Sunday, July 31, 2011

Are the historical models that might help modern authors and publishers?

As book stores go out of business and the book publishing industry faces new uncertainties, the question of how authors can support their work comes to the fore. Some are experimenting with disintermediation, self publishing (often using print on demand) and/or publishing digital versions online. Amazon will list such books for sale, providing a marketing intermediate, even if the author chooses to dispense with a publishing house with its editorial and other staff.

In the past, authors sometimes financed their works by subscriptions, as Audubon financed his great Birds of America by having people subscribe to monthly issues of prints. I recall too that authors of fiction in the 19th century would support their work by serializing the chapters of their books in periodicals, publishing hardback editions when the book was completed.

I have ordered a book in advance of its publication on Amazon, which allowed me to be assured that I would be among the first to obtain a copy. The process used by Amazon also assures a low price, pricing the book not at the nominal price when the order is placed but at the lowest price from that time until publication.

Selling books online might allow subscriptions of different kinds. Thus one might subscribe to digital editions of chapters on a monthly basis, or to a digital edition of the whole book, to a paper back, to a hard cover edition, to a copy of the hard cover signed by the author, or even to a more elaborate arrangement.

Someone should set up a business making these options available to authors!

Saturday, July 30, 2011

The quality of scientific knowledge (and engineering knowledge)

Sir Paul Nurse on the Charlie Rose show

Nobel Prize winner, Sir Paul Nurse says that there are three key aspects of science that result in the high quality of scientific knowledge:
  1. Scientists seek to incorporate huge amounts of experience in their theories.
  2. Scientists are skeptical.
  3. Scientists work as a community, so that when a consensus emerges from the debates among a large number of skeptical scientist it is likely to be especially trustworthy.
People too often reject negative information. Science is built on the idea that all hypotheses should be refutable, and indeed that experiments must be made and replicated in an effort to refute hypotheses. Indeed, the greatest kudos go to scientists who successfully challenge the most widely accepted “common knowledge”. Think about Darwin and his challenge to the Great Chain of Being, Newton and his challenge to the rejection of action at a distance, or Einstein and his challenge to Newtonian physics.

Scientists ideally attribute only a limited credence to the best established scientific facts and very actively seek to challenge new experimental findings by replicating experiments and observations; they also actively seek to challenge the interpretation of observations.

When a theory has been tested by the generation of very many hypotheses generated from the theory, each of which has survived many replications of experimental observations intended to falsify the hypothesis, and each of which has survived scientific challenges of the interpretation of theory into hypothesis and hypothesis into observation, then that theory gains credence.

On the other hand, engineering knowledge gains credence when the bridge stands for a century carrying heavy traffic, or when a chemical processing plant has produced ton after ton of product safely and efficiently for a decade or two. Engineering knowledge is codified in codes of practice, both legal and professional, in standards, in formal training programs, and in long processes of apprenticeship for the transfer of tacit knowledge, 

Friday, July 29, 2011

1912: Wilson, Roosevelt, Taft and Debs--The Election that Changed the Country

I just finished reading 1912: Wilson, Roosevelt, Taft and Debs--
The Election that Changed the Country by James Chace. The book tells the story of the 1912 presidential election, one that I knew little about, but one which was unexpectedly important in the history of the country.

The scale of enterprises had become large in the United States by 1912, with continent spanning railroads, electric power systems spanning large areas, and large manufacturing enterprises serving large. It was the time of monopolies and little regulation. It was also a time in which the population was increasing rapidly, including by immigration. The working environment was too often dangerous, and children were exploited in the workplace. The economy went through recurrent cycles of boom and bust, causing grave social problems during the recessions, As a result of the social and economic problems of the day, there was widespread belief that progress must be made in protecting workers and regulating industry, but there was also a strong conservative faction who liked things as they were.

Government was much more limited than it is now; notably there was no central bank for the United States. While there were many who felt that monopolies had gotten out of hand, and many who felt that government was the best (and perhaps only) means of balancing their power, there was no consensus on how government should deal with monopolies.

 The book focuses on the election and its politics. Theodore Roosevelt and William Howard Taft had been president and vice-president; when Roosevelt failed to run for a third term, Taft was elected. The book paints Taft as a week and more conservative president than Roosevelt, leading to Roosevelt becoming disenchanted with his successor and his policies. He eventually spoke out against the Taft administration, the established friendship between the two foundered, and Roosevelt contested for the Republican nomination for the 1912 election. Chace paints a complex picture of a contest between progressives and conservatives, between bosses and their machines and popular movements. Roosevelt lost the Republican nomination and, using his popularity and charisma, led in the creation of a third party, the Progressive.

Woodrow Wilson, the Democratic candidate was a one term governor of New Jersey; he is painted by Chace as a conservative by nature, a progressive for convenience, and a racist prejudiced against the new immigrants from southern and central Europe, who was lacking in intellectual curiosity and international experience. Wilson had had three strokes prior to the election, hidden from the public, which might have predicted the major stroke he actually had in office. Wilson won the Democratic nomination over a large field of weak Democratic candidates after a long battle.

The fourth candidate, Eugene Debs, an extremely popular labor leader, led the Socialist Party to their strongest showing ever in the election, gaining almost a million votes.

Wilson of course won the election, but did so with a minority of the votes. Roosevelt was second, gaining the largest portion of the vote of any third party candidate in history. Taft was third, with Debs a distant fourth in the balloting. Progressives dominated the voting, reaching a high water mark until another Roosevelt was elected in the Great Depression.

While war clouds were gathering in Europe during 1912, with war breaking out in 1914, according to Chace U.S. preparedness was not an important issue in the 1912 campaigns, nor was the likelihood that the candidates would support U.S. entry into the war, and much less which candidate might best lead in the planning in the aftermath of the war. Chace clearly thinks that Teddy Roosevelt would have done much better than Woodrow Wilson in those areas if elected president. On the other hand, Wilson's first term in office resulted in economic changes that probably did help prepare the country to prosecute the war more effectively, and he supported military preparations while seeking to avoid war. Still, it seems clear that while Wilson shared an interest in a post war intergovernmental organization to help keep the peace, his failures with the Senate helped assure that the Treaty of Versailles and the League of Nations would fail.

The book is relatively short and easy to read. To achieve these virtues it profiles the candidates and their key supporters relatively briefly, describes the machinations of the politicians and the party conventions in some detail, but devotes relatively little attention to the issues at play in the election.


