist the heart-warming story titled “A homeless man finds a friend in Miami Dolphins football boss Bill Parcells”:

Parcells was headed to work but stayed parked through a green light after [the homeless John] Schoen mentioned that he was an Eagles fan.

Schoen lamented the fact that Andy Reid, the Eagles coach and executive vice president, hadn’t made a play for a big-time wide receiver. Schoen also admitted that, as an Eagles fan, he hated the Giants, Cowboys and Jets teams that had been coached by the Big Tuna.

A few weeks later, Parcells stopped at the corner for his daily paper and handed Schoen an Eagles shirt, ball cap and the following note, which Schoen carries in the pocket of his worn, turquoise fleece jacket:

Coach, Tell my newspaper friend that we took a wide receiver in the second round, DeSean Jackson, and to wear the hat and shirt with pride — we are playing the Dolphins in the Super Bowl! AReid

With that, Parcells gave Schoen a pair of tickets to Miami’s game last November against the Oakland Raiders. Schoen, overcome, looked at his new Eagles attire, the tickets — lower level, 35-yard line, 10 rows behind the Dolphins bench — and asked:

“Do you think it’d be appropriate for me to wear my Eagles stuff to the Dolphins game?”

“No, but I’ll take care of it,” Parcells said.

The next day, Parcells stopped to give Schoen the Dolphins cap.

Posted by James on Nov 10, 2009

Intense emotions prevent learning

The following seems obvious (once you think about it) but is so important I want to highlight it:

[Horacio] Sanchez says, “If the amygdala is in control, the neocortex shuts down.” Brain Science for Dummies would translate: If the kid is having big feelings, he’s not thinking clearly, if he’s thinking at all.

Teachers can give superb lessons, but if the kid’s not listening, he’s not learning. If he’s sad, angry, depressed, or worried about his parents’ fighting, about the bully, about the death of Grandma, the dog, or even a beloved TV character, he’s full of feeling. And feelings come first.

Parents who care about their children’s education should focus not on grades but on effort. And productive effort requires a student to concentrate on learning. Emotional disruptors destroy children’s ability to concentrate.

If your child is happy at school, she/he is probably learning a lot. But if they’re glum or worried, they’re emotionally handicapped in the classroom. You must find out why and help them remove whatever is blocking their ability to engage at school.

Posted by James on Nov 16, 2009

I offer 50. You demand 100. Let's compromise on 100

A.I.G. basically offered the world the following deal: “Anyone who gives us a dollar today will receive $500 if the economy weakens.” Financial institutions around the world tripped over themselves racing to make such a great bet.

Once A.I.G.’s mountain of incredibly stupid bets failed in 2008, A.I.G. was bankrupt and owed other financial institutions hundreds of billions of dollars it could not pay.

Normally, unpayable private debt is resolved by partially paying off creditors (often via bankruptcy). Generally, the debtor and the creditor will sit down and reach an agreement by which the debtor promises to pay a fraction of what it owes and the creditor agrees to accept that amount as full payment. If the parties cannot agree, then the courts — often the bankruptcy courts — will impose a settlement by which creditors each receive some fraction of whatever they are owed.

But as I explained in March in “If I owe you $10K, I’m in trouble; if AIG owes you $400 billion, taxpayers are screwed”, the Federal Reserve basically said, “Don’t worry, A.I.G. We’ll pay off your debts for you.”

By dangling the prospect of paying off A.I.G.’s private debts, the Fed possessed incredible bargaining power. If A.I.G.’s creditors refused to accept partial payment from the Fed, the Fed was under no obligation to pay them a penny.

The Fed asked major bank creditors to suggest settlement terms: 50 cents on the dollar; 60 cents on the dollar; 70 cents; whatever.

We now know that seven of the eight banks offered to “settle” for 100 cents on the dollar! The eighth bank — UBS — offered 98 cents on the dollar!

So the Fed decided to “compromise” by giving banks 100 cents on the dollar!

