My candidate for an aphorism or epigram for the future

Truth is constructed fact by fact as a beautiful outhouse is constructed brick by brick.

Thomas Jefferson's outhouse

African has been developing economically

According to The Economist:

Ten years ago The Economist dubbed Africa “the hopeless continent”. Since then its progress has been remarkably hopeful. In 2000-08 Africa’s annual output grew by 4.9% (adjusted for purchasing-power parity), twice as fast as in the 1980s and 1990s and faster than the global average of 3.8%. Foreign direct investment increased from $10 billion to $88 billion—more than India ($42 billion) and, even more remarkably, catching up with China ($108 billion). The Boston Consulting Group notes that, since 1998, the revenues of Africa’s 500 largest companies (excluding banks) have grown at an average of 8.3% a year.

That is very good news. Now lets hope that the "dark continent" continues to ride out the global economic recession well!

Some data on genomics

The Economist issue of June 19th has a special report on genomics. I draw from it two graphs:

Source: The Economist

I quote:

The genome sequenced by the International Human Genome Sequencing Consortium (actually a composite from several individuals) took 13 years and cost $3 billion. Now, using the latest sequencers from Illumina, of San Diego, California, a human genome can be read in eight days at a cost of about $10,000. Nor is that the end of the story. Another Californian firm, Pacific Biosciences, of Menlo Park, has a technology that can read genomes from single DNA molecules. It thinks that in three years’ time this will be able to map a human genome in 15 minutes for less than $1,000. And a rival technology being developed in Britain by Oxford Nanopore Technologies aspires to similar speeds and cost.

Source: The Economist

The development of technology to study genomes has progressed very rapidly and as it has done so the number of teams studying genomics has increased significantly. In coming years it seems clear that our understanding of evolution and genetics will be completely transformed. From that research and transformation will undoubtedly evolve an important new technology.

A thought about banks

This is me trying to figure our how banks work.

Money goes into a bank in the form of investor capital and deposits. (I suppose banks can also sell bonds which it you think about it are like a different form of deposit.) The bank also obtains money in the form of deposits. Banks are required by the government to hold money in reserve. A bank can lend out all of the capital and deposits less the reserve it is required to hold. Say the reserve is 10 percent, then a bank can lend out 90 percent of the funds it has obtained.

Banks lend against collateral. Thus a bank can make a loan in the form of a mortgage on your house. It might loan up to 90 percent of the estimated value of the house. If you default on the loan, the bank can foreclose on the mortgage. As long as the money retrieved from the foreclosure covers the remaining amount of the loan, the bank gets its money back, allowing it to cover the value of the deposits it had loaned out without losing capital.

It seems to me that the required reserves held by a bank in part serve to provide a guarantee to the depositors that the collateral of bank loans and the reserves will be sufficient to guarantee the safety of their deposits. When banks make riskier loans (in the sense of financing a larger portion of the value of the collateral) then their reserve rates should be increased.

The interest charged on the loans made by a bank is used in part to pay the interest on the deposits of the bank and the profits on the invested capital. Since the interest that the bank pays on deposits is fixed by the agreement between the bank and the depositor, there is a risk on the rate of return on investment. In general, the bank should be managed so that the return on investment is higher than the interest it pays on deposits, rewarding the investors for the risk they have assumed.

Banks benefit from the statistics of banking. Usually the bank can depend on an accurate prediction of its total amount of deposits because individual new deposits and withdrawals are statistically uncorrelated and the "law of large numbers" holds. Of course, in the past there have been unpredictable fluctuations, leading to runs on banks or periods or rapid increases in total deposits. In part these fluctuations have been based on the psychology of the depositor, and government insurance of bank deposits helps to keep depositors calm and deposits in place.

Banks usually can also depend on the accurate predictions of defaults on loans, allowing them to accurately calculate the required interest rate needed to pay the interest on its deposits and profits on investment even after losses on defaults. Of course, as recent experience indicates, when a real estate bubble bursts the banks may find that they have seriously underestimated the risks of defaults on real estate mortgages. When the economy goes into recession or depression, the banks may find that they have seriously underestimated the risks on loans to businesses. Mortgage insurance can help to reduce such risks of underestimation of default rates. Government programs to keep the economy sound and growing can help to reduce the risks of underestimation of default rates on business loans.

One of the great things about banks is that they help people mobilize their capital. A person can take a mortgage on his/her house or land and use the money to invest in his/her business. If the profits from the investment in the business exceed the cost of the money borrowed, then the person comes out ahead. The economy benefits from increased investment in businesses, resulting in more employment and economic growth. A renter, having saved enough for a down payment on a home, can borrow the rest of the money needed to buy the home. As long as the cost of ownership is less than the cost of rent, he/she comes out ahead. The government, believing that wide spread home ownership has considerable social benefits, can foster investment in home ownership not only be mortgage insurance but also by tax deductions for mortgage interest payments.