Eradicating polio


The Economist has an interesting article on the global campaign to eradicate polio. It notes that the World Health Organisation in 1988 set out to achieve a polio-free world by 2000. While the rate of polio infections today is one percent of that in 1988, the eradication has not been accomplished.
Today polio is endemic in only four countries: Afghanistan, India, Nigeria and Pakistan. It has, however, re-emerged in several others. Each endemic country has its own particular problems. In Afghanistan the GPEI has failed to stop transmission in 13 war-ridden southern districts. Most of India is free of the disease, but the states of Uttar Pradesh and Bihar continue to struggle. In 2003 and 2004 Nigeria was gripped by rumours that polio vaccine would sterilise children and infect them with HIV. And although in Pakistan the incidence of polio dropped tenfold between 1995 and 2000, conflict, poor sanitation and a mobile population helped the number of cases jump by 62% last year.
International terrorism has been killing a few hundred people per year. Polio will return in full horror if the eradication fails; malaria did when the malaria eradication campaign failed. If polio does return, it will be far more damaging than international terrorism. The cost of the wars in Iraq and Afghanistan, supposedly fought to reduce the risk from international terrorism, cost some four trillion dollars. Lets not skimp on financing of the effort to eradicate polio. Indeed, I would suggest that countries that do not eradicate polio within their borders be seen as comparable to Afghanistan in its criminal support of Al Qaeda before 9/11! However, there poor countries and regions will need help and incentives to do their part.

Working Age Populations

I quote from The Economist:
Many emerging economies are in the sweet spot of a demographic transition, where the share of the population in their working years is rising, boosting economic growth. So far East Asia’s economies have reaped the most dramatic demographic dividend. The share of the working-age population has soared from 47% in 1975 to 64% in 2010. This surge has underpinned rapid economic growth, but is now ending. The share of the working-age population in East Asia will peak this decade and fall to 57% by 2050. In South Asia, in contrast, the share of the population of working age will continue to rise until 2040.
This suggests that India might in a few years surpass China in the rate of increase of GDP. Investors take notice. 

The Oldest Established Floating Crap Game in Government

The Congressional misadventures on the extension of the debt limitation reminded me for some reason of "The Oldest Established Floating Crap Game in New York" from the musical, Guys and Dolls. That leads me to make a modest proposal. Lets have the Congress move from place to place every month.

We could have the public vote by Internet on the quality of the Congressional effort in the previous month, In accord with that vote we could have the Congress move to a more attractive or worse location. If it did very well, Congress might meet the next month in a luxury hotel in Hawaii. If it did poorly, it might spend a month in Philadelphia.

In keeping with that idea, let me suggest that it spend the next month in FIMA trailers in an especially mosquito loaded area of Alaska traversed by the Alaska pipeline and nothing else!

A modest proposal to Pres. Obama on what to do after August second

Assuming that the Congress will fail to expand the debt limit and the government runs out of money on August 2 with which to pay its bills, your first priority should be to turn off the water, lights and air conditioning of the Capitol and the House Office Buildings. You should also stop paying the members of Congress, furlough the Congressional staff, and cancel the health insurance of all members of Congress.

The problem is of course that the separation of powers requires that the administrative branch of government administer the appropriations laws passed by the Congress and also not to exceed the debt limit passed by the Congress. If the Congress fails to extend the debt limit then the appropriations passed by the Congress for this fiscal year will necessarily require borrowing in excess of the debt limit remaining from the existing law.

Secondly, I would withhold payments on all contracts for large companies, on the assumption that large companies would have credit lines and other resources which would allow them to deal successfully with the cash flow problems. The fact that the executives of the large companies would likely make their displeasure known to their Congressional representatives, and that their opinions count a lot with the Republicans, are only peripheral benefits of the decision.

Of course the Congressional appropriations bills do not specify the expenditures month by month in the fiscal year, so that it principle the administration may defer expenditures that would normally be made in August into September. Indeed the practice is that funds appropriated for a given fiscal year must simply be obligated in that year, as for example by being obligated in contracts or grants to be paid over a longer period.

There is a long history of American presidents impounding appropriated funds, and under some circumstances a temporary deferral of obligation of appropriated funds is allowed (for up to a year). Thus it would seem that the administration would have some flexibility in dealing with the responsibility of obeying the laws passed by Congress and signed by himself or his predecessors.

Of course, it is the courts that would be asked to judge the legality of the administration's acts after they occur. I recall that Andrew Jackson is supposed to have said of a decision made by the Supreme Court under John Marshall: "John Marshall has made his decision; now let him enforce it!"


Check out the two following figures from recent studies by the Pew Research Center and CBS:


The last couple of years have been hard, often very hard, on a lot of our citizens. The safety net provided by Social Security, Medicaid, Medicare, government pensions, and related government programs should be protected!

Wednesday, July 27, 2011

Who is assassinating Iranian scientists and engineers?

Darioush Rezaie, 35, a university lecturer, was shot dead by gunmen in eastern Tehran Saturday.  According to Reuters:
Western security agencies were most likely behind the killing of an Iranian scientist in an operation that underlines the myriad complications in the conflict over Iran's nuclear program.
Al Arabiya states (quoting Irans Student News Agency):
“An Iranian nuclear scientist was assassinated in front of his house today ... and his wife was also wounded,”
Al Arabiya adds:
There have been several instances when Iran’s nuclear scientists were targets of assassination or kidnap. 
In November 2010, twin blasts in Tehran killed top nuclear scientist Majid Shahriari and wounded another, Fereydoon Abbasi Davani. Tehran then swiftly blamed the CIA and Mossad for the attacks. 
In January 2010, Masoud Ali Mohammadi, another Iranian nuclear scientist involved with the SESAME- light for Experimental Sciences and Application in the Middle East - project, was killed in a bomb attack which Tehran blamed on “mercenaries” in the pay of Israel and the United States. 
In July 2010, Iranian nuclear researcher Shahram Amiri said after returning to the Islamic republic that he had been held in the United States for more than a year after being “kidnapped” at gunpoint by two Farsi-speaking CIA agents in the Saudi city of Medina.
On the other hand, Science magazine reported in its January 22 edition of 2001 that Masoud Ali Mohammadi was not a nuclear scientist (although he was a physicist), and that
Alimohammadi was one of 240 Tehran professors who had declared their support for Ahmadinejad's main opponent, Mir-Hossein Mousavi.
It goes on to suggest that students at his university attribute his assassination to officials of the Islamic Republic. There are also reports, including those citing the Government of Iran that Rezaie was not a nuclear scientist.

I would note that the Welfare of Scientists network is working on a number of cases involving Iranian intellectuals and scientists.

On indicators for outpatient health services

Currently it would seem that our health services usually wait for patients to seek services. Only in some circumstances do those services seek patients proactively that might benefit from services. One might ask the question of how the resources available for primary health services could best be allocated to improve health.

It is generally accepted that the most cost effective health interventions are preventive, such as immunizations and certain kinds of health education.

I did a part of my doctoral dissertation on risk indicators, and it seems reasonable to give more care to people at higher risk of needing health services.

Disability Adjusted Life Years (DALYs) have been used for a number of years to account for health benefits. Prior to the use of DALYs, emphasis was on mortality and life expectancy. The WHO initiative to improve outcome measures recognized that disability was also a negative outcome for the health system, and correspondingly, years of disabled life should not be equally credited with years of normal life.

Perhaps one could develop measures of the likely risk of individuals, the likelihood and amount that risk could be reduced by prompt provision of health services, the magnitude of the health risks and health benefits, athe cost of the intervention, and the costs averted for future services that would have been needed without prompt intervention.