The key problem: “The Fed ‘refused to use its considerable leverage,’ [wrote] Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program” because “The banks and the regulator were confident that the New York Fed was not willing to push A.I.G. into bankruptcy.”

The insane refusal of the Fed and the government to let bankrupt financial institutions declare bankruptcy has cost Americans trillions of dollars. And the number will rise as some of these zombie firms take on excessive “heads-we-win-tails-taxpayers-lose” risks.

Posted by James on Nov 17, 2009

"IQ measures the brightness of the searchlight, but where we point it matters"

This article on why “smart” people often make idiotic decisions says “most researchers agree that, overall, the correlation between intelligence and successful decision-making is weak.” One reason is that “smart” people often trust their guts rather than think through the likely consequences of their decisions:

Without careful reasoning we often get [decisions] wrong, probably because our brains use two different systems to process information. One is intuitive and spontaneous; the other is deliberative and reasoned. Intuitive processing can serve us well in some areas – choosing a potential partner, for example, or in situations where you’ve had a lot of experience. It can trip us up in others, though, such as when we overvalue our own egocentric perspective. Deliberative processing, on the other hand, is key to conscious problem-solving and can help us override our intuitive tendencies if they look like leading us astray. …“Some people who are intellectually able do not bother to engage very much in analytical thinking and are inclined to rely on their intuitions,” explains Evans. “Other people will check out their gut feeling and reason it through and make sure they have a justification for what they’re doing.”

Another reason is that “smart” people — as measured in IQ tests — are often irrational decision-makers. The article notes that IQ tests fail to measure many mental functions essential to making wise, rational decisions:

[IQ] tests fall down when it comes to measuring those abilities crucial to making good judgements in real-life situations. That’s because they are unable to assess things such as a person’s ability to critically weigh up information, or whether an individual can override the intuitive cognitive biases that can lead us astray.

My favorite part of the article is the metaphor about intelligence being a searchlight. We often make poor decisions by focusing on the wrong things:

Perkins explains this as follows: “IQ indicates a greater capacity for complex cognition for problems new to you. But what we apply that capability to is another question. Think of our minds as searchlights. IQ measures the brightness of the searchlight, but where we point it also matters. Some people don’t point their searchlights at the other side of the case much, for many reasons – entrenched ideas, avoidance of what might be disturbing, simple haste. A higher wattage searchlight in itself is no protection against such follies.” Indeed, it seems even the super-intelligent are not immune. A survey of members of Mensa (the High IQ Society) in Canada in the mid-1980s found that 44 per cent of them believed in astrology, 51 per cent believed in biorhythms and 56 per cent believed in aliens (Skeptical Inquirer, vol 13, p 216).

Posted by James on Nov 17, 2009

Is "Soylent Green" the new "1984"?

Billions of people across Africa, Asia and Latin America won’t be surprised to learn that economies can place, essentially, zero value on human labor. But billions more — in prosperous, industrialized countries — are starting to witness the value of their labor plummet.

For many years, computers and robots have been muscling their way into increasingly more sophisticated physical tasks and intelligent analyses. Years ago, I extrapolated this trend to predict a bleak economic future for most people. Only those who own the technologies that power sophisticated robots and computational algorithms (or the giant databases they analyze) are economically safe. Most everyone else is living on borrowed time until computers eventually do their jobs better and cheaper.

Well, Martin Ford — a computer engineer — has written a book laying out my long-ago vision:

[H]e believes that technology is the direct cause of job losses that will never return. In fact, his fear is that even in those industries that are currently still labor intensive, job losses are inevitable. Which just might mean that there will be vast numbers of people all over the world who will have no money to spend at Zara. Not even at Old Navy…

…[E]conomists such as Hanson tend to believe that economic inequality might be a politically difficult thing, but it doesn’t portend economic disaster: because, as Hanson says, “producers can focus on giving the rich what they want, and innovation and growth is just as feasible for elite products as for mass products.”

