#if i was a capitalist i would build my countrys economy around the stuff

[lord-kiwi-the-wizard]

I tried pitching hydrogen powered cars to my friends once and they argued that the humidity of a hundred dozen mini cloud makers would fuck up so many eco systems it's not funny.

I mean yea but it would be funny though.

Also why not build dozens of dehumidifiers powered by solar everywhere. You get the water back to make more hydrogen and oxygen it's win win baby!

#hydrogen power #if i was a capitalist i would build my countrys economy around the stuff

[sambinnie]

1. Happy Mabon! Every autumn, I forget that the darkness comes clanging down in a great rush in the mornings. One day, I am greeted by a pinking sunrise. 48 hours later, it’s so dark on my run to the river that I have to stop a passing runner and check the time, in case my disturbed sleep sent me dressing and leaving the house at 2am. This summer may not have given us those mornings where it’s so hot I can barely get out of the water, where those early hours feel like full silent days carved out just for me to sit in the light and wait for everyone else to wake up, where the only extra thing I put on to run home is my trainers — I look at my waiting winter gear, neoprene socks and gloves, head torch, two more thickening jumpers, hat, thermal mittens — but every season, every day, is beautiful.

Today we go early for celebrations, and the water is silky, and Orion hangs over us with his phallic sword dangling and Betelgeuse winking on one shoulder. The near-full moon spotlights us and I feel almost ready for the shortening days.

2. Hilary Mantel continues to be a literary god. How does she write with that clarity? How can I ever speak with her calm good sense and wit? 

3. We have two main problems at the moment, as far as I can see. a) What we’re doing (“curating” our lives; twitter spats; purity spirals; division and isolation; wanting ‘debates’ that can only be won or lost; encouraging people to buy more things; trying to buy our happiness; letting marketers tell us how we feel about the world rather than encouraging major moral lessons from throughout the ages to challenge us on our weaknesses; refusing to accept that life is suffering; asking self-care to be a plaster for everything we don’t have) and b) what we’re not doing (joining together to stand against those with more money and power; protecting the people who have even less power and voice than we do as a matter of course; learning from history; protecting nature above all else; prioritising going for walks; learning to repair things and campaigning to make things repairable; having a basic belief in human dignity for all, not just those with whom we agree; accepting that truly, we are all different and no amount of shaming or disgust will change that; working to shape our societies, culture, economies, production, food supplies and communications around improving — not just sustaining — the air, water and land, and fighting to ensure all of those new shapes protect women and children).

Individualism has morphed into something so completely self-destructive that we’ve forgotten we need nature more than anything — literally, more than anything — and we need to unionise and unite and put aside differences and work together even with people we don’t like. 

Because when there are wicked people in power, when it’s genuinely exhausting to think about all the corrupt, venal, toxic, divisive, false, and cruel things they have done since coming to power, those people love to watch everyone below pointing their fingers at one another, saying, You, You’re The Enemy, You’re The Problem, while corrupt populist leaders rub their bellies and chuckle at another promise broken, another mass death on their hands, another building site on a protected forest. Do you understand the stakes here? Do you understand that it’s actual survival? It’s not about being right any more, it’s not about besting someone in the argument. It’s about having decision makers who can not only ensure there is still food to eat and air to breathe, but that relations both within a country and between countries are built on care, and support, and compassion, and believing in human dignity. And while it sounds wishy-washy and hands-clappy it’s the schmaltzy, sentimental truth. It’s the only one, really. 

If we instead continue to believe every single day that my feelings are the most important, that my beliefs are the right ones, that I’ve got to prove those baddies there are evil and awful and wrong, then honestly, what the fuck? If we’re happy to live in a country where hostile architecture is the starting point for all public builds, where we send refugee boats away from our shores, where affiliate links are a career goal, where we haven’t stormed the Daily Mail offices with accounts of all our lovely immigrant friends and family and had a huge feast together and compared our long and tangled family trees, then come on. It’s only a race to the bottom if we all keep running. 

Because, pressingly, whatever the spark of a major global conflict — assassination, fuel shortages, hyperinflation, invasion — the kindling is almost always a populace fed pure hatred for months, for years, until they can’t even taste it anymore but are ready to spew it out again, and are ready to use another populace as the receptacle. And hatred is brewed up in silence and isolation, and in the ashes of bridges burned between disparate groups. 

And on that note, I’m not a conspiracy theorist, mainly because I don’t believe governments are generally competent enough to manage Grand Plans, but it’s annoying that technology and social trends and culture have developed in such a way that no one knocks on anyone’s door for a chat as a matter of course now, that it’s a given that a ringing phone triggers anxiety, that it’s not the norm for cups of tea with your neighbours, that we don’t know each other’s neighbourhoods, that we don’t even talk on the phone, with live words and intonation and synchronised laughter, but in text, in WhatsApp chats, in tapped out words and symbols that we know can be screen-grabbed and misinterpreted, that we know are kept, filtered and sold by the tech companies. It’s not a conspiracy. It’s just a reality that every single one of us can choose to do differently. 

Sometimes exactly the right thing comes along at the right time. All of us here watched About a Boy at the weekend, a film which is so wonkily weighted and oddly rhythmed, but a perfect depiction of everything I’m banging on about here. Hugh Grant’s character likes being alone. He’s happy that way. It suits him. It’s his choice. Then, between one thing and another, he finds himself drawn into a world of a suicidal single mother, a duck-murdering young boy, more single mothers, more tricky teens, plus exes and mothers-in-law and awkward support groups. And it turns out that actually, being with people is better. Being uncomfortable often develops you as a person. Constantly prioritising only yourself produces a waxen, pointless baby. Making shared sacrifices might just be the point of being alive. Remember that to be human is to be flawed. That no one is ever completely right, and no one is ever completely wrong. That the boring stuff makes us feel good, and the glossy stuff, if all we strive for is gloss, doesn’t. 