The following illustration from How Things Work's article on How Banks Work illustrates how banks multiply the amount of money circulating in the economy. The multiplication of money in the economy if too great is inflationary, if too low is deflationary. As a result the Federal Reserve in the United States and central banks in other countries seek to regulate the rate of money creation by banks.

Book distribution as an element of cultural diplomacy

There is a new book out:

BOOKS AS WEAPONS: Propaganda, Publishing, and the Battle for Global Markets in the Era of World War II by John B. Hench

There is a streaming video of an interview with the author on C-SPAN and a useful review of the book.

Hench describes a program of the U.S. Office of War Information during and immediately after World War II to distribute books published in the United States to Europe to improve the understanding of European intellectual elites of the United States, its culture, and of the development of the U.S. culture during the war years when communication had been cut off. The program is compared with efforts of the United Kingdom and meant to counteract the propaganda about the United States that had been disseminated by the Nazis.

This program is part of what I (and many others) would term "cultural diplomacy". Dick Arndt's book, The First Resort of Kings: American Cultural Diplomacy in the Twentieth Century, is I believe the definitive history of U.S. efforts in cultural diplomacy.

I would point out that UNESCO was created with part of its mission to counteract propaganda. Thus with strong U.S. support, one of UNESCO's first post war programs reviewed text books used in Europe in order to remove falsehoods and other propagandistic elements that had been introduced by the fascists.

Hench points out that sales of U.S. published books in post-war faced the challenge of the poverty of Europeans whose national economies had been wrecked by the war. UNESCO sought to help Europeans get access to text books through a vouchers program that allowed purchases with local (ofter heavily devalued) currencies.

Hench does not focus on the post war programs for the distribution of books. Had he done so he might have learned from the evaluations of such programs. Indeed, he seems not to be aware of the number and nature of such programs. There is a good report from the Library of Congress (U.S. Books Abroad: Neglected Ambassadors by Curtis Benjamin) on U.S. international book programs that you might find useful.

One of my favorite programs of this kind was the Regional Technical Aids Center project (in two phases: RTAC I and II) supported by USAID. That program was run for more than 20 years to provide U.S. text books, translated into Spanish, to Latin America. Several evaluations are available from the USAID Development Experience Clearinghouse (do a search on the Clearinghouse database to find them).

It seems to me that the distribution of books published in the United States can have a huge impact improving the understanding of the United States by the intellectual leaders of other nations, and especially the positive opinions of Americans and U.S. culture. This will happen best if the distribution is not undertaken as propaganda managed by bureaucrats to achieve a desired effect, but rather as an effort to make the best of American non-fiction and fiction available to those who have a need or an interest in the works.

A thought about research on mental illness

Homeostasis is the property of systems, especially applied to biological systems, that regulates the internal environment in order to maintain stable, constant conditions. It has been suggested that the nervous system, faced with psychotropic drugs, will invoke homeostatic mechanisms that return the action of the nervous system to its pre-drugged condition. You can see that such a mechanism would be useful if for example a person with a normal brain were to accidentally ingest a substance which included a component that affected perception or brain functioning. It has been suggested that medication of people exhibiting symptoms of mental illness might trigger such homeostatic mechanisms that would over time return the brain to its pre-medicated conditions of mental illness.

The "gold standard" for assessing the safety and efficacy of a new drug is the randomized, double blind case control study. These studies are expensive and are time limited. It has been suggested that such a study of continuing medication with a psychotropic drug might show results that would, were the study continued long enough disappear due to the homeostatic systems of the nervous system. However, if the homeostatic mechanism were to require some years to function, most case-control studies would miss the effect due to early termination. Thus drugs might be approved on the basis of short term effects that would not be useful for long term use, and indeed might be counterproductive.

What do you suppose the medical profession would do if, after some years of use, such drugs were challenged? The practitioners would have experienced the short term efficacy with their patients, who would leave care or would be seen to have relapses. It seems to me that the common perception would be that the drugs were efficacious. Moreover, the group-think of the clinical community would tend to respond negatively to what it might perceive as a challenge to its common knowledge and general practice. The response of the drug companies profiting from the sale of the drugs and faced with possible liability were it proven to be of limited use or indeed capable of worsening the presenting condition can easily be imagined.

One public protection against such situations would be good medical records and systems for tracking the long term success of patients with chronic conditions receiving long term drug treatment.