I suspect that a good intermediate approach would be to develop risk indicators for a number of common problems and then have clinicians define protocols for those whose risk was sufficiently high. The protocols would include the possibility of contacting the patient and calling them in to receive an intervention.

Some Thoughts About Innovation

Josef Hochgerner has published an article titled "The Analysis of Social Innovations as Social Practice" in Bridges, the science policy online journal of the Austrian Embassy to the United States (Incidentally, Bridges is well worth reading for those interested in science and technology policy in an international context.) I found the article tough sledding, and indeed wondered about its accuracy. For example, Hochgerner sees the interest in innovation as having stemmed from economist Joseph Schumpeter's work before World War II, while the Oxford English Dictionary seems to indicate that the word was used much earlier, and usually in the context of political innovations.


Let me begin recognizing that "inventions" are first reductions of ideas to practice, while "innovations" may simply be introduction to practice in a new environment. Thus inventions are always innovations, but innovations are seldom new inventions; most innovations are simply transfers of things found elsewhere to a new environment. Of course, such transfers frequently involve adjustments, or if you prefer, complementary (usually minor) innovations.

As an old former engineer, I tend to focus on technological innovations. Of course, technological innovations often are made in parallel and coordination with institutional innovations. Thus ICT innovations leading to the penetration of personal computers and the Internet in businesses also involved re-engineering of those business organizations and indeed restructuring of the markets among business enterprises.

Looking back at the Arab Spring helps one to recognize that political innovations are still with us. Authoritarian governments have been challenged in many countries and all of them can probably be seen as innovating in response. Those innovations differ from country to country. Tunisia and Egypt seem likely to introduce considerably more democratic governments in response to their national demonstrations, while Syria seems to be introducing more coercive procedures to tamp down its demonstrations. NATO and the United Nations have introduced new procedures to deal with the Libyan civil war, as both the Gaddafi and opposition forces are innovating in their efforts to retain/obtain power.

I suppose the development of social networking on the Internet has been prototypical of complementary technological and social innovations. The changing patterns of person to person and group interactions taking place on the social media are not primarily economic nor political, but they are surely social (and cultural, in the broad sense of culture).

I have been interested in the role of art museums in recording the process of new artistic schools as innovations in "high culture". The National Gallery of Art, for example, has a good collection illuminating the artistic innovations of the Renaissance and of the Dutch artists who developed a new art to serve the market of affluent merchants that developed in the 17th century. New York's Museum of Modern Art is especially good at tracking the innovations in painting and sculpture in the 20th century.

Is it worth talking about religious innovations, such as those that led to the creation of the Church of the Latter Day Saints or Scientology, or those related to radio evangelists?

As one thinks of socio-economic development, it seems to be a process of successful innovations of many kinds. Not only are technological and institutional innovations intimately related, often in unpredicted ways, but so too are innovations in economic, political, social and cultural realms, and those too are often beyond our capacity to predict.

Sunday, July 24, 2011

A Thought About Reasoning from History.

Marvin and Deborah Kalb discussed their book Haunting Legacy: Vietnam and the American Presidency from Ford to Obama on Book TV. There were a couple of key points made:

  • Different presidents facing different problems at different times have looked back on the U.S. experience with the war in Viet Nam, interpreted that experience in very different ways, and used it to justify or conceptualize very different decisions on their military problems.
  • In general, we do not understand the foreign cultures and countries in which the new military problems occur well enough to deal with those problems well. Perhaps one might extrapolate to suggest that it is easy to draw false analogies if one does not understand the situation in which you plan to apply the analogy.
I dare to suggest that it is also the case that we do not understand Viet Nam and the U.S. experience in Viet Nam well enough (yet, still?) to be safe from false analogies to other situations.

It seems to be obvious that different historians understand the same history in different ways, and indeed that the same historian may understand a single historical event in different ways at different times. Moreover, it seems to be agreed that each generation reinterprets the past according to the issues of its time. Indeed, since culture changes fast enough that each generation's culture differs from that of its predecessor and that of its successor in significant ways. One can conclude that the drawing of "lessons" from history to apply to current decisions is a risky business.

Perhaps one might suggest that a limited time perspective does not help. Seeking analogies from a couple of thousand years of history, and from the history of all regions of the world is likely to yield more accurate parallels than seeking analogies from only one's own lifetime and only one's own country.

Thus I guess I am suggesting that it is better to know a lot about history, about the details of historical analogies and about the situations to which one seeks to apply the analogy if one is to reduce risks to an acceptable level.

Perhaps one can go further and suggest that our top decision makers seldom frame problems in ways that our descendants will think was the most reasonable, that they often miss the key issues on major events. If so, how much are they likely to benefit from historical analogies that they seek to apply?

Saturday, July 23, 2011

People don't act as if they accurately projected the future.

This week marked the 150th anniversary of the Battle of Bull Run, and I have been thinking about the Civil War. It seems obvious to me that there were better options than what actually was done. In fact, the Civil War resulted in 620,000 deaths of soldiers. The south saw the emancipation of slaves, massive destruction of infrastructure, loss of international trade which could not be revived after the war, post-war occupation by Union troops, and disruption by large numbers of slaves given freedom with no preparation, followed by a history of oppression of blacks. The north lost more young men killed in the war than did the south as well as a huge monetary cost; presumably the economic condition of the north would have been improved if the south had had a more vigorous and complementary economy in the latter part of the 19th century such as might have been possible without the Civil War. Alternatives might have included:

  • Virginia staying with the Union. Virginia was especially hard hit by the war as so much of the military action took place in the state. Had Virginia remained with the Union, other states that actually joined the Confederacy might have also have remained with the Union. Presumably the war would have been shorter, with the far south more clearly dominated by the expanded Union, and possibly the peace would have been gentler with the cultural support of Virginia for the defeated Confederacy. The transition from slave societies to free societies might have been better planned had Virginia been part of the Union.
  • A strategy in which a plan was created for the gradual abolition of slavery in the nation which included such elements as help for the former slaves to adjust to their new condition and reimbursement for those who lost the property that they held as slaves.
The question I have is why the people of the United States did not find these solutions. Some people, for example Winfield Scott (the head of the Union military) and Sam Houston (former President of Texas) saw that the war would be terrible. One supposes that the media failed to inform the public, that leaders drew false analogies with historical precedents, and that the decision making failed in serious ways.

This might be a lesson to contemplate as the Congress seems to be about to act stupidly with respect to the debt ceiling and the plan to reduce the deficit!

Where is the Best Place to Invest $102,000 -- In Stocks, Bonds, or a College Degree?


Michael Greenstone and Adam Looney have posted an article on the Brookings site holding that (on average) families would do better economically by putting a kid through college than be investing a comparable amount in stocks and bonds. Of course, I value university education, and have taught at the university level as an avocation for a dozen years or more. However, I do have some doubts about the article.

I wonder first of all whether the graph above is correct. In fact, people with higher income tend to invest more, feeling that the future income from the investments is more attractive than the current consumption. The college education might also lead to more remunerative investments. Should such items be included in the analysis?