If you want anything practical, here are the things that have really helped me over the last few years:

Writing a letter or email regularly to my MP, to CEOs of organisations, to anyone I want to communicate my strong feelings and how I’d like things to be done better. Tweeting eats your soul. It’s a horrible myth the media pretends is important. It really, really isn’t.

Inviting people to go in front of me in queues, in traffic, getting on to buses and trains. It lowers my stress levels right down.

Learning the names of my neighbours and people I meet regularly on walks and letting them learn mine. (I definitely haven’t just decided I loathe a neighbour because they cut a bird-hatching tree down in their garden on the last day of the year it was legal to do so. It’s fine.)

Joining a few political parties, and the closest thing I have to a union

Making something, anything — everything can be done with love, and learning to not get sucked into the capitalist conceit of having to make it perfect, sellable, exhibitable is a genuine gift to yourself; making a cake or a film or a coaster and not putting it on social media, letting it be ugly or serviceless and loving it anyway. I felt extremely overwhelmed the other evening, but instead of doom-scrolling I knitted a… I don’t know, something flat and woollen, and it helped to have my hands and eyes working on directionless introspective creation. 

Trying to stop hating. Every time I want to tell a negative story in my head about someone, I attempt to turn it into something positive: how unhappy that person must be, what they must be missing out on. It’s so nauseatingly Pollyanna-ish, and of course it isn’t always successful, and of course every single day brings a hundred thousand examples of cruelty and injustice and wickedness, but the alternative only makes my life feel worse, so why would I indulge that? 

Teaching myself the names of birds, trees, flowers, clouds and constellations. I’m still at the most basic levels on all of these, but the difference one feels in the world when you can name things  — let alone use them and know their stories — is a very real sort of magic. (For that reason I hope to read this book very soon.) This episode of The Cut is also good on the wonder and power of learning the names of the weeds that grow in your nearest pavement crack. 

4. Creating anything is always a gamble, isn’t it, but writing a book you actually like for once and seeing it slowly and beautifully sink to the bottom of a river never to be seen again is ever so slightly crushing. However, it turns out even Thom Yorke feels that way, so I am comforted. 

5. I’m sure I’ve mentioned plenty of these before, but if you want some suggestions of where to find joy, here are my favourites from the last year or so:

I was given Lucy Easthope’s book, When the Dust Settles, for work recently, and I was surprised and delighted to discover the most uplifting, hopeful, human and rightfully angry book I’ve read in a long time. Do yourself a favour and preorder it. I bought this other book for my own birthday, gave it to a housemate to give to me, forgot about it, and was delighted to later unwrap He Used Thought As A Wife. Laughed a lot, cried twice. Marvellous. 

Now even the youngest housemate here can recite John Finnemore sketches and sing the songs. Has also taught them various composers, gods, logical fallacies and gothic story tropes. Also v funny. Oh, Kate Beaton! Her two books (Hark! A Vagrant and Step Aside Pops) are a bit like a comic-book version of Finnemore, but swearier and sexier and utterly unsuitable for all the housemates who have read it and been educated about the Brontes, Katherine Sui Fun Cheung, Tom Longboat, Nancy Drew, Ida B. Wells, Sacagawea, and the Borgias. 

Had to give Inside a restraining order against me for the sake of us all, but Bo Burnham’s Eighth Grade is a masterpiece of writing, acting, sound design and optimism. Spy is dumb action comedy polished to perfection, and Yasujirō Ozu’s Good Morning seems like the inspiration for almost all US arthouse films since 1990, and is also beautiful, funny, thoughtful, and good. 

Taylor Swift’s Evermore, like all brilliant albums, isn’t completely perfect. But most of the songs are. And Hole’s classic Live Through This is still just ideal for turning up very, very loud after a tricky day, for the enjoyment of any neighbours who may have hacked down a bird-friendly tree on the last day of February. 

Watched both series of Liam Williams’ Ladhood when I had a week off this summer, and really relished the location, the intention, and the writing. More please. 

Miles Jupp and Justin Edwards continue to be my comforting bedtime listening in In and Out of the Kitchen. Has it ruined Nigel Slater for me? Well, a bit, but no more than any of us deserved. 

I thought this would be a book I’d mumble through the first chapter of, then let get buried in my To Read pile, never to re-open. Instead, I found Whatever Happened to Margo? laugh-out-loud funny, drily written, and full of humanity. Excellent Women has made me want to read everything written by Barbara Pym, a goal I am slowly but surely working towards. 

6. I’ve spent the last few years trying to find hazelnut trees, and finally found a copse between a car park and a play area, full of nuts the squirrels hadn’t noticed. Now I’ve found them, the spell has been cast and I see hazel trees everywhere, on walks and on pavements and running along motorway slip roads. A tray of green and brown frilled hazelnuts now dries with the laundry. They are so beautiful. 

[mostlysignssomeportents]

Pluralistic: 26 Mar 2020 (EFF's videoconferencing backgrounds, the ideology of economics, LoC plugs Little Brother, Canada nationalizes covid patents, Exponential Thread, Sanders on GOP stimulus cruelty, record wind power growth, social distancing and other diseases, Badger Masks)

Today's links

EFF's videoconferencing backgrounds: With a deep cut from the NSA's secret listening post.

The ideology of economics: Economics doesn't have "laws" it has "policies."

LoC plugs Little Brother: Open access FTW.

Canada nationalizes covid patents: An Act respecting certain measures in response to COVID-19.

Exponential Threat: Trump threatened to sue media outlets that aired this spot.

Sanders on GOP stimulus cruelty: "Millions for plutes, but not one cent for workers."

Record wind-power growth: Covid stimulus could start a Green New Deal.

Social distancing and other diseases: Do we trust IoT thermometer companies, though?

Badger Masks: UW Madison's open facemask design.

This day in history: 2005, 2010, 2015, 2019

Colophon: Recent publications, upcoming appearances, current writing projects, current reading

EFF's videoconferencing backgrounds (permalink)

Telework is a quiet reminder that we live, in some sense, in an age of wonders. As terrible as lockdown is, imagine it without any way to videoconference with your peers and colleagues.