The constitution guarantees our right to protect information from unwarranted search and seizure

Daniel Ellsberg

Charles Breyer, now a federal judge, in his appearance on C-SPAN Books discussion titled Watergate's Legal Legacy, commented on the passivity of the public with respect to government invasions of privacy without warrants. He described the prevailing attitude as "if someone has nothing to hide, then they need not worry about government intrusion into their homes, offices or telephone conversations." He seemed to indicate that the issue is not that people have things to hide, but things to protect. Among those things are the rights guaranteed by the First Amendment to the Constitution.

One of the early abuses by the Nixon administration was the burglary of the office of Daniel Ellberg's psychiatrist in the aftermath of his making a study of the decision making about Viet Nam available to the public by leaking a classified government report to the press. The White House authorized the break in without a warrant and without any judicial review. The psychiatrist, Dr. Louis Fielding, had the right to protect the records of interviews with his patients (including but not only those with Ellsberg) from being revealed to the public or the government. Certainly his patients had the right to expect that their psychiatric records would be protected. Thus Dr. Fielding can be seen as the prototypical person with nothing to hide and much to protect, whose constitutional rights were infringed upon on orders from the White House.

I in fact had met Dr. Fielding; his son was a close friend of mine at one time. The invasion of his office did Dr. Fielding real harm. His son told me that not only had many of his patients left his care, denied of their rightful privacy, but that his practice never recovered. Perhaps more importantly he felt his privacy had been violated and his government had prevented him from fulfilling his professional responsibility to assure the confidentiality of the communications with his patients.

A Thought on Immigration Policy

Source: "A Smart Exception," David Gergen, Parade, June 12, 2010

“There is always a well-known solution to every human problem -- neat, plausible, and wrong.”
H.L. Mencken

I quote at length:

Since the early days of the Republic, talented foreigners have streamed to our shores to till the soil, build industries, and turn the country into a scientific and technological powerhouse. They converted the U.S. into the first global nation, giving us adaptability, an intuitive feel for other cultures, and an innovative edge.

We see living proof of what they can accomplish in the lives of Sergey Brin (pictured left), Jerry Yang (right), and Pierre Omidyar (center). All three came here as the children of legal immigrants and grew up with the blessings of opportunity in their adopted land. And guess what: They went on to start Google, Yahoo!, and eBay. Nor are they alone in their contributions. From 1995 to 2005, legal immigrants were CEOs or lead technologists in one of every four U.S. tech and engineering start-ups and half of those in Silicon Valley. These companies employed some 450,000 people before the recession hit.

It’s now commonplace to see foreign-born students dominating U.S. graduate programs in science, math, and technology. Not long ago, it was joked that MIT stood for “Made in Taiwan.” Immigrants have accounted for 70 or so of 315 American Nobel Prize winners since 1901 and, according to one study, about half of all patents issued in the past decade.

But that flow of talent is starting to reverse course. The U.S. imposes so many limits on the numbers of legal immigrants and, since 9/11, has introduced such a thicket of red tape that many who would have come here are now staying home. Moreover, their native countries have become more alluring: By a 9 to 1 ratio, Chinese respondents to a recent survey said they had better opportunities to start businesses in China than in the U.S. By a 2 to 1 margin, Indians said their home country provided better education for their children.

Gergen states, and I agree strongly:

There are two main ways high-skilled foreigners can now gain entry to the U.S. -- and both are too restrictive. First, they can apply for permanent residency, a so-called green card. The trouble is that less than 20% of the 1.1 million legal permanent residents admitted each year are highly skilled. Second, foreigners can apply for a temporary six-year visa, the H-1B, but the cap for those is just 85,000 a year. Far more apply than can get in, and there are huge backlogs and long waits (as much as 20 years) for scientists and engineers.

Strikingly, leaders on both sides of the Congressional aisle agree that we should open the doors wider to skilled foreigners, but they have allowed this issue to become entangled with that of illegal immigration. This approach to talent is loony -- what The Economist calls a “policy of national self-sabotage.”

Comment: Gergen appears to suggest that it is legal immigration that provides the U.S. with imported talent, and indeed that the 80 percent of immigrants entering via green cards who are not "highly skilled" are not talented. So too, he seems to imply that none of the illegal immigrants are talented. I suspect that there might be a fair amount of talent, not to mention intestinal fortitude in those who brave the challenge of illegal status to obtain a better life for themselves and their families. Perhaps we need a process which differentiates among those illegal immigrants who we very much want to expel and those who would more than justify a more lenient policy if allowed to stay. JAD

FAKE BOMB DETECTOR: THE HIGH COST OF IGNORANCE.