…Ford… has a very interesting solution to his rather bleak human scenario. He seems rather keen on a consumption tax, or a direct tax on business that would attempt to capture the income that people would have earned if they had had a job. Then he would incentivize the unemployed to contribute to society according to their own talents and society’s needs…

“I really wonder if the system will be sustainable without some type of intervention,” he told me.

Extrapolating this trend all the way to a jobless future sounds like reductio ad absurdam …until you realize that double-exponential technological “progress” is practically rendering this extrapolation a fait accompli. Robots don’t have to replace everyone to destroy the value of labor. They need only take over enough jobs that the number of people wanting to do the remaining jobs far exceeds the number of openings. A substantial surplus of human labor will then drive the price of labor to zero.

Leaving aside the issue of how we distribute the bountiful goods a robotic society produces (and leaving aside the psychological fact that people who work feel they’re doing something useful), our collective ability to produce huge quantitites of goods with fewer and fewer people is a GOOD thing. It potentially frees us all to live happier, more fulfilling lives. But that potential can become reality only if we all share in the fruits of robotic labor whereas our capitalist system is concentrating those fruits in the hands of a select few (Bill Gates and the Google Guys, for example).

The obvious fair solution is a heavy tax on automated production that spreads the wealth. This is exactly what I envisioned years ago: that society would move toward the socialist ideal of healthcare for all, a basic living income for all, good education for all, community health and recreation facilities for all, greater spending on sports, the arts and music, shorter work weeks, etc.

(Private property absolutists will, of course, say this is unfair. But the justification of private property and capitalism is that the outcome for society is better than any alternative system. If private ownership and capitalism plus technological change lead us toward an unbelievably wealthy 1% and a desperate, hungry 99%, then society can and must re-write the rules. Besides, accumulating wealth is possible only in a society that provides advantages like police protection, courts, roads, trains, an educated workforce, etc. So, society has some claims on “private” assets.)

Years ago, I felt it inevitable that democracies in which most citizens were falling further and further behind economically would demand the rich share their new, ungodly wealth. How ironic, I chuckled, that the end game of capitalism would be an ideal socialist society.

Instead, in America, we’ve seen the political system cater to the ultra-rich to an extent I couldn’t have imagined 15 years ago. We’ve further cut taxes on the rich, and even in 2009 we can’t pass the lousy, totally-watered-down healthcare bills under consideration. Corporate lobbyists own the American political system.

Societies in which inequality has spiralled skyward and the ultra-rich have continued refusing to share “their” wealth have come unglued. (French Revolution, anyone?) Societies reach a breaking point at which open class warfare breaks out. But with all the new militarized robots (plus tasers, sound weapons, EMP, etc.) on their side, will tomorrow’s ultra-rich just choose to cordon us off into ghettoes or wipe us out rather than share? I hate thinking such horrid thoughts, but we have witnessed such selfish disdain by powerful Americans toward ordinary Americans this decade that Soylent Green feels more and more like Orwell’s prophetic 1984.

Posted by James on Nov 23, 2009

More reasons to hate the House health insurance "reform" bill

The New York Times’s David Leonhardt lists six specific failures of the House bill. Paraphrasing his more detailed arguments:

  • Failing to require or even incentivize hospitals to easily prevent “about 100,000 [deaths per year] from preventable infections they contract in a hospital”

  • Failing to provide funds for research into the effectiveness and cost-effectiveness of various treatments

  • Failing to empower a commission to set Medicare reimbursement rates, rather than let politicians take lobbyists' bribes to set high rates

  • Failing to require that hospitals incentivize doctors to provide quality care rather than expensive, high-profit care

  • Failing — despite their rhetoric — to provide a “public option,” i.e., a government-run insurance program that is an option available to the public. The “public option” will only be an option for a tiny fraction of Americans.