But it's also a moment where we tremble on the precipice of cyberpunk dystopia, when calls for mass surveillance – both for epidemiology and stabilizing states that are bruised and reeling – meet a world where everything is online and amenable to "collection" by spooks.

This is, basically, the moment that EFF has been warning about for 30 years: the moment when the "digital world" and the "real world" fully merge, and where the distinction between "tech policy" and "policy" dissolves.

One way you can help keep this in your colleagues' minds is to use EFF's amazing, free/open graphics as your videoconferencing background (most of these are the creation of the brilliant Hugh D'Andrade).

Now, those are all great, but this one is Room 641A at AT&T's Folsom Street center, where the whistleblower Mark Klein was ordered to build a secret room so the NSA could illegally spy on all US internet traffic.

The ideology of economics (permalink)

Thomas Piketty's "Capital in the 21st Century" advanced a simple, data-supported hypothesis: that markets left to their own will cause capital to grow faster than the economy as a whole, so over time, the rich always get richer.

https://boingboing.net/2014/06/24/thomas-pikettys-capital-in-t.html

He's followed up Capital with the 1000-page "Capital and Ideology" – whose thesis is that the "laws" of economics are actually policies, created to "justify a society's inequalities," providing a rationale to convince poor people not to start building guillotines.

The first ideology of capital was the "trifunctional" system of monarchist France, dividing society into "those who pray," "those who fight," and "those who work."

After the French revolution, we enter the capitalist phase, then social democracies, and now, "meritocracies."

"Meritocracies" invest markets with the mystical power to identify and elevate the worthy, in a kind of tautology: those who have the most are worth the most. You can tell they're worth the most because they have the most.

("That makes me smart" -D. Trump)

In Piketty's conception, "Inequality is neither economic nor technological. It's ideological and political," where "ideology" "refers to a set of a priori plausible ideas describing how society should be structured" (think: Overton Window).

https://bostonreview.net/class-inequality/marshall-steinbaum-thomas-piketty-takes-ideology-inequality

The major part of the book seeks to explain how the post-war social democracies gave way to the grifter meritocracies of today, pulling together threads from across the whole world to tell the tale.

On the way, he described alternatives that were obliterated, and others that were never tried, and shows how "meritocracy" gave us Trump, xenophobia, Brexit, and the Current Situation.

In particular, he's interested in why working class people stopped voting (spoiler: they no longer perceive that elites will pay attention to them irrespective of how they vote) — and what it would take to mobilize them again.

The elites' indifference to working people is grounded in an alliance between the Brahmin Left (educated, well-paid liberals) and the Merchant Right (the finance sector). Notionally leftist parties, like the Democrats, are dominated by the Brahmin Left.

But more than any other, Macron epitomizes this alliance: proclaiming his liberal values while slashing taxes on the wealthy — punishing poor people for driving cars, exempting private jets from his "climate" bill.

Life in a "meritocracy" is especially cruel for poor people, because meritocracies, uniquely among ideologies, blame poor people for poverty. It's right there in the name. French kings didn't think God was punishing peons, rather, that the Lord had put them there to serve.

"The broadly social-democratic redistributive coalitions of the mid-twentieth century were not just electoral or institutional or party coalitions but also intellectual and ideological. The battle was fought and won above all on the battleground of ideas."

As Marshall Steinbaum writes in his excellent review, Piketty's work doesn't just highlight new ideas in economics: it highlights the intellectual poverty of the economics profession and its tunnel vision.

"Economists cannot be allowed to be the arbiters of the intensely political concerns Piketty takes up in the book, and the good news is that there is reason to believe they won't be."

LoC plugs Little Brother (permalink)

Honored and pleased to have my book Little Brother included on the Library of Congress's excellent collection of open-access ebooks in its collection, which you can always access gratis but which may be of especial interest during the lockdown.

https://blogs.loc.gov/thesignal/2020/03/more-open-ebooks-routinizing-open-access-ebook-workflows/

If you enjoyed Little Brother and its sequel Homeland, you might be interested in the third Little Brother book, Attack Surface, which Tor is publishing on Oct 12.

https://us.macmillan.com/books/9781250757531

If you're looking for more topical reading, Infodocket's carefully curated list of coronavirus resources is here for you:

https://www.infodocket.com/2020/01/31/2019-novel-coronavirus-resources/

Canada nationalizes covid patents (permalink)

Canada's Parliament has passed Bill C13, "An Act respecting certain measures in response to COVID-19," amending patent law to create automatic compulsory licenses for any inventionused to fight covid, including diagnostics, vaccines, therapies or PPE.

https://www.parl.ca/DocumentViewer/en/43-1/bill/C-13/third-reading

As E Richard Gold writes, it's an "important signal that Canada will not support IP delays…While most firms are helping find solutions, this will prevent those who try to take advantage-by raising prices or limiting supply-or those who cannot deliver to block what is needed."

Exponential Threat (permalink)

"Exponential Threat" is a remarkable – and factual – political ad, one that contrasts Trump's statements on coronavirus with the spread of the disease in America.

https://www.youtube.com/watch?v=bkMwvmJLnc0

More remarkable: Trump has threatened to sue the media for airing it, which is a totally cool and normal thing for someone who has sworn a solemn oath to uphold the Constitution and the Bill of Rights to do.

https://assets.donaldjtrump.com/2017/web/hero_images/Redacted_PUSA_Letter.pdf

"In case you needed more, here's an (admittedly incomplete) list of Trump statements on the novel coronavirus and COID-19"

http://www.joeydevilla.com/2020/03/25/exponential-threat-the-covid-19-themed-ad-that-the-trump-pence-campaign-doesnt-want-you-to-see/

Jan. 22: "We have it totally under control. It's one person coming in from China."

Feb. 2: "We pretty much shut it down coming in from China. It's going to be fine."