Robert Park tells this story:

According to a story in The Independent (UK) on Tuesday, the investigation into the sale of fake bomb detectors has been expanded to a number of firms in the UK. It seemed comical fourteen years ago when we learned that golfers were buying fraudulent golf-ball finders (WN 12 Jan 96). The Quadro Tracker was nothing but an antenna mounted on a pistol-grip with a swivel that was free to rotate 360°. An almost imperceptible deviation of the swivel from horizontal would cause the antenna to rotate to its lowest point under the force of gravity. To a credulous observer it might seem to be controlled by some mysterious external force. Quadro soon began marketing them to law enforcement agencies and the Department of Defense for $995 each to search for drugs and weapons. After it failed a simple test, Sandia National Labs dissected one and found it contained no internal parts. The FBI shut Quadro down and arrested its officers (WN 26 Jan 96). However, the device soon reappeared in the UK as the ADE 651, sold by ATSC for prices as high as $48,000. As WN reported (WN 29 Jan 2010), at least 1,500 were sold to the government of Iraq as bomb detectors at a cost of millions of dollars. Reliance on the fake bomb detectors reportedly contributed to hundreds of bomb deaths in Iraq and Afghanistan, including British and American troops.

I wonder how many of us are careful in evaluating information we receive from people, but accept information we receive from a "measuring instrument"? Of course the credulity of the consumer does not excuse the fraud of the vendor, but there may be a lesson here for us consumers.

Call for standards for science education

Alan I. Leshner, Shirley Malcom, Jo Ellen Roseman published an editorial in Science magazine calling for the scientific community to support "common, internationally benchmarked, state-approved standards" for science education. They write:

Great concern has been voiced for at least 30 years about the sad state of U.S. primary and secondary education in mathematics, science, engineering, and technology, but little real progress has been made. The most recent findings from the U.S. Department of Education brought no optimism. In 2005, 32% of all U.S. fourth-graders and 41% of eighth-graders scored below expected achievement levels in science. Nearly 30% of entering college students needed remedial science and math courses. However, we are at a moment in U.S. history to finally address one cause of the problems, and the scientific community needs to help capture this unique opportunity.

The many national commissions and studies of science education in the past three decades have consistently identified the same two issues and potential remedies: a need for much better-prepared math and science teachers and for a clear statement of learning goals for science that are the same across the United States. The consistency would remove some of the disadvantages faced by students in states with less rigorous standards, and it would ease students' mobility across state boundaries. It would also help the United States develop robust curriculum and assessment materials and prepare teachers who understand the science to use such tools to help students reach the standards. Nearly all of America's competitor countries have national science education standards and score much higher on international science achievement assessments: U.S. 15-year-olds ranked 21st among students in 30 developed nations in science on the 2006 Programme for International Student Assessment.

The United States can not afford to be in the bottom third of achievement in teaching science, and Leshner, Malcolm and Roseman are right that strong national standards would be a step in the right direction!

Growth of Foreign Student Population in the U.S. is Back on Track

Source: "The economic impact of international students around the world," Jason Baumgartner (Indiana University Bloomington), Julie Chambers (Institute of International Education) and Robert Gutierrez (Institute of International Education), June 9, 2010 by globalhighered

A question

After the successful prosecution of the war, the victorious government found itself unprepared for the post war period. The occupying force established an government and began to seek to impose radical cultural and social changes. After a couple of years, elections were allowed to replace the appointees. The former ruling class was left with ownership of much of the remaining capital, and there were hundreds of thousands of armed former soldiers of the old regime who disappeared into the population. A massive insurgency occurred. After a decade or so, as the political support for the reconstruction effort disintegrated, the victorious government withdrew its troops and ended the efforts to impose political and cultural change.

Is this description based on the Civil War or the Iraq War?

"Those who don't know history are doomed to repeat it."

After the Civil War, the former slaves in the South had a brief period of hope in which they began to vote and have civil rights and schools were opened for their children. That hope was extinguished, they were disenfranchised and largely reduced to peonage and involuntary servitude that lasted for decades. Indeed, in the 20th century the Ku Klux Klan was recreated and grew to a new level of regional and even national power. Antebellum culture was modified in the South, but only in the sense that the institutions that insured supremacy of one group over the other were slightly modified.

Dictatorships and/or coercive governments were established in the aftermath of U.S. invasions of Cuba, Haiti, the Dominican Republic, Nicaragua and U.S. support of regime changes in Guatemala and Chile. American intervention has seldom produced democratic governments in the 20th century.

Let us hope that the experience in Iraq and Afghanistan are better!

Sins of American History

Last night my history book club discussed the suppression of blacks by whites in the Southern United States after the Civil war, based on reading of several books on the topic. The dozen people in the group were all reasonably well educated with an interest in history, yet we were surprised by what we had read.