  • Failing to tax gold-plated insurance policies. Why does this matter? “If the Senate’s tax on so-called Cadillac plans were enacted, the average household would be making an additional $1,000 every year (in today’s dollars) by 2019.”

Posted by James on Nov 11, 2009

Protect Americans from terrorists? OK. Protect Americans against disease and illness? No way!

Rep. Alan Grayson said, “I’m sure that if we learned that al-Qaida was going to launch an attack on the United States and kill 44,789 Americans at any time next year, I’m sure that we would do anything in our power to prevent that. I submit to you we should do the same about [the 45,000 Americans who die needlessly each year simply because they lack health insurance]. We should do exactly the same here because we face the same threat.”

And at a Republican anti-health care rally, an anti-health care protester collapsed and had to be taken for medical treatment by paramedics. I hope you’ve got a great job, buddy, or you’ll soon be drowning in medical bills!

Posted by James on Nov 06, 2009

Rep. Kucinich: "insurance companies are the problem, not the solution"

In a short article every American should read, my man — Rep. Dennis Kucinich (D-OH) — exposes the farce of health insurance reform in “Why I Voted No”:

We have been led to believe that we must make our health care choices only within the current structure of a predatory, for-profit insurance system which makes money not providing health care. We cannot fault the insurance companies for being what they are. But we can fault legislation in which the government incentivizes the perpetuation, indeed the strengthening, of the for-profit health insurance industry, the very source of the problem. When health insurance companies deny care or raise premiums, co-pays and deductibles they are simply trying to make a profit. That is our system.

Clearly, the insurance companies are the problem, not the solution. They are driving up the cost of health care. Because their massive bureaucracy avoids paying bills so effectively, they force hospitals and doctors to hire their own bureaucracy to fight the insurance companies to avoid getting stuck with an unfair share of the bills. The result is that since 1970, the number of physicians has increased by less than 200% while the number of administrators has increased by 3000%. It is no wonder that 31 cents of every health care dollar goes to administrative costs, not toward providing care. Even those with insurance are at risk. The single biggest cause of bankruptcies in the U.S. is health insurance policies that do not cover you when you get sick.

But instead of working toward the elimination of for-profit insurance, H.R. 3962 would put the government in the role of accelerating the privatization of health care. In H.R. 3962, the government is requiring at least 21 million Americans to buy private health insurance from the very industry that causes costs to be so high, which will result in at least $70 billion in new annual revenue, much of which is coming from taxpayers. This inevitably will lead to even more costs, more subsidies, and higher profits for insurance companies—a bailout under a blue cross….

The “robust public option” which would have offered a modicum of competition to a monopolistic industry was whittled down from an initial potential enrollment of 129 million Americans to 6 million. An amendment which would have protected the rights of states to pursue single-payer health care was stripped from the bill at the request of the Administration.

Posted by James on Nov 10, 2009

Richly deserved anti-Carly Fiorina rant

Hewlett-Packard Trojan Horse Carly Fiorina wants to bring her power to destroy everything she touches to Washington by unseating one of America’s few good Senators: Sen. Barbara Boxer (whom I admire on many levels but still feel hurt by because she campaigned for Joe Lieberman against Ned Lamont, whose campaign I joined two months before it became an official campaign).

For anyone who doesn’t know the disaster Fiorina is, I offer this blog post:

Speaking as a woman in high tech, nobody wanted Carly to succeed at being the CEO of a Fortune 50 company more than me. I was tired of being the only woman in the room at meetings, I was tired of testosterone charged work days, I was tired of trying to out-guy the guys. I wanted someone who could be the face of women in high tech; to show the world that, hey, a girl could do this. Carly was charismatic, a dynamite speaker and seemed tailor-made for the role.

Then she actually tried to do the job. Cue the screeching tire and car crashing sounds….