Feb. 25: "CDC & my administration are doing a GREAT job of handling Coronavirus."

Feb. 25: "I think that's a problem that's going to go away. They have studied it. They know very much. In fact, we're very close to a vaccine." [White House | New York Post]

Feb. 26: "We're going very substantially down, not up."

Feb. 27: "One day it's like a miracle, it will disappear."

Feb. 28: "We're ordering a lot of supplies. We're ordering a lot of, uh, elements that frankly we wouldn't be ordering unless it was something like this. But we're ordering a lot of different elements of medical."

March 2: "You take a solid flu vaccine, you don't think that could have an impact, or much of an impact, on corona?"

March 2: "A lot of things are happening, a lot of very exciting things are happening and they're happening very rapidly."

March 4: "If we have thousands of people that get better just by, you know, sitting around and even going to work – some of them go to work, but they get better."

March 5: "I never said people that are feeling sick should go to work."

March 6: "I think we're doing a really good job in this country at keeping it down… a tremendous job at keeping it down."

March 6: "Anybody right now, and yesterday, anybody that needs a test gets a test. And the tests are beautiful. They are perfect just like the letter was perfect. The transcription was perfect. Right? This was not as perfect as that but pretty good."

March 6: "I like this stuff. I really get it. People are surprised that I understand it. Every one of these doctors said, 'How do you know so much about this?' Maybe I have a natural ability. Maybe I should have done that instead of running for president."

March 6: "I don't need to have the numbers double because of one ship that wasn't our fault."

March 8: "We have a perfectly coordinated and fine tuned plan at the White House for our attack on Coronavirus."

March 9: "The Fake News media & their partner, the Democrat Party, is doing everything within its semi-considerable power to inflame the Coronavirus situation."

March 10: "It will go away. Just stay calm. It will go away."

March 13: National Emergency Declaration.

March 17: "I felt it was a pandemic long before it was called a pandemic."

Sanders on GOP stimulus cruelty (permalink)

This Bernie Sanders floor speech in the Senate on the GOP's relentless attempts to punish poor people in the covid relief package is a must-watch

https://www.reddit.com/r/SandersForPresident/comments/fp3my0/bernie_goes_full_sanders_on_the_republicans_for/

tldr: GOP Senators are freaking out because some people in line to get the pittances they're doling out actually earn EVEN LESS than $1k-2k/month, and so they might get a raise in the form of covid relief.

That is, rather than taking the fact that this bare-minimum subsidy package exceeds "normal" income as a wakeup call to raise the minimum wage for the first time since 2009, the GOP is calling for cuts to aid to the most vulnerable Americans.

As Sanders points out, these same Senators had no problem with the Tax Scam, which poured trillions into the accounts of the richest Americans, directly and indirectly through stock-buybacks, which also left US business vulnerable and in need of trillions more today.

Now those bailed-out plutes want workers to risk death to "restart the economy," and the GOP will ensure they'll starve if they don't.

As ever, The Onion nails it:

https://politics.theonion.com/gop-urges-end-of-quarantine-for-lifeless-bipedal-automa-1842461351

"GOP Urges End Of Quarantine For Lifeless Bipedal Automatons That Make Economy Go"

Record wind-power growth (permalink)

As the world's wind-generation capacity increases, you'd expect annual growth to fall proportionately (it's easier to double a very small number than a very big one!), but this year should see the largest proportional growth ever, a 20% increase!

https://www.theguardian.com/environment/2020/mar/25/worlds-wind-power-capacity-up-by-fifth-after-record-year

That number is uncertain (hello, coronavirus), but on the other hand, there's a massive stimulus package in the offing that could be used to restart the economy by saving the planet with renewable energy.

The non-adjusted, pre-virus projection for this year's total growth in wind power was an additional 76GW (to meet climate projections, that number has to rise to 100GW/year, and then to 200GW/year).

Social distancing and other diseases (permalink)

Though the evidence is a little shaky, it appears that social distancing has dramatically reduced the spread of other infectious diseases, like flu.

https://qz.com/1824020/social-distancing-slowing-not-only-covid-19-but-other-diseases-too/

The data comes from an Internet of Shit "connected thermometer" company that (allegedly) anonymizes its data and uses it for health surveillance; they report a massive drop-off in high temps relative to other years and pre-distancing levels.

The claims are plausible, but they're also an ad for an IoT company that sells a product no one needs, so take them with a grain of salt.

I'd be interested in STI transmission after weeks/months of government-recommended masturbation-over-hookups:

https://www1.nyc.gov/assets/doh/downloads/pdf/imm/covid-sex-guidance.pdf

Badger Masks (permalink)

A local hospital asked researchers at the UW Madison Engineering Design Innovation Lab to design them a field-expedient face-shield that could be mass-manufactured to protect its staff from coming cases.

https://www.wired.com/story/tinkerers-created-face-shield-being-used-hospitals/

Using hardware-store parts, the UW makerspace, and teleconferencing with self-isolating collaborators, the team designed an excellent mask, the Badger Shield:

https://making.engr.wisc.edu/shield/

They've manufactured and delivered 1,000 Badger Masks to the hospital and a Ford plant in MI is making 75,000 more this week for Detroit-area hospitals. Here's a technical spec you can follow if you have access to equipment and parts:

https://www.delve.com/assets/documents/OPEN-SOURCE-FACE-SHIELD-DRAWING-v1.PDF

It involves just 3 pieces: polyethylene sheets (laser- or die-cut), an elastic headband, and a 1" thick strip of self-adhesive polyurethane foam. For initial production, Midwest Prototyping used office-supply-store electric staplers for assembly.

The design process started with a teardown of an existing, approved mask, and the project lead, Lennon Rodgers, worked with collaborators to replicate it, sanity-checking successive designs with his wife, an anaesthesiologist.

They started hand-delivering prototypes to the hospital, who refined the design further, swapping in latex-free elastic and lengthening the shield. Tim Osswald from UW used his polymer engineering expertise to find a supplier who could create a custom die.