More to the point, an individual kid is likely to benefit more or less than the average from a four year college education. Moreover, a kid attending college is likely to find one that is more or less expensive than the average. Sending a kid who will not benefit from a college education to a $50,000 a year college to study something like cultural studies is unlikely to be a good investment.

As an aside, some people who dropped out of college made a lot more money than most people who stayed in college, such as Bill Gates, Steve Jobs, Mark Zuckerberg, Tom Hanks and Tiger Woods. Indeed, each of these people may have done better financially by dropping out of college at the best moment to exploit their financial opportunities.

Certainly there are a lot of people who would do better preparing to be carpenters, electricians, metal workers, mechanics, or other important occupations for our society than going to college to prepare for some occupation that they would enjoy less and at which they would be less successful.

The article, reasonably does not look at the externalities of higher education. College education is subsidized in a number of ways, including faculty who teach for less than the value of their services, cross funding from research grants, scholarships. There are also benefits to the society that accrue from the population of college educated citizens which are not reflected in their remuneration.

I would suggest that it might be interesting to try to estimate the value of a college education in terms of the opportunities that that education opens. One of my old friends who held a BS, an MD, an MPH and a DPH noted that his earning potential went down with every degree past the MD, yet he always had the economic potential provided by that MD degree. In my own case, I chose to volunteer for a couple of years as a Peace Corps Volunteer, to work for the Government when I might have worked for more money in the private sector, and to donate a lot of time to teaching and (other) unpaid services that I could have used to make money. Not only does the potential earning, even if foregone, seem a more appropriate measure of the value of education, the opening of opportunities may be theoretically the real value of university education! 

Friday, July 22, 2011

Latin America needs a 'big push' in S&T investment

I quote from an article by Francisco Sagasti in SciDev.Net: 

Latin America is a fertile land for creative policies for science and technology (S&T), but its achievements in this field are limited.
It invests just 0.6 per cent of GDP in research and development, about a third of the global average. It has 8.5 per cent of the world's population but accounts for only 3.5 per cent of the world's researchers, 4.9 per cent of the scientific publications and 0.2 per cent of patents.
Sagasti has played an important role in Latin American science policy, and indeed in science policy internationally, for decades. He writes from experience as well as from a policy analysis background. I certainly agree that Latin America has under performed in science and in technological innovation and improvement, and that in the coming century it should do better.

I am a Gringo, however, and am familiar with a government that has no explicit science and technology policy, but implements a number of instruments that influence investment and production of science and technology. The United States has a complex system in which federal and state governments, the higher education system, private industries and even civil society do and fund science, and innovate and improve technology as they use it.

I have lived in Chile and Colombia, in both places transferring technologies, and have worked in and out of almost all the other countries in the region. My experience suggests that there are fertile fields for technological innovators. I wonder, however, if my Latin colleagues and students lacked the brashness of us Gringos. The ideal is indeed that enemy of the good in technological work, and it is often important to just go ahead and do the best you can. Technology grows through people building marginally on the work of others.

I suspect that Sagasti and I agree that strengthening science and technology in Latin America involves both governmental policies and industrial efforts. The educational system is critically important, both to do science and technology and to prepare the workforce to work as productive scientists, engineers and technologists.

Thursday, July 21, 2011

"Crockett fought odds in Washington, too"

I quote from "Crockett fought odds in Washington, too', James R. Boylston and Allen J. Wiener, The Tennessean"
“I am a party man in the true sense of the word,” he wrote, “but God forbid that I should ever become so much a party man as obsequiously to stoop to answer party purposes.” He saw the rise of political parties as a threat to the country, because politicians were bound to become more concerned with the success of their party than the greater good of the country. Like Jefferson, Crockett believed democracy was best served by tying citizens closely to the government through their representatives. He defiantly insisted that “I cannot nor will not forsake principle to follow after any party and I do hope there may be a majority in Congress that may be governed by the same motive.”
My friend Allen alerted me to his article, and I agree completely that today we need the members of the House of Representatives and the Senate to think of the country first, rather than their party. Lets see the debt limit increased and a reasonable compromise on the budget future  now!

I must say, I feel few of our current legislators' names will live in history as Davy Crockett's has. But then few of them are the men that Crockett was!

Growth and Inflation are keys to managing the debt!

Monday I described how even with the debt increasing at one percent per year, with an attainable growth rate of three percent per year, were the initial ratio of debt to GDP 50 percent, it could be reduced in a decade to 41 percent. If there were a modest inflation applied to the GDP but not to the debt, the ratio of debt to GDP would be reduced to 31 percent.

If instead of an increase of one percent per year of the debt, it could be reduced by one percent per year, then without inflation the the debt to GDP ratio would be reduced to 31 percent; with three percent per year inflation, the ratio would be reduced to 25 percent.

The point is that with attainable levels of economic growth and modest inflation, a government that pays it costs as it goes will rapidly reduce its debt to manageable levels (as compared with GDP).

Where does all the computer power go? A lot goes to the federal government!

There is an article in the New York Times today about the planned consolidation of U.S. Government computer data centers, apparently going to cloud computing in some cases to substitute for single-user centers. Summarizing some of the information from the article:
The U.S. federal government is the largest buyer of information technology in the world, spending about $80 billion a year. The population of federal data centers has swelled from 432 in 1998 to more than 2,000 by last year.
The U.S. federal government now plans to close some 800 of its data centers. One facility run by the Department of Homeland Security in Alabama covers 195,000 square feet; other data centers to be eliminated are less than 1,000 square feet in size. The cost savings from running fewer data centers is estimated at more than $3 billion a year. Analysts estimated that tens of thousands of jobs will most likely be eliminated by the consolidation.

Across the federal government hundreds of different software programs are used for financial accounting and hundreds of different ones for human resources management. The government is shifting to cloud computing, which could save the government an additional $5 billion a year by reducing the need for individual government agencies to buy their own software and hardware. 
The data consolidation is part of a larger reworking of information technology by the government in which the goal is more responsive and efficient government services.”
According to Wikipedia, more than two-thirds of the nations of the world have GDPs under $80 billion, that is less than the U.S. government spends of computers and computer services. I have often noted that many of the discussions of the "Digital Divide" focus on per capita measures of access to personal computers, the Internet or even telephones. The massive U.S. federal government expenditures on information technology suggests that there may other indicators of the Digital Divide, such as the magnitude of intensive use of high end information technology that would be useful for international comparisons.

I note also that the kind of consolidation being planned by the U.S. federal government may make information technology services more cost effective than would be possible for governments serving smaller, poorer countries.

Wednesday, July 20, 2011

"The internet is not that global after all"

Source: The Economist
The article in The Economist indicates that not only is connectivity different in different nations, but the way that consumers use the Internet is also different. The article focuses on consumer Internet use, and not on other uses such as business to business Internet mediated activities which seem to me also likely to be "culture dependent".

Insight: A Conversation with Gary Klein



Edge presents a nice video in which Psychologies Gary Klein explains some of his ideas about the way people chose their actions.