The southern whites had used lynchings, beatings, rapes and other forms of intimidation on a huge scale, combining violence with election fraud to disenfranchise the blacks. Black schools and churches were burned in large numbers. A variety of techniques had been used to assure that blacks did not and could not own property, including systems of contracting labor with legal sanctions for those who would not contract or broke contracts, debt peonage, and frank involuntary servitude imposed by fraudulent arrests and convictions, contracts for convict labor, beatings to force work from those in involuntary labor, and hunting down those who escaped with dogs and guns to impose severe corporal punishment on the recaptured. These of course were combined with informal procedures to deny blacks opportunities to work in higher status or higher pay occupations. The result was to keep blacks as an underclass.

All of this was combined with the creation of a myth of a far more gentle antebellum slave society than actually existed and a myth that the brutality had been forced upon the south by the north through its reconstruction policies.

There was a discussion as to why our schools do not teach this history, as well as a comparison of experiences of the intense segregation against blacks that still existed in our lifetime, and indeed the discrimination that still exists.

Of course, American history has seen treatment of native Americans that was also truly horrible, and was denied in a mythical history of noble cowboys, frontiersmen, and settlers. American history has also seen racism against "white races" justified by pseudo science and racial myths, resulting in prejudice and discrimination against Irish, Italians, Poles, Hispanics, Asians, Catholics, Jews and other minorities. We are almost equally ignorant of these sins of the American past. This history is also not taught in the schools nor widely appreciated by the public.

A Thought About 1959

I have just started reading 1959: The Year Everything Changed by Fred Kaplan. He looks at some technological changes such as those marked by the invention of the microchip and the start of the Apollo Space program, but focuses mostly on cultural changes such as the beginning of the Beat Generation and modern jazz.

It occurs to me that one of the key drivers of the cultural revolution was the dissemination of television. At the beginning of 1950 there were perhaps 5 million black and white TV sets in American homes and perhaps 100 TV stations in 60 cities. By 1959 there were some 42 million black and white televisions and that year some 90 thousand color TV sets were sold; TV stations served the vast majority of the American population. TV had become the dominant entertainment medium in the United States. The movie studies were in a state of crisis.

Growth in the Number of Radio Stations

Radio during the 1950s changed its role greatly. At the beginning of the decade it was still the major mass media for entertainment, with audience dominated by the major radio networks. At the end of the decade there were many more AM stations and the growth of FM stations had begun in serious, and the audience for radio had splintered. Radio began to broadcast music to niche markets -- African American, Rock and Roll, classical, jazz, folk, etc. It seems to me that the music of the 40s was rather bland so as to be acceptable to the largest possible number in the mass audience, while the music of the 60s was more varied and much of that broadcast was more innovative and interesting.

The broadcast of dramas shifted from radio to television, while music was left more to radio. The television audience which had been limited to the relatively affluent at the beginning of the decade became a mass audience for the three major networks, and consequently programming shifted to attract the larger audience.

The Change in the Audience

There was an explosion in the demand for education after World War II, including the mass movement to higher education stimulated in part by the GI Bill, but also to a new insistence on completion of secondary education.

There had been a major improvement in the status of African Americans startling during World War II. Indeed, the reaction to the racial atrocities committed by the Nazis seems to have resulted in reduction of prejudice against many minorities.

Women who had stepped into the workplace in huge numbers during World War II, freed by new technologies for the home, also changed their social status radically. The change would be further accelerated by the introduction of birth control pills in 1959.

U.S. mass media are financed by the sale of advertising, and the increasing affluence of many of these niche markets resulted in financial incentives for radio media to target entertainment narrowly to niche audience which might correlate with niche markets for advertiser products.

I am suggesting that changes in popular culture may result from changes in the technology infrastructure and changes in the economic and social conditions of the population -- not a very revolutionary thought.

What is good journalism

Good journalism, according to Carl Bernstein, is "a simple matter but difficult to achieve", namely "trying to obtain the best attainable version of the truth."

I wonder if, in that definition, it might be better to replace "version" with "approximation". I am not sure I like the idea that there are different versions of truth, other than the different versions that different people might hold of the same truth.

I also wonder if the function of the journalist is simply to "obtain" that approximation rather than to convey the information that would enable the public access to the best approximation of truth.