Now, more than 1M Badger Masks have been sought, with manufacturers like St Paul's Summit Medical tooling up to meet demand.

Other designs are popping up across America. San Francisco's Exploratorium is making 200+ shields/day using its own makerspace.

This day in history (permalink)

#15yrsago If the Constitution was a EULA https://web.archive.org/web/20050330012000/http://slate.msn.com/id/2115254/

#10yrsgo Discarded photocopier hard drives stuffed full of corporate secrets https://www.thestar.com/news/gta/2010/03/18/hightech_copy_machines_a_gold_mine_for_data_thieves.html

#5yrsago TPP leak: states give companies the right to repeal nations' laws https://wikileaks.org/tpp-investment/press.html

#5yrsago Woman medicated in a psychiatric ward until she said Obama didn't follow her on Twitter https://www.independent.co.uk/news/world/americas/woman-held-in-psychiatric-ward-after-correctly-saying-obama-follows-her-on-twitter-10132662.html

#5yrsago Sandwars: the mafias whose illegal sand mines make whole islands vanish https://www.wired.com/2015/03/illegal-sand-mining/

#5yrsago Australia outlaws warrant canaries https://arstechnica.com/tech-policy/2015/03/australian-government-minister-dodge-new-data-retention-law-like-this/

#5yrsago As crypto wars begin, FBI silently removes sensible advice to encrypt your devices https://www.techdirt.com/articles/20150325/17430330432/fbi-quietly-removes-recommendation-to-encrypt-your-phone-as-fbi-director-warns-how-encryption-will-lead-to-tears.shtml

#1yrago Article 13 will wreck the internet because Swedish MEPs accidentally pushed the wrong voting button https://medium.com/@emanuelkarlsten/sweden-democrats-swedish-social-democrats-defeat-motion-to-amend-articles-11-13-731d3c0fbf30

#1yrago EU's Parliament Signs Off on Disastrous Internet Law: What Happens Next? https://www.eff.org/deeplinks/2019/03/eus-parliament-signs-disastrous-internet-law-what-happens-next

Colophon (permalink)

Today's top sources: Slashdot (https://slashdot.org/), Naked Capitalism (https://nakedcapitalism.com/), Late Stage Capitalism (https://www.reddit.com/r/LateStageCapitalism/).

Currently writing: I'm getting geared up to start work my next novel, "The Lost Cause," a post-GND novel about truth and reconciliation.

Currently reading: Just started Lauren Beukes's forthcoming Afterland: it's Y the Last Man plus plus, and two chapters in, it's amazeballs. Last month, I finished Andrea Bernstein's "American Oligarchs"; it's a magnificent history of the Kushner and Trump families, showing how they cheated, stole and lied their way into power. I'm getting really into Anna Weiner's memoir about tech, "Uncanny Valley." I just loaded Matt Stoller's "Goliath" onto my underwater MP3 player and I'm listening to it as I swim laps.

Latest podcast: Data – the new oil, or potential for a toxic oil spill? https://craphound.com/podcast/2020/03/23/data-the-new-oil-or-potential-for-a-toxic-oil-spill/

Upcoming appearances:

Quarantine Book Club, April 1, 3PM Pacific https://www.eventbrite.com/e/quarantine-book-club-cory-doctorow-tickets-100931360416

Museums and the Web, April 2, 12PM-3PM Pacific https://mw20.museweb.net/

Upcoming books: "Poesy the Monster Slayer" (Jul 2020), a picture book about monsters, bedtime, gender, and kicking ass. Pre-order here: https://us.macmillan.com/books/9781626723627?utm_source=socialmedia&utm_medium=socialpost&utm_term=na-poesycorypreorder&utm_content=na-preorder-buynow&utm_campaign=9781626723627

(we're having a launch for it in Burbank on July 11 at Dark Delicacies and you can get me AND Poesy to sign it and Dark Del will ship it to the monster kids in your life in time for the release date).

"Attack Surface": The third Little Brother book, Oct 20, 2020. https://us.macmillan.com/books/9781250757531

"Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583

This work licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commerically, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net.

https://creativecommons.org/licenses/by/4.0/

Quotations and images are not included in this license; they are included either under a limitation or exception to copyright, or on the basis of a separate license. Please exercise caution.

How to get Pluralistic:

Blog (no ads, tracking, or data-collection):

Pluralistic.net

Newsletter (no ads, tracking, or data-collection):

https://pluralistic.net/plura-list

Mastadon (no ads, tracking, or data-collection):

https://mamot.fr/web/accounts/303320

Twitter (mass-scale, unrestricted, third-party surveillance and advertising):

https://twitter.com/doctorow

Tumblr (mass-scale, unrestricted, third-party surveillance and advertising):

https://www.tumblr.com/tagged/pluralistic

When live gives you SARS, you make sarsaparilla -Joey "Accordion Guy" DeVilla

#pluralistic

[morecolorfulmetaphors]

How would a world without capitalism look like? Would money be worthless? This is a genuine question, im not trying to contradict you or anything of that sort. I agree that (sorry if its a stupid question, its just that as a gen z child i cant imagine it)

Hi! Sorry for the late response. I’ve been a little swamped with work. 3 It’s not a stupid question at all though! It’s definitely something we’re all still figuring out. Also, I would imagine that any future will be affected by technology that doesn’t even exist yet, so it’s basically impossible for us to know exactly how society would be. For example, Star Trek takes place in a post-capitalism future, and replicators played a huge role in that (where people can just press a button and get whatever they need). It’s possible a technology like 3D printing could develop to have a bigger impact on the economy, but who knows!

As for money, it’s an interesting question. Some people in the solarpunk community here like the barter system, but tbh that mostly just works for one-off trades between two people (for example: I’ll help you pick these strawberries, and in exchange, you bake me a strawberry pie). It would be pretty impossible to apply that to businesses (though, imagining everyone in line for coffee having to barter with the barista is pretty funny).