He recognizes that there are formal approaches to decision making that depend on quantification and mathematical (or at least arithmatic) analytic procedures. They simply are not used in the situations in which his research has taken place.

So too he recognizes the utility of formal procedures, such as the flight check procedures used by airline pilots. Neither he nor I would want to fly on a plane for which the ground crew and flight crew had not successfully completed their preflight checks. On the other hand, he finds that in too many firms there are efforts to limit all personnel to routinized and formalized procedures to the expense of the application of expertise to situations and at the expense of valuable insights from the experts.

Expertise by the line people in important functions like fire fighting is developed with on the job training and experience and includes a lot of tacit knowledge. Klein emphasizes that experts will confront a situation, (almost always) recognize its pattern as fitting in a known categories, and frame the search for actions in terms of those categories. His research suggests that they will then generate options sequentially and model each mentally until one is found that appears to successfully resolve the situation. The expertise based intuition is involved in recognition of the pattern fitting the situation and/or identifying ways in which the pattern is not fulfilled, and in the mental simulation of the options. I would suggest that it is also involved in the ordering in which options are reviewed, where options more likely to prove successful are likely to be first considered.

Insight is then invoked (especially by experts) in discarding some aspect of the expert routine and innovating with a new classification of the situation or a new solution to its problems and opportunities.

Klein seems to be one of those people who combine a lot of practical experience and deep thought to produce a deceptively simple synthesis. I like very much the implication of his talk that many organizations put too much emphasis on formal procedures and too little emphasis on the promotion of expertise and productive insight.

I think of the various efforts at "management by objectives" and "logical framework" planning, monitoring, management, and evaluation of projects. In the hands of experts these can be fruitfully combined with expert insight and intuition. Without the appropriate use of expertise the results may not be pretty. Moreover, a key management effort should be to develop experts in the organization with strong intuition and insights as well as mastery of formal procedures.

Of course, there is a problem as to when to use formal quantitative analysis, when to depend on expert opinion, and when to fall back on routine.

Thanks to my friend Julianne for pointing me to this talk!

Balony Detection Kits



Check out written versions of:

Lets think about this for a bit. It seems to me that these guys are thinking about big questions -- "is mankind causing global warming" or "is evolution the best explanation of the web of life". Does the approach work for all questions of what you should believe? How about really little questions -- should I take an umbrella with me today?

I have a little box that predicts the weather, a daily newspaper that does so, and several weather channels on television. I could spend a lot of time making my own observations, but it seems likely that I should accept the authority of these sources. I could spend a lot of time comparing their predictions over history with what actually happened. But the cost of making the decision should not be greater than the penalty for making the wrong decision.

It also seems to me that belief is a continuous variable, not a binary one. I would rather say, it is probably true that it is going to rain rather than have to say "I believe it must rain" or "I believe it can not rain". Better yet is the weather service's probability that it will rain. (Note, however, that you have to know what that probability means.)

So, let me think of a kit for making little decisions about what to believe.

1. How much is it worth doing to decide what to believe? There are distinctions without a difference. There are also distinctions that are either so unlikely to have costs or to have major costs that only a small amount of time and effort are justified in their research.

2. Refer to authority. Don't reinvent the wheel, look up the answer or ask someone who knows. On the other hand, be sure that the authority you source is based on knowledge, not some extraneous source such as access to the media or political office. Check to see that the source is really credible.

3. Break problems into their component parts, and plan an attack to find the best answer expeditiously.


4. Don't investigate extraneous issues. Physicians use the guidance that they should not order a test if the treatment decision will not depend on the results of the test; you too should limit your search for answers to those answers that will influence future actions.


5. Use your eyes and ears. If its raining, you don't need to check the weather reports to know whether to carry an umbrella; just look out a window.

6. Use your reason. Does the answer fit with other things you know? Does it make sense.

7. Investigate in ways that help you think. If you are number oriented, quantify. If you are oriented toward graphs, plot information. If you think in words, do so.

8 Be willing to accept ignorance? It is usually better to know that you don't know than to assume you know something which is not true.

9. Recognize degrees of credence. Ideally, one might say that a proposition is true with probability xx percent. Lofti Zadeh developed a fuzzy logic to recognize that, in contrast with traditional logic, it might be useful to consider that a proposition could be more or less true, more or less false, or more or less of undetermined truth value. Bayesian statistics provides not only a statistical means of adjusting probability estimates with new information, but a conceptual framework for doing so heuristically.

A back story to the UK withdrawal from UNESCO

No, no, not night but death;
Was it needless death after all?
For England may keep faith
For all that is done and said.
We know their dream; enough
To know they dreamed and are dead;
And what if excess of love
Bewildered them till they died?
I write it out in a verse -
MacDonagh and MacBride
And Connolly and Pearse
Now and in time to be,
Wherever green is worn,
Are changed, changed utterly:
A terrible beauty is born.
William Butler Yeats
Easter, 1916

Yeats was the first Irishman honored with a Nobel Prize. He was a driving force behind the Irish literary revival and with Lady Gregory a founder of the Abbey Theater. I have a small connection to Yeats in that he, together with Douglas Hyde and Lady Gregory, was a leader in efforts to rediscover lost Irish literature, and with Douglas Hyde was instrumental in creating the modern reputation of my ancestor, the poet Blind Raftery.
Yeats and Lady Gregory wrote a one act play titled Cathleen NĂ­ Houlihan. The lead role of Cathleen in the original Abbey Theater production was played by Maud Gonne, a famous beauty and dedicated Irish nationalist. She is notable among other things for having turned down four proposals of marriage from William Butler Yeats. Ultimately she married John MacBride.

John MacBride first came to general notice during the Boer War when he raised the Irish Transvaal Brigade (also known as the MacBride Brigade) which fought on the side of the Boers against the British. A leading member of the Irish Republican Brotherhood, he was an organizer of the Easter Rebellion of 1916, and was executed by the British after the rebellion, and immortalized in the great poem by Yeats quoted above.

Sean MacBride was the son of John MacBride and Maud Gonne. He was active in the Irish war of independence, and active in the IRA in his early years. In 1946 he founded the Irish republican/socialist party. His later distinguished career included stints as the Irish Minister for External Affairs, President of the Council of Ministers of the Council of Europe, and vice-president of the Council for European Economic Cooperation, Assistant Secretary General of the United Nations, and President of the UN General Assembly. Wikipedia reports that he was responsible for Ireland not joining NATO. He was a founding member of Amnesty International, and awarded the Nobel Peace Prize in 1974 for his work on human rights.

In 1977 he was appointed to chair the UNESCO International Commission for the Study of Communication Problems. The Commission produced its report, Many Voices, One World: Towards a New, More Just, and More Efficient World Information and Communication Order (Critical Media Studies Institutions, Politics and Culture) in 1980. The report, often called the MacBride Report, was the subject of a very divisive discussion at the following UNESCO General Conference. While the Commission report was considered moderate and is well regarded by many today, the developing nation delegates to UNESCO found it did not adequately reflect their demands for a New International Information Order that would make the media more supportive of their nation's needs for development and information for their peoples. The American and British media, which of course had huge international interests, covered the debate almost to the total exclusion of other aspects of the General Conference, and that coverage was largely negative.