The truth about what? Bernstein is famous for his work with Bob Woodward in exposing the Watergate conspiracy. Using that as the example, consider several truths:

• The truth about the event of June 17, 1972 in which a group of men broke into the offices of the Democratic National Committee.
• The truth about the effort of the Republican campaign officials to obtain information about the Democratic plans for the election campaign.
• The truth about the efforts of Republican campaign officials to use unfair and sometimes illegal steps to ensure a win in the election.
• The truth about the overall efforts of the Republican campaign in the election.
• The truth about the role of President Nixon and his inner circle of White House advisors to subvert election procedures and then to cover up what they had done.
• The truth about the weaknesses in our democracy that if corrected might prevent such abuses in the future.

Some of these "truths" would be instrumental in revealing others. Some of these truths seem more important than others. Perhaps good journalism is revealing the best available approximations of a series of truths to create an effective narrative to help the public understand an important issue of public policy.

John Wooden's Pyramid of Success

UCLA's great basketball coach, who died recently, had an impact on me and I suspect all of the university's students and alum.

The OECD Innovation Strategy: Getting a Head Start on Tomorrow

"The world today faces significant economic, environmental and social challenges. While no single policy instrument holds all the answers, innovation is the key ingredient of any effort to improve people’s quality of life. Today’s recovery from the global financial and economic crisis remains fragile. As countries seek to improve productivity performance and ensure sustained growth, they will need to boost their capacity to innovate. Innovation is also essential for addressing some of society’s most pressing issues, such as climate change, health and poverty.

"But how can governments encourage more people to innovation more of the time? And how can government itself be more innovative?"

Compendium of statistical indicators: Measuring Innovation: A New Perspective

Innovation Strategy key findings (pdf)

Published by the OECD.
Pages: 225
ISBN 978-92-64-08470-4
Published:
May 2010 (pdf)
June 2010 (print)

Read a summary of the study in The Economist.

A Question About Human Rights

Like most of the world, I am concerned about the human rights of the Palestinians and have been interested in the evolving crisis about the ways in which Israel is enforcing a ban against weapons shipment into Gaza. I also note that eight million children died last year worldwide, most of them from preventable diseases. It seems to me that the most important human right is the right to life. Bad as is the state of Palestinians, their problems pale when compared with the global loss of life in developing nations. Yet the news is filled with the Palestinian-Israeli controversy, apparently giving equal weight to the lesser suffering of the Israelis from terrorism and the greater suffering of the Palestinians from Israeli actions to prevent terrorism, while there is almost no coverage of the plight of the poor in poor nations. Are our human rights priorities wrongheaded?

Taiwan's ICT Industry

Source: The Economist

"Taiwan is now the home of many of the world’s largest makers of computers and associated hardware. Its firms produce more than 50% of all chips, nearly 70% of computer displays and more than 90% of all portable computers. The most successful are no longer huge but little-known contract manufacturers, such as Quanta or Hon Hai, in the news this week because of workers’ suicides. Acer, for example, surpassed Dell last year to become the world’s second-biggest maker of personal computers."

Framing Makes a Difference

Source: The Economist

A new study* for the Office of Fair Trading, Britain’s main competition-policy watchdog, seems to confirm that the way prices are presented, or “framed”, can tempt consumers into error. Its authors, Steffen Huck and Brian Wallace of University College London (UCL), and Charlotte Duke of London Economics, a consultancy, base that finding on a controlled experiment. They tested responses to five different price frames: “drip pricing”, where only part of the price is revealed at first and extra charges are levied as the sale progresses (think of buying an airline ticket online); “sales”, where the price is contrasted with a higher price (was $2, now $1); “complex pricing”, such as three-for-two offers, where the unit price has to be worked out; “baiting”, where a cheap deal is advertised but restricted to a few lucky shoppers; and “time-limited offers” that are available for a short period......

How did shoppers fare? Faced with per-unit prices, shoppers made the right choices four times out of five. But when errors were made they were costly. The average lost pay-off per round compared with the best strategy was enough to cut the maximum score by a quarter. The errors were still larger in the rounds where prices were framed differently. The authors calculated the additional loss each subject suffered in response to each price frame compared with the baseline case. The average extra loss was then used to rank the five price frames. Shoppers were worst off under drip pricing, followed by time-limited offers, baiting, sales and complex pricing.

Comment: Of course retailers have been working hard for a long time figuring out how to price things, and I suppose buyers have also been learning which framings to avoid. Still it is nice to see controlled experimental evidence added to the body of information demonstrating that people act more or less irrationally according to the way their decisions are framed.

Globish

From a review of Globish: How the English Language Became the World’s Language by Robert McCrum in The Economist.

The big shift is towards a universally useful written Globish. Spellchecking and translation software mean that anyone can communicate in comprehensible written English. That skill once required mastery of orthographical codes and subtle syntax acquired over years. The English of e-mail, Twitter and text messaging is becoming far more mutually comprehensible than spoken English, which is fractured by differences in pronunciation, politeness and emphasis. Mr McCrum aptly names the new lingo “a thoroughfare for all thoughts”.