So money or some kind of credit could still exist. My ideal is that it would only be needed for fun stuff, and that necessities like food, water, shelter, health care, transportation, energy, and education would be accessible to all (we already have free public schools, libraries, medicare/medicaid, etc., so it’s not that radical of an idea).

The thing about money now is that it’s framed as a way to deal with scarcity. In other words, people say there aren’t enough resources for everyone to just have what they need, so we use money as a way to ration it. However, the reality is that a lot of that feeling of scarcity is fake. Artificially created by industry. For example:

-Diamonds are actually not that rare. It’s just that diamond companies keep most of them off the market so that they seem rare, and therefore, they can set the price high. 

-There are far, far more vacant homes in America than there are homeless people. Some reports say there are six times as many vacant homes as homeless people, let alone abandoned buildings that could be converted into homes.

-The world already produces more than enough food to feed every person on Earth. Some say we produce two to three times as much as we need.

-“We Could Power The Entire World By Harnessing Solar Energy From 1% Of The Sahara”

So in many areas, we actually have enough for everyone to have what they need, and we don’t need money to ration it. The reason so many people *don’t* have what they need–despite there being enough to go around–is that the companies are driven to do what’s most profitable. They make decisions based on what makes the most money for them right now. And often, helping people is not profitable.

Sure, we could power the whole world with renewable energy, but it’s not as profitable as fossil fuels, so wealthy people don’t build the infrastructure for renewables.

We could invest in better farm technology and infrastructure so there isn’t so much food waste, but then if everything was plentiful, the prices would drop.

We could easily lift poorer countries out of extreme poverty, but then who would manufacture our consumer goods for super cheap?

The main thing is that we need to transition from a system driven by the profit motive (game objective: make as much money as you can, any way you can get away with it) to a system where we work together to meet human needs (game objective: work with your teammates to finish chores as fast as possible so you can chill on the beach after). As you can see from the above examples, we know *how* to meet many those needs already. We just need a system where that’s the goal, rather than profit. Also, like I said in my original post, if our objective is just to get the necessary work done to meet human needs, then a lot of work could be automated (like we automate household chores with our dishwashers, washing machines, dryers, etc.).

Another small example of something I’d love to see in the future: There’s an adorable bookstore in Paris called Shakespeare and Company. They have an apartment on the second floor where anyone can stay for as long as they want, no money required, as long as they help out in the shop for a couple hours a day. Doesn’t that sound delightful?

Jumping off that, it’s good to remember that if people had the basic living essentials guaranteed, so many people would offer even fun things for free. For example, I would love to write books and just post them all online for free. I know a lot of people would do that in their own fields if they didn’t have so many bills to pay. Contrary to what capitalists tell us, most people actually have the inherent desire to create and contribute something to the world. Most of us have some sort of work we enjoy doing, and would do not just for the promise of lots of money, but because we’re passionate about it. Hopefully in the future, we can spend a lot more of our lives on those things. 🌼

#capitalism #solarpunk #replies

[lethesomething]

A note on fictional jobs

There's a joke that all fanfic characters are either baristas, teachers, lawyers or some denizen of the tattoo/florist au set. This isn't really fully true (there's also witches and vampire hunters!) but for anyone going for a realistic setting, let me at least, as someone who has worked a number of jobs in media, software development and catering, give some pointers on how that stuff works, because dear lord does Hollywood get it wrong.

This post is 2k words, so under the cut it goes.

Journalism/Photography/Media

General tips

This sector seems to be pretty popular in old school comics, and for good reason. Clark Kent gets to go out into the city and be near events. It's a job women are historically allowed to do (and be sassy in) and even Peter Parker gets to just traipse around the city getting into adventures.

It must also be noted that all these characters were developed in the first half of the 20th century, and media has changed a lot since then.

If your character is a journalist, they will work long hours and not be paid *that* much. Carrie Bradshaw is the most unrealistic journalist character in the history of everything. Especially after, oh, 2010 or so, when the traditional press sales really started declining. No journalist is that well paid for that little. And none will have that much free time.

Journalists generally have a beat, and what they do and know heavily depends on that. Your character can get into the gritty streets of downtown chasing drug dealers, or they can go to theatre premieres. They won't do both. The Vast Majority of modern media have beats. A person can be a sports caster and then he will go to sports events to report them. They can be a jetset reporter or restaurant reviewer and go to swanky places. They can be a cultural reporter and be invited to premieres and shows. They can be a dedicated business journalist, reporting on IT, or cardboard logistics, or whatever, and go to conferences around the world. But they will rarely be all these things at once.

How wide this beat is, depends heavily on the 'range' of the medium. Big news rooms, like NYTimes, have a lot of journalists, and some very, Very specialised ones. This is deep dive, spend weeks trailing every leak out of the White House stuff. In contrast, a small regional tv station can have their reporter (with or without a camera man and sound tech) drive around the countryside reporting on pumpkin carving festivals one day, and grisly murder the next.

A lot also depends on the medium. If the character works for a newspaper, they will have a noon to eight shift as a writer, and a two to ten shift, most likely, as an editor, because papers need to get printed overnight. If it's a weekly or a monthly print mag, there will be a few days with relative freedom to do interviews and such, and then a few days of crunch time. If they work for a news website they will have a desk job and most likely work in shifts. TV and radio news people are the ones doing most of the running around to get quotes, but they are also on the tightest of schedules.

Speaking of schedules. Unless the character is a blogger, they won't finish an article and immediately rush it to the printer/publish it. Reputable news sources have, at the very least, a copy editor to check for mistakes and typos. Bigger newspapers and magazines and sites have a dedicated fact checker.

Very VERY few papers in the world have full time photographers on the payroll. If your character is a photographer, they will most likely be a freelancer and do corporate events or weddings on the side (sorry Peter Parker). What happens is, a medium will decide in advance which article or interview will require a picture, and book a photographer for that piece.