“Train wreck” doesn’t quite cut it when describing Carly’s tenure at HP. “Epic fail” works better. During her tenure at HP, the stock nosedived 44%. She spent billions to acquire Compaq, promising big gains, which never materialized. She chased the last of the Hewlett and Packard families out of the company. She laid off over 28,000 people, and completely destroyed HP’s reputation as quality company to work for. She racked up over $100 million in compensation, including her $21 million severance.

Shit, I would have ruined the company for half that.

What has she done lately? Well, she was on John McCain’s staff for his failed presidential bid. She got sidelined, however, after she admitted that neither John or Sarah Palin was qualified to run a major company. (Because no one knows “un-qualified to run a major corporation” like a failed former CEO)

Posted by James on Nov 05, 2009

Teaching teachers

Excellent op-ed in today’s New York Times on how poorly America teaches and mentors new teachers:

Our best universities have, paradoxically, typically looked down their noses at education, as if it were intellectually inferior. The result is that the strongest students are often in colleges that have no interest in education, while the most inspiring professors aren’t working with students who want to teach. This means that comparatively weaker students in less intellectually rigorous programs are the ones preparing to become teachers.

The author’s recommended reforms seem obvious, which suggests how abominable our teacher training system has become:

Too often, teaching students spend their time studying specific instructional programs and learning how to handle mechanics like making lesson plans. These skills, while useful, are not what will transform a promising student into a good teacher.

First, future teachers should continue studying the subject they hope to teach, with outstanding professors. It makes no sense at all to stop studying the thing you want to teach at the very moment you begin to learn how.

Meanwhile, students should learn their craft the way a surgeon learns to operate: by intense supervision in a real setting with expert mentors. Student-teachers are usually observed only twice during a semester and then given a written evaluation. But young teachers, like young doctors, should work side by side with skilled mentors, getting plenty of feedback, having plenty of opportunities to observe and taking on greater and greater responsibility as they improve….

Teachers must also learn far more about children: typically, teaching students are provided with fairly static and superficial overviews of developmental stages, but learn little about how to watch children, using research and theory to understand what they are seeing.

Years ago, I actually investigated becoming a teacher but quickly gave up because the process seemed to involve jumping through many hoops… hoops that had little to do with becoming a successful teacher. The credentialing system seemed perfectly designed to weed out candidates with low tolerance for bureaucratic, boring, cookie-cutter training classes that you had to repeatedly drive 100 miles to attend — the exact kind of dynamic, knowledge-loving, get-it-done, creative people schools should be tripping over themselves to hire. Sadly, experts in the field seem to agree.

Posted by James on Nov 02, 2009

The only channel for truthful news -- Comedy Central -- does it again

My wife and I are so addicted to “The Daily Show” and “The Colbert Report” that we become angry and depressed whenever we learn the shows are taking a week off. We love TDS & TCR because they present the news through a filter of truth and balance… values most “real” news programs pay only lip service to. And only because they drew out the sick humor of American politics and let me laugh at it was I able to stomach watching news during the Bush Administration.

But “The Daily Show” recently aired quite a boring interview with a liberal Palestinian politician and a Jewish Palestinian sympathizer. What they said struck me as innocuous, self-evident platitudes I would characterize as “Palestinians are suffering. Let’s negotiate a peace so Jews and Palestinians can live in harmony.” That’s why I found the segment so dull.

But you can’t say anything negative about Israel in America without a massive backlash from the American Jewish lobby, which — on many issues — seems more reflexively pro-Israel than even the average Israeli.

During taping of the show, an audience member screamed, “Liar!” I’ve watched over 1,000 episodes and had never before heard such an outburst.

And, apparently, since the show, The Daily Show has been receiving hate mail.

I am heartened by comments (on articles about this uproar) praising Jon Stewart for having the courage and respect for the truth to try to present the side of the story never presented on American television:

  • They’ve had hundreds of pro-Israeli guests: Bill Kristol, Jon Bolton, anyone from the Bush administration, anyone from the Obama administration…and they get ONE pro-Palestinian guest on, and this happens. WHAT…DOES…THAT…TELL…YOU???