This seems a very important insight to me. There is a debate now as to whether human language began in gesture or in sound, perhaps both. Certainly the human mind can comprehend both spoken and signed languages. Many people, number in the billions, can communicate in more than one language. Many people can use any of several grammars according to the language in which they are communicating.

Communicating by means of symbols seems a relatively recent human accomplishment, but the large majority of people can now do so. Some written language is based on symbols that correspond to the sounds of speech, some on pictures which correspond to ideas. And of course we all are familiar with symbols such as those on road signs and in airports which convey meaning by stylized images.

I suppose the Information Revolution is creating a new way of communication which already is accessible to a billion or so people, based on the written English. I note that I read French with sounds in my mind's ear that would not be comprehensaibles to a Frenchman. So too we can communicate across language barriers via the Internet, each hearing with his mind's ear a language which would be incomprehensible to the other.

I am reminded of an old friend who is fluent in Japanese and who was sent as a translator to Korea during the Korean war. Of course he spoke no Chinese and the Chinese prisoners he was to interrogate spoke no Japanese. He told me that they could communicate via the characters used in writing both languages.

Something of the sort will occur more and more as translation software gets better and better (because in part, personal computers continue to get more and more powerful). Two people will be able to communicate on the Internet, each writing in his/her own language and reading the translation of the other's postings.

Perhaps we will be able to communicate universally by such means at the end of the century!

Briefly Noted:

The Virtues of Mendacity: On Lying in Politics by Martin Jay

Our response to this phenomenon, writes the renowned intellectual historian Martin Jay, tends to vacillate—often impotently—between moral outrage and amoral realism. In The Virtues of Mendacity, Jay resolves to avoid this conventional framing of the debate over lying and politics by examining what has been said in support of, and opposition to, political lying from Plato and St. Augustine to Hannah Arendt and Leo Strauss. Jay proceeds to show that each philosopher’s argument corresponds to a particular conception of the political realm, which decisively shapes his or her attitude toward political mendacity. He then applies this insight to a variety of contexts and questions about lying and politics. Surprisingly, he concludes by asking if lying in politics is really all that bad. The political hypocrisy that Americans in particular periodically decry may be, in Jay’s view, the best alternative to the violence justified by those who claim to know the truth.

For some reason there is an essay on the Internet by this same title ascribed to Martin Jay which bears the instruction not to cite.

I wonder how important is the distinction between erroneous truthfulness and accurate lying?

A Thought About American History and the creation of myths

There is a current in American history of exploitation, discrimination and disenfranchisement of weaker groups by stronger groups. That current includes slavery imposed on African Americans and driving Native Americans into reservations in a small and undesirable portion of their original lands. It includes discrimination against blacks, Irish, Italians, eastern Europeans, Catholics, Jews, Mormons, and Muslims, and the disenfranchisement of women.

There is a counter-current of opposition to exploitation, discrimination and disenfranchisement of those groups. Most importantly, that opposition has been in the form of millions of people seeking to better themselves through education, work, saving, investment and good living. Millions of people from minorities facing prejudice have served in the American military, many sacrificing their lives for the country in which their families faced such prejudice.

The counter-current also involved organization to secure rights, including the trade unions, the NAACP, and the women's suffrage movement. In a few cases such as the abolition movement, the Civil Rights Movement and the ACLU, people who themselves would not benefit themselves aided in the securing civil rights for others.

I am posting this because I have been thinking of the facility with which the empowered groups create mythologies to justify their behavior. I have been reading about the post Civil War Period (The Bloody Shirt: Terror After Appomattox by Stephen Budiansky and Slavery by Another Name: The Re-Enslavement of Black Americans from the Civil War to World War II by Douglas A. Blackmon). During slavery, there had been a widely believed myth among whites that slavery if not good for the slaves was the only way in which blacks and whites could live successfully together. With Emancipation, the southern whites adjusted that mythology. They created myths of Northern carpetbaggers, evil former slaves, and righteous night riders, even coming to believe that they were forced to a campaign of murder and brutal intimidation of blacks by Northern policies which failed to understand the nature of African Americans. Eventually they created myths of idyllic antebellum southern society with paternalistic plantation owners and happy slaves. The Ku Klux Klan was in the southern myth turned into a knightly crusade protecting white women rather than a brutal group of thugs seeking white power via the disenfranchisement of blacks.