Any other pictures tend to come from news agencies. Think Reuters or Associated Press. These sort of agencies do use full time photographers, as well as freelancers who happen to visit an event. They'll take like two hundred picture and sell them to the agency, who distributes them to media all over the world.

Few media have the money for correspondents, so they'll pick only a handful. This means a foreign correspondent has a large area to cover. European news media tend to have one correspondent in the US, covering the Entire US, for instance. American media tend to have more moneys, but if your character is a respondent in, say India, expect them to trek along India a lot, because they're prob the only one in that vast country.

Having said that, coverage, especially war coverage, is super expensive. If they're sending a journo to a war zone, it will absolutely not be a rookie. They will have proven themselves capable, preferably speak the language and they'll be Very Prepared. Think local guides, vast networks of informants etc. A startling amount of war reporters and investigative journalists are also freelance. If they are trekking through a jungle and come across anything exciting, you bet they'll try to sell that story in several angles/versions to different media.

Have you considered:

Bread and Butter Freelancers: It's a gig economy my friends. Freelance writey people don't have a boss and usually work from home or from some coffee shop. If they are to be successful (enough to make a living), they'll still have a beat, and will actually have to be fairly good at this subject. Since these characters make their own shifts, they do have the ability to go out in the middle of the day to do superheroing or witchery or to investigate the disappearance of their best friend. Upsides: Freedom. Downsides: Usually very little money. Unstable hours, like one day nothing and then a week of 14 hour days. The crushing stress of looming deadlines ànd job insecurity.

Copywriters: The people that write the text on corporate websites, that fill mail order catalogues with entries for every picture, compose newsletters for various organisations, turn technical instructions into actually mildly readable user manuals. Upside: money. If they're good at it, they will have a fairly stable income. They have the same freedom as freelancers to go flirt with flower shop assistants. Downside: the crushing knowledge that with every piece you write, your soul sinks deeper into the void. Anyone who's ever read clientsfromhell will know what to expect of their clientele.

Lay-outers: The creative side of making media. The bros making the graphs, putting the text to paper,  photoshoping the head of Putin onto the body of a baby, whatever. Upside: artist character. This is a slightly more realistic character than the 'painter'. They're creative, but they have yet to sell their soul to the corporate machine (depending on the medium you put them in, of course). Downside: this is basically a desk job with stable hours.

Cameraman, sound technician: the people that hang out with the news reporter and trot all over the region with him/her. Upside: see the world! Without being instantly recognizable. Downside: they're probably stuck in their mission and they rarely have the power to go 'hey, let's investigate over there'.

 Software development

General tips

There's actually a few different environments for software engineers to work.

Start-ups: the hip one. Think Silicon Valley, the upstarts in sneakers and Star Wars t-shirts living on pizza and red bull and basically coding 20 hours a day. Depending on where they are in the growth of their start-up, these people will be nearly alone, or have a team of coworkers. Traditionally, start-ups start with like a founder (or four) and an idea, and some coding. As the company grows they'll hire a sales person to sell this stuff, a marketing manager to brand it, a support person to troubleshoot it, an HR person, etc.

A very Very VERY large part of start-up business is pitching, aka selling your premise to a bunch of venture capitalists and investors. It's Dragon's Den. Literally. Your super shy, autism spectrum character who hates public speaking and who can't even look at another person without blushing would make a super crappy start-up founder by themselves. They will definitely need their bubbly, motivational speaker best friend. On the other hand: this is an amazing environment for that suave, smooth talking character who could sell sand in the desert.

Second environment: corporate. The vast majority of software engineers out there just work for some big company. These are the people building and deploying management system software for banks, installing security in factories, that sort of thing. A lot of the time they're consultants. They wear a suit. They use something called the Waterfall method, which sucks out your soul, or the Agile method, which also sucks out your soul. There's a lot of managing and meeting and progress reports. If they're good enough, they're allowed to leave the tie at home.

Software needs to be tested. You don't just write the code last minute and put it live.

The coders are absolutely not the only people in a software development team. There's the project managers, the designers, the copywriters, the testers, the lawyers, oh god, the lawyers, etc.

Software Needs to be tested. It takes ages. I cannot stress this enough. It usually happens in India or some other Asian country where the wages are lower.

Will a lot of environments, even corporate, allow their creatives to come to work in like… jeans and a t-shirt, the only people realistically allowed to actually act like teenagers, in any environment (corporate, start-up, small business), are the ones with skills that are very hard to find. In essence: security experts and specifically white hat hackers. Yes, you're allowed to have a hacker character that acts dumb and comes to work in his pyjamas and it will be realistic that he does not get fired. Your clerk character that's super rude and deals in hurtful quips? Not so much.

SOFTWARE NEEDS TO BE TESTED

 Have you considered:

Researchers: you know those people that made a song that can give Alexa commands without the owner knowing? Those are university researchers. A lot of really cool stuff is being developed not by office workers, but at universities. This includes software. Upside: probably a looser environment, with a lot of young people. Downside: you're basically writing a college AU.

Venture capitalists: in a Silicon Valley environment, this is basically the 'wealthy businessman' stereotype of old. The dragons in the dragon's den, the people that traipse around the city talking to people and assessing the potential of their pitch, before throwing money at them (or not). There's a bunch of paperwork, but they probably have a small army of accountants to handle this.

Evangelists: the cool people that hold TED talks. They usually work for a big tech company, as a specialist, and part of their job is to be a spokesperson.  A good example of this is the tech researcher, who has a day job finding nasty hackers or viruses, and who also blogs about that and holds talks and presentations about securing your business. A character like this has the advantage of being a deep tech nerd hacker type. They're rarely the CEO, so they can go deep into the coding, while also travelling places and meeting crowds of press or business people.

Project managers: these don't tend to do the actual coding, but they do, well, the managing. Characters like this will be more social and creative, they're the ones making the reports and presenting their progress to the CEO, and they're the ones troubleshooting when stuff goes wrong. In general, there's a lot of planning involved.