The conservative Heritage Foundation had long opposed UNESCO and U.S. participation in UNESCO. In part the anti-UNESCO factions opposed the administrative practices of Amador M'Bow, and were concerned about charges of inefficiency of the Organization, but found the debate on the MacBride report to be a potent illustration supporting their charges of radical politicization of UNESCO debates (in directions contrary to U.S. interests). The conservative Republican administration of Ronald Reagan was convinced to withdraw the United States from UNESCO in 1984.

Why did the United Kingdom withdraw a year later? There were anti-UNESCO factions in the UK, and the Heritage Foundation had also been active in England lobbying against UNESCO; the media had panned the New International Information Order debate in the UK as it had in the United States, and it is generally agreed that the UK decision was in part influenced by and supportive of the U.S. withdrawal decision. Still the majority opinion in the British public and British Parliament were pro-UNESCO.

Margaret Thatcher had begun her long term of office as Prime Minister of the United Kingdom in 1979, and her administration was as conservative as that of Ronald Reagan in the United States. It is perhaps not surprising that it came down, over the objections of the House of Commons Foreign Affairs Committee, for withdrawal from UNESCO. I wonder, however, whether their opinions of the long history of anti-British activism by Sean MacBride and his parents might have had something to do with their response to the MacBride report and the debates that it influenced.

Tuesday, July 19, 2011

Michael Shermer: The Believing Brain

Reaching the bottom of the pyramid as a growth strategy

I quote from The Economist:
MANAGEMENT gurus have rhapsodised about “the fortune at the bottom of the pyramid” in emerging markets ever since C.K. Prahalad popularised the idea in 2006. They have filled books with stories of cut-price Indian hospitals and Chinese firms that make $100 computers. But when it comes to the bottom of the pyramid in the rich world, the gurus lose interest.

This is understandable. McDonald’s and Walmart do not have the same exotic ring as Aravind Eye Care and Tata Motors. The West’s bottom-of-the-pyramid companies are an unglamorous bunch. Many rely on poorly educated shift workers. Some inhabit the nether world of loan sharks and bail bondsmen.
The countries which have been achieving rapid economic growth by competing fiercely in global markets are going to find that motor for growth will slow, especially as wages increase with the increasing per capita GDP. The alternative motor for growth will be to increase domestic demand and increase production for domestic markets. This will be a challenge for firms in these nations involved both in distribution and manufacturing.

Does Schooling Promote Democracy

Source: The Economist

Sometimes it is better to look at the scatter plot than the regression line. It looks to me as if there may be little advantage of a year of schooling, that there is a relatively strong correlation of democracy and schooling over the six to nine years of education range, and that there may be decreasing returns to education with respect to democracy for more than nine or ten years of schooling on average.

Of course, correlation is not causation. It may be that increased freedom leads to more education, or that an underlying variable promotes both schooling and democracy (as measured by Freedom House).

I note too that there is a lot of variance around the regression line.

I also recall that the German Nazis and the Chinese Communists worked to see that the schooling in Germany and China did not promote democracy, but rather supported their authoritarian regimes.

Monday, July 18, 2011

Economic Growth helps shrink the debt as a portion of GDP

Assume that a national debt is 50 percent of the GDP. Assume further that the GDP is growing at three percent per year, and the debt continues to grow at one percent per year. At the end of ten years, the debt is 41percent of GDP. Thus even if there is no progress in reducing the debt and it is allowed to grow, if it grows slower than the GDP, the debt over time becomes a smaller with respect to the GDP (and thus easier for the government to handle).

Assume that there is actually a one percent per year reduction of the debt while the GDP grows at three percent per year. In that case, at the end of a decade the debt has been reduced to 34 percent of the GDP. Thus even a modest reduction of the debt combined with a strong growth of GDP greatly reduces the ratio.

The lesson from this little example is that the debate over means of bringing the debt down to manageable size must include means to grow the economy!

Check out the Nature Special on Science and Technology in Africa

Thinking about population policies

Years ago the debate in the development community about family planning seemed to focus only on the difficulties created by high rates of fertility and rapid population growth. It would be hard for families to support their many children, for school districts to build schools and train teachers to accommodate the large cohorts of children, for economies to create the jobs that they would need when they entered the job market. The environment would be further stressed. Food production would have to be increased very rapidly to feed the growing population and it was not clear how that could be done. Of course, all of those concerns continue to exist in countries in which birth rates are high.


The debate has been broadened. Of course, the rate of population growth has been successfully reduced in many countries and worldwide in general. Attention is being directed to the effects of the reduction policies. China with its one child policy is going to face a situation in which few workers are going to have to support a rapidly increasing population of people too old to work. Families that are having few children and prefer male children are using in fact reducing the numbers of girl children and no one knows what the results will be of who societies with massive imbalances in the male-female ratios.

On the other hand, we also hear that at the time when there is a bulge in working age people, with low dependency ratios (relatively few children due to low birth rates, relatively few aged due to earlier high mortality and high birth rates), a country can rapidly increase GDP and can invest in economic growth.

For the high income countries which now often have birth rates too low for replacement, policies are encouraging immigration to fill the labor needs of the economy. This results in brain drain from poor nations, and also results in social problems related to the changes in culture due to the new immigrants.

We also see unprecedented rates of rural to urban migration leading to the growth not only of cities of the sizes we are used to, but also to increasing numbers of mega-cities. It is obvious that this rapid urbanization is difficult to manage, but the social, economic and cultural impact of life in the mega-city seem especially unpredictable.

So, today demographic policies seem much more complicated and difficult to understand and develop than in the past.

We are all connected, and both Europe and the US need to deal with debt!



Reuters has an important opinion piece by Larry Summers, the former Secretary of the Treasury and chief White House economic advisor. I quote the opening paragraph:
"With last week’s tumult in Italian markets, the European financial crisis has entered a new and far more dangerous phase. Where the crisis had been existential for small economies on the periphery of Europe but not systemically threatening to either the idea of European monetary union or to the functioning of the global financial system, it now threatens both European integration and the global recovery. Last week’s drama surrounding bond auctions in Europe’s third leading economy should convince even the most hardened bureaucrat that the world can no longer let policy responses be shaped by dogma, bureaucratic agenda and expediency. It is to be hoped that European officials can engineer a decisive change in direction but if not, the world can no longer afford the deference that the IMF and non-European G20 officials have shown towards European policy makers over the last 15 months."
At a time when the European economic system is at high risk, the Congress should not fool around with that of the United States. It is time to pass the extension of the debt ceiling and to begin serious work on a long term plan to deal with the U.S. debt!

Sunday, July 17, 2011

Culture or Governance?

Michael Spence, the Nobel laureate who chaired the Commission on Growth and Development, has suggested that if one created a graph characterizing developing nations in which one axis was a continuum from authoritarian to democratic government and the other axis was a measure of economic growth, there would be no correlation visible. Strong and weak economies are found with both authoritarian and democratic governments.