As I think about knowledge for development, I wonder how to prevent the creation of myths which hinder development. In the postbellum south, it might have been possible to move ahead educating the former slaves and their children, introducing small farm systems and work-for-pay systems. Instead, supported by their evolving myths, the white power structure instituted systems of debt peonage, share-cropping, oppressive labor contracts, and intimidation that effectively replaced slavery with forced labor from a black underclass.

I suspect that modern development is similarly hindered by dysfunctional mythologies. It is perhaps easy to understand how societies adapt existing myths to account for new conditions, but difficult to understand how the myths can be more successfully replaced by functional understanding of reality or even by less destructive myths.

Thoughts occasioned by an email from the past

I got an email from someone from my high school class yesterday, just as the class is preparing for the 55th reunion. He suggested that the federal government should enact legislation dealing with migration following the lead of Arizona. That provides a useful reminder of why I avoid high school reunions.

Of course, the message fits in a long U.S. tradition:

• We refused entry to all but a very few Jews during the holocaust. Fortunately the anti-Jewish bias did not keep Louis Brandeis from serving on the Supreme Court, not did it keep out Irving Berlin nor Albert Einstein.
• The Asian Exclusion Act did what it was intended to do for decades. Fortunately it was repealed in time to allow Asian immigrants to play key roles in American industry relating to the Information Revolution and Asian-Americans are now intellectual leaders in many fields.
• There was a history of prejudice against Irish, Southern European and Eastern European immigrants for a century. Fortunately they were allowed to build the railroads and canals, man the mines and foundries, and serve as the industrial wage slaves that helped build the American economy during the Industrial Revolution.
• Leaders such as Lincoln and Jefferson thought that Blacks and Whites could not live peacefully together in a condition of equality, and thought that anyone with a drop of African blood might best be returned to Africa, even though Africans had been brought to this continent in slavery. They of course did not realize that since our species developed in Africa we all have basically African genomes, with the exception of a few mutations that allow us to live in a situation of low sunlight, a few admixtures from Neanderthals, and some mutations that cause genetic diseases found only in Europeans.
• Benjamin Franklin even worried about the German immigrants in the 18th century who he believed were undermining the quality of the English immigrant population.

It would be better to focus on our foreign policy with respect to Hispanic America. That began with the theft of Texas from Mexico and the Mexican American War in which we fought with a weak neighbor to take other territories that we coveted. Other adventures in foreign policy contributed to the dictatorships of Batista in Cuba, Duvalier in Haiti, Trujillo in the Dominican Republic, Somoza in Guatemala and Pinochet in Chile, as well as the overthrow of the democratically elected Arbenz government in Guatemala.

Mexico is now in the grips of an economic crisis which is likely to be prolonged as its oil reserves are expected to be exhausted in the coming decade. It is involved in a war with drug gangs which are fueled by the drug market in the United States and the flow of guns and drug profits south over the U.S.-Mexican border. Its border cities are facing huge problems due to the behavior of maquiadoras exploiting Mexican laborers to produce for U.S. corporations.

Perhaps we should try to live up to what President Roosevelt termed (ironically) a good neighbor policy with our Hispanic neighbors. Of course I don't approve of illegal immigration although I sympathize with the people who feel forced to immigrate illegally. But it is a minor problem compared with the huge problems that our Hispanic neighbors face. Perhaps we would have fewer illegal Hispanic immigrants if our foreign policy did more to encourage development in the rest of the hemisphere.

The rich countries will not meet their targets for aid to Africa

Source: The Economist

At the end of last year the G8 countries were collectively only 44% of the way towards hitting the 2010 target set in Gleneagles in 2005. Even if the rich countries fulfil this year’s plans, they will have provided only 61% of the increase promised in 2005.

Growth of Telecommunications Subscriptions

Source: The Economist

Of course, some people have more than one cell phone and lots of people in rich countries have both a land line and one or more cell phones. The growth of broadband is surprising to me.

Now Cometh the Spring

With the coming of spring the light will be gaining.
So after Brid's feast day I'll set my course -
Since it entered my head I'll never rest easy
Till I'm landed again in the heart of Mayo.

I'll spend my first night in the town of Claremorris
And in Balla I'll raise my glass in a toast,
To Kiltimagh then, I could linger a month there
Within easy reach of Ballinamore.

I testify here that the heart in me rises
Like a fresh breeze lifting fog from the slopes.
When I think on Carra and Galen below it,
On Sceathach a' Mhile or the plains of Mayo.

Killeadan's a place where all good things flourish,
Blackberries, raspberries, treats by the score,
Were I to stand there again with my people
Age would fall from me and I would be restored.

Anthony Raftery (1784-1835). Translation by Michael Coady

I was checking on my Raftery ancestors from Claremorris and found this nicely translated poem by Blind Raftery.