  • Do what you need to do Jon, you always call it right. We support you.

  • it[‘]s kind of ironic how parody news is better than real news at reporting the real issues without slander or bias.

  • kudos to the Daily show for showing the other side of the story. The Palestinians deserve for th[ei]r story to be told

  • Israel has all the power but they claim to be the victim. Meanwhile the Palestinian people are hoarded into camps … their resources reduced to a trickle … children shot at by Israeli military as if their lives are all completely worthless. The US and all of us who live here are responsible. With out the support of our military and propaganda Israel can not wage it’s all out assault against the Palestinians …. You cannot hoard people into camps restrict their food and medical supply .. bomb their homes and use their children for target practice with overwhelming military aggression and not have consequences … But in the US what we hear about is how bad the Palestinians are … that they are ruthless murderers …. terrorists …. you never hear the other side of it and when someone does try to talk about it they are ruthlessly attacked.

Here are comments from another article:

  • Jon, Thank you for once again being a more credible news source than FOX. War and hate are easy. Hope and Peace take work

  • Thank you, Jon — especially for your courage and caring, and for reminding us of the Family of Man and human values.

  • Jon Stewart should be singled out for praise by journalists and members of the public for having the courage and good sense to put a sober and reasoned Palestinian position on his show.

  • As a Jewish author, I support him and any efforts to encourage dialogue about peace.

  • Thank god, allah, jahweh, and/or just plain rational thought and human decency, for Jon Stewart

  • Thank you Jon for bringing these two guests and making people aware of the issues that don’t show up in our media outlets.

  • How refreshing to have honest discussion of the Palestinians' plight on television, from both a Palestinian and a Jewish American perspective. Barghouti showed us that there are voices other than Abbas worth listening to, and Baltzer showed us that many in the Jewish diaspora support justice. Kudos to them, the Daily Show and Comedy Central — way ahead of the curve.

The American people — or at least my fellow Daily Show watchers — are far better informed on this than the media who would rather shout at us what to believe than present facts honestly. I don’t know how the truth leaks through the Israel-can-do-no-wrong media firewall, but I’m sure glad it does.

Posted by James on Nov 03, 2009

U.S. gov't trying to criminalize ISPs whose users post copyrighted content

The United States is attempting to insert into an anti-counterfeiting treaty stiff criminal penalties against any ISP/website whose users violate copyright law… even non-commercial ISPs! Jailing website operators based on user-submitted content would likely cripple websites — like Facebook, Youtube and DemocraticUnderground — that rely on user-submitted content because policing massive quantities of user-submitted content for copyright violations is basically impossible.

A quick search for “ACTA” on The New York Times (“All the news that’s fit to print”) and The Washington Post websites turned up absolutely nothing. So I point you to these articles for coverage of the Obama Administration’s attempt to cripple the Internet:

Posted by James on Nov 04, 2009

Why save when you might hit the lottery?

Neil Irwin describes the crux of the problem with SuperFreakonomics’s environment chapter:

The standard strategy for preventing potentially catastrophic global warming, one advanced by an overwhelming consensus of climate scientists and environmental economists, is to put in place policies to reduce the amount of carbon dioxide humankind emits. That’s apparently too conventional for Levitt and Dubner, who spend the vast majority of their chapter (with time taken out for potshots at Al Gore) examining the work of scientist/entrepreneur Nathan Myhrvhold’s crew, a group that is exploring the idea of pumping sulfur into the upper atmosphere and other neat tricks that just may be cheaper, easier ways to combat global warming.

It would be great if one of those schemes turned out to work. Fantastic, even. But Levitt and Dubner seem to simply presume that because one of them might work, Gore et al. are foolish to push to reduce emissions. It is like a family declining to save for college because their 10-year-old Little Leaguer with a decent arm may end up getting a full baseball scholarship.

Posted by James on Nov 20, 2009