Spence suggests that, while one might conclude from such analysis that government is not responsible for economic progress, he would tend to conclude that specific functions of government are complementary to the economic foundations of growth, but different forms of government adequately achieve these functions. Thus control of corruption, rule of law, and promotion of long term growth might be the characteristics of government performance that economists might best monitor. Different forms of government might be able to achieve similar outcomes in these important dimensions and thus be comparably supportive of economic progress.

A century ago it was widely thought that Argentina, Australia, and Canada were comparably likely to progress economically. Now the Argentine GDP per capita is $14,700, that of Australia is $41,000 and that of Canada is $39,400. Following Spence one might suggest that the difference is related to the failure of the Argentine government, as compared to those of Australia and Canada to provide the necessary government functions for economic growth. I would note that Argentina, like Australia and Canada was resource rich, with a temperate climate and a population dominated by European immigrants. I wonder, however, whether the Anglo-Saxon culture of Australia and Canada did not provide either a better basis for governance and/or for economic growth than the Latin culture of Argentina.

Chile might also be compared with Argentina as another resource rich, temperate, European immigrant dominated society with a Hispanic culture and a history of military governance at key periods. Its per capita GDP is $15,400, roughly the same as that of Argentina.

Saturday, July 16, 2011

BLINDED: EARTH HAS ITS EYES PLUCKED OUT.

I quote from Bob Park's What's New:
One week after a House subcommittee proposed terminating the James Webb Space Telescope (JWST), NASA's costly successor to the orbiting Hubble observatory, agency officials told an advisory panel on Thursday that JWST can be launched as soon as 2018, but political realities could delay the mission's start well into the 2020s. "Political realities" could terminate it completely. Meanwhile, the 2012 budget request NOAA sent to Congress in February asked for $47.3 million for the Deep Space Climate Observatory (DSCOVR) and $11.3 million for Constellation Observing System for Meteorology Ionosphere and Climate-2 (COSMIC-2). The House bill would not provide funding for either. Republicans oppose any mission that would give evidence of global warming. Otherwise celebrity billionaires might be called on to pay taxes at the rate of working people.
I can see delaying the Webb space telescope launch given the pressure of the debt crisis. On the other hand, keeping the tax burden low for the very rich is not worth giving up on the Deep Space Climate Observatory or the COSMIC-2 satellite.

Quotation: Sean MacBride on Communication

As communication is so central to all social, economic and political activity at community, national and international levels, I would paraphrase H.G. Wells and say human history becomes more and more a race between communication and catastrophe. Full use of communication in all its varied strands is vital to assure that humanity has more than a history.....that our children are assured a future.
Sean MacBride
Preface to Many Voices, One World
The report of the International Commission for the Study of Communication Problems

Sean MacBride was among other things a founder of Amnesty International. Click here to listen to his Nobel Prize lecture.

Thursday, July 14, 2011

A Call To Investigate Payments to Egyptian Cultural Officials

The New York Times has published an article indicating that Zahi Hawass, Egypt's antiquities minister, has received as much as $200,000 per year from National Geographic and that he has (presumably in his official capacity) made Egyptian antiquities available to National Geographic for its reports.

The article also states
Arts and Exhibitions International, secured Mr. Hawass’s permission several years ago to take some of the country’s most precious treasures, the artifacts of King Tut, on a world tour; its top executives recently started a separate venture to market a Zahi Hawass line of clothing.,,,,,,
Two Tut exhibitions organized by the company have traveled to 15 cities so far.....By the time the tours end in 2013, they will have brought Egypt close to $100 million.
It has been implied in the press that Farouk Hosny, the long time Egyptian Minister of highly desired ancient Egyptian artifacts to American museums in order to have his own paintings exhibited in their galleries.

Both Zahi Hawass and Farouk Hosny have recently survived criminal charges brought by authorities of the new Egyptian government.

The U.S. Foreign Corrupt Practices Act
prohibit(s) the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person. 
Perhaps the U.S. Government should formally investigate whether benefits offered to Zahi Hawass and Farouk Hosny were permissible under the act.

Policy Analysis Dependent of Scientific Knowledge

Gary Gutting, a professor of philosophy at the University of Notre Dame, wrote an opinion piece in the New York Times.: I quote:
How can we, nonexperts, take account of expert opinion when it is relevant to decisions about public policy?

To answer this question, we need to reflect on the logic of appeals to the authority of experts. First of all, such appeals require a decision about who the experts on a given topic are. Until there is agreement about this, expert opinion can have no persuasive role in our discussions. Another requirement is that there be a consensus among the experts about points relevant to our discussion. Precisely because we are not experts, we are in no position to adjudicate disputes among those who are. Finally, given a consensus on a claim among recognized experts, we nonexperts have no basis for rejecting the truth of the claim.
Professor Gutting goes on to discuss the example of Anthropogenic Climate Change.

It seems to me that if there is complete scientific consensus about an issue, then either decision makers will accept that consensus or will deny the relevance of scientific opinion as the basis for decision making. I think something of that kind occurred when Thabo Mbeki refused to base South African HIV/AIDS policy on the medical consensus that AIDS is caused by HIV.

The situation of Anthropogenic Climate Change is one in which 95 percent of experts agree, with only one in twenty disputing the widely agreed upon position. There is a basis for adjudicating the validity of the position held by the minority, and that is an investigation of the factors that may be involved in the decision making of those experts. Often we find, for example, that they have interests in the outcome of the policy decisions which should be disclosed. (I was on the editorial advisory board of a journal dealing with intellectual property law where we decided to require such disclosure by authors of all articles.)

The situation described by Thomas Kuhn in his book The Structure of Scientific Revolutions is perhaps of considerable interest. In the midst of a paradigm shift in a scientific field, the majority -- including older, more senior scientists -- can be expected to support the expiring view, while a minority -- led by younger, less famous scientists -- can be expected to support the arriving view. Is this really a realistic scenario? I recently read Empires of Light: Edison, Tesla, Westinghouse, and the Race to Electrify the World by Jill Jonnas about the battle between Edison and Westinghouse (and their companies) as to the better technology for electrical networks -- AC or DC. Edison was the more famous (and better at self publication) and he was supported by such luminaries as Lord Kelvin. However, Westinghouse in supporting the newer technology turned out to be correct.

In that case, the situation was far from clear since neither technology was sufficiently mature in the early stages of the policy debate that their utility could be conclusively determined, much less their cost effectiveness. Before AC won out, large investments had been made in DC systems which were eventually outdated and discarded. An illuminating example was the millions of dollars spent on the tunnels required for the Niagara Falls power plant before it was clear whether AC or DC power would be preferable. Had AC power not proven to be cost effective, the power plant might well have been limited to supplying the Niagara industrial zone. Since the power in the falling water was sufficient to supply a large portion of the total electrical power for the north eastern United States for many years, inability to send the power to where it was needed would have been very costly.

Of course, one can not use a decision rule of accepting the ideas of the younger scientists contesting the established scientific paradigm against that of the older, more established scientists. Most of the people seeking to overthrow an existing paradigm may well be wrong. In the case of the AC-DC controversy time resolved the issues of the feasibility of proposed technologies, and the market resolved the issues of the cost-effectiveness of the alternatives. Perhaps the lesson from this example is that policy makers should avoid rush to judgment, allowing scientific or technological controversies to ripen until a solution becomes apparent.

I would also note that in developed nations there are mechanisms that legislative and executive branches of government can use to deal with such issues, complementing or indeed replacing the legislative knowledge systems or the bureaucratic knowledge systems. These are the Academies of Science, which are staffed by experts in the analysis of scientific/technological systems, with strong procedures for consultation with many scientists providing a range of views, and also with strong procedures for differentiating those issues on which reliable consensus exists from those which are still ripening.

Thinking about the causes of the French Revolution

My book club met last night to discuss The Days of the French Revolution by Christopher Hibbert. I liked the book because it simply describes the day be day progress of the revolution into chaos, without trying to fathom the reasons for the revolution. As such it makes a real impression of how fast and seriously things can get out of hand. Those who were living through the days of the French Revolution clearly did not foresee the actual course of the revolution, of if they were of the tiny minority of Cassandras did not see how to stop the process.

In our discussion, however, I was especially interested in some of the hypotheses that came forth as to the causes of the revolution and the reasons it went so wrong.

  • The monarchy was broken. It was spending more than it could raise and was unable to raise the funds to pay its debts. Moreover, there were other countries with governments that were not broken showing that better government was possible.
  • The narrative that the monarchy was divinely ordained as attested by the Catholic church headed by God's representative on earth had been strongly challenged by the thinkers of the Enlightenment, thus undermining the conceptual basis of the monarchy, the church, and indeed the aristocracy in the minds of many of the key actors.
  • The income distribution had become too uneven, with the majority living in the most abject poverty, the monarch living in splendor, and the aristocracy and high church officials visibly living in great luxury. Anger was rife.
  • Bad weather led to crop failures, and the food distribution system was unable to prevent famine, while food prices were escalating for those living on the edge of poverty, exacerbating all the longer term  problems of the society and catalyzing revolution.
  • A widely recognized malaise that was present but not understood at the time.
  • The lack of cultural precedents in France for democratic government, such as existed in England, and institutions such as the rule of law that could have lent support to the various governing bodies and their decrees. The lack of a strong independent judiciary.
France was the most powerful country in Europe at the time of the revolution, able to conquer most of Europe even when dealing with domestic upheaval. Moreover, it was the cultural center of the West; French was the lingua franca of Europe. The revolution in France therefore was taken very seriously in other European nations.

There seemed to be general agreement that the book was interesting and engrossing.

The Objectives for the Government with respect to the U.S. Economy

It seems to me that there are three interrelated objectives for the government for the next ten to fifteen years:

  1. to reestablish and maintain confidence of investors, lenders, producers and consumers in the U.S. economy
  2. to reduce the ratio of government debt to GDP
  3. to grow the economy
Accomplishing the latter two objectives would help a lot with the first. I suspect that certain kinds of regulatory reforms, such as improving regulation of financial services would also help. If the conditions that contributed to the last financial meltdown are not corrected, then it will be hard to build confidence.

Reducing the ration of government debt to GDP can be approached by:
  1. a modest level of inflation. Three percent per year inflation would increase GDP by 100 percent in 24 years even without growth of the economy in real terms;
  2. reduce government expenditures;
  3. increase government revenues;
  4. grow the GDP.
The GDP is currently growing slowly and that growth if fragile. It would be stronger were confidence higher. Still, probably the immediate priority is to increase demand, and certainly instruments that would cut demand (such as cutting off unemployment insurance, laying off public employees, cutting back on social security payments) would have reduce demand. Continuing certain kinds of stimulus funding seems still to be appropriate.

Increasing the export of goods and services, tourism, medical tourism, enrollment of foreign students, etc. would help grow the economy.

In the long run, government investments that stimulate innovation, human resource development and infrastructure contribute to growth.

This is not rocket science. (As an aside, I actually worked for the Astropower Laboratory of McDonnell Douglas early in my career, which I guess made me a rocket scientist.)

The problem of course is to find how to combine the incentives in a reasonable way. When does the government shift from stimulus to debt reduction, by what proportion. How much emphasis should be given to revenue enhancement versus expenditure reduction? These are issues on which the best professional advice should be sought, not that of the Tea Party true believers, the false pundits on television, or indeed the average Senator or Representative.

Whatever the answers to those questions, it seems clear that default on the national debt is not a good idea!


Wednesday, July 13, 2011

Some Questions about the Debate on the Debt Ceiling

The executive branch is constitutionally required to implement the laws passed by the Congress and signed by the President. Thus it is required to implement this years appropriations and the current tax code. It is also required not to exceed the debt limit. If the debt limit is not increased by July 2, what is the constitutional action by the executive branch?

The government spends about one-third of its budget servicing the debt. If the debt ceiling is not increased, then the government will have to roll over some of the debt that is maturing and will face higher interest rates in doing so, so the portion of the income devoted to debt servicing will increase. There will have to be significant cuts in government spending if the debt ceiling is not increased and the executive branch implements that ruling of the Congress. It is estimated that about half the funding for the rest of government would be cut. In that case would it be better to cut Social Security, Medicare, support for the soldiers in Iraq and Afghanistan, funding for the FBI or the CIA?

Section 4 of the 14th amendment to the Constitution begins "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." Does that mean that the United States may not default on its debt? Does it mean that it may not default on social security payments?

We hear that businesses are sitting an a huge amount of cash but not investing it in their businesses, nor in hiring new staff. Why do the Republicans think that reducing taxes, by increasing the money held by businesses and business leaders will lead them to spend more on creating employment?

How can our political leaders view the threats of defaults from Greece and other European countries, with their threats of contagion and not remove the artificial threat of not extending the debt ceiling, much less the real threat of U.S. second-dip recession?

The best way to increase revenues to the government is to grow the economy and employment. Why is that approach not emphasized in the debates over increases in tax revenues and cuts in government expenditures?

How can some Republicans call for a complete overhaul in the tax code and simultaneously reject any thought of a change in how progressive our taxes are?

How can Republicans, facing a tax rate that is lower than any time since the 1950s, and recognizing that there were many periods of growth in that interval, say that tax increases would necessarily cut growth?

Some 5,000 changes in the tax code have been put in place in recent years, and the tax code is notoriously complex. Yet some Republicans seem to be calling for a complete revision of the code before September first. What are they thinking?

Why do Republicans think that reducing government spending, given that such spending results in employment in government and in the companies selling to government, would increase employment in the short term?

How can some Republicans feel that cutting the one element of last year's health legislation that is most likely to cut Medicare costs is likely to help reduce the deficit?

It is important to avoid a second dip recession and indicators suggest that we are very close to one now. It is important to reduce the deficit, and a plan is needed to do that over a period of a decade or longer. What is the proper balance between pump priming now and budget cuts now and later?