 Bakeries/Catering

General tips

Mass production of food is gruelling. You think you're writing about your sexy pastry chef and how they're carefully, tip of their tongue peeking through their lips, putting a cherry on top of that little moeilleux, but in reality, there's two hundred more to finish on this rack alone and they need to be done in under an hour.

Say it with me, people: baking is a night job. Industrial baking, mom-and-pop rural French bakery, bagel shop, donuts. Someone is going to be making all that stuff before the first customer arrives and that someone is slaving in front of a hot oven at four in the morning.

Any type of catering is a time management business. You know this. You've all watched Great British Bake-off (or, like, Chopped or whatever). If your professional cake maker is only working on one project/wedding at a time, they're not going to be in business for long. Your line chef will be plating up several dishes per minute. Your short order cook is baking six pancakes and scrambling eggs at the exact same time.

Unless it's a very large kitchen, the people that cook are the same ones that clean. And since it's food prep, there is a lot of cleaning.

Have you considered:

Recipe writer: ok so we're kinda back to media but big tv chefs don't make all those recipes themselves. Someone, usually a freelancer, writes them and tests them. Imagine someone getting the request to develop a seasonal cronut recipe that involves peaches and charcoal, because it's hip, and then baking several batches until they find something edible. This is a somewhat realistic environment for your super creative baker to live in a small house and make some money while also working on a book on the side, and falling in love with the quirky … goat… herd… brewer, florist, whatever.

#writing resources #also salt #possibly #fanfic

[dustindahusky-blog]

Would Americans buy a Chinese car?

From my view, yes. Here’s why a Chinese car might stick around long enough to catch on with American buyers.

 Cars are pillars of status, privilege, and pride in the USA. The car has truly made its home in our country and to many we often see them as members of the family or a faithful friend. Some like to show off with luxury or sport models or brands to denote their position in their company, neighborhood, or for the thrill of driving something fun or special. Most of us own what I would refer to as a daily driver, a car that gets you to A and B without fuss with creature comforts that make the everyday drive possible and while adding buckets of practically for any adventure. Some own minivans or CUVs/SUVs for hauling stuff around easier or to move large families around with oodles of space. Trucks are great for even bigger hauling and towing things around like boats or trailers of beer or stolen copper wire. However there is a price to pay with all this, depending on brand or model, new or used. Buying a vehicle is quite the important purchase for many. And they aren’t cheap depending on entirely what you’re looking for.  And this is where the Chinese auto manufacturers might have a leg on nearly all brands currently selling in the US. This even includes the value leaders of Kia and Hyundai, who have been known to sell cars at more reasonable prices than their competitors and offer more for what you’re buying.

 Installing a brand into a new market isn’t easy, however we have seen a template in which new guests into the US auto arena have done very well to get anchored in and to weather to storm ahead. At first European brands immediately after WWII have established themselves and have secured a foothold in the US, so did the Japanese in the mid 1960’s and early 1970’s, the Koreans in the late 80’s and early 90’s, and even late newcomers back on American soil like Tesla in the 2010’s have found their way to be taken seriously on the big stage. That successful template is offer something special or affordable in value, or do both. The original Volkswagen Beetle offered affordability, simplicity, and economy that was hard to pass up in the car starved post war era of the late 40’s. So was the Toyota Corona and Corolla of the late 60’s. The Koreans offered the Hyundai Excel that also provided much the same qualities. At the time when they were new, they were “the” disposable car of their time. They did a job well and adequately without many frills, and they were good value for the money for their respected time periods. Even the little Yugo from Socialist Yugoslavia offered the cheapest car in the US that only did the job to get you around town that didn’t get you wet when it rained.  They offered both young people and adults who didn’t have a lot of money to spend or who wanted to buy a new car at second hand car prices, cheap affordable wheels they can take home with.

 Now it’s 2018, and the brands that introduced themselves humbly during their times are now well established with the American buying public. No longer do we look at brands like Toyota, Honda, or Nissan with skeptical views of cheapness or being unpatriotic of not buying domestic, even today the scrutiny of buying Kia and Hyundai products is nearly nonexistent in our day and age because they have continued to up their quality and value game. Much like the many imports before them, we see them no differently than how we see GM, FoCoMo, and Chrysler-Fiat products. Just another quality brand. However now, there is a catch that we now see today, the import brands that came into our country that once touted affordability have now slowly over the passage of time become a tad out of reach for younger buyers. Yes cars are expensive, but most cars you see on dealer lots tend to be more expensive mid and upper trim option levels for most models, and you have to do some digging around to find a new car that is cheap enough to fit within budget needs. And here’s why this affordability is important with the feasibility of seeing Chinese cars in the US market. The average age of a car in the US is 11 years old, which honestly doesn’t sound that bad, though that feels kinda low. I’d feel it’s more like 15 years old, there are still a ton of older cars still rolling about the hills and the back roads. But whatever it is, people are holding on to them for many reasons. Can’t afford a newer car, maybe with plenty of work done a car could be driven for a lot longer, or maybe life priorities don’t call for the purchase of a newer car.

 Now let’s take a look at the Chinese auto industry. The Chinese economy is very much a living example of the Yugoslavian hybrid model of “market socialism”, centralized planning with capitalist competitiveness coexisting well together that promotes more frequent updates or advancements with the goal to sell to the consumer without having industrial or economic waste. Other socialist states didn’t work like this, and how they had vehicle development, marketing, and production was a much more different animal than what is seen in China today. And because of this, China’s automotive industry is has blossomed into many companies producing many models of vehicles for its vast “captive” and export markets. Some companies have properly obtained licensing agreements and their technical packages to produce vehicles, while some others have reverse engineered vehicles to blatantly copy. Their quality ranges from comparable to Western cars we come to expect to just low quality junk that we haven’t seen in cars since the 80’s or 90’s.

 If China makes most of our consumer products, cameras, phones, selfie sticks, appliances, industrial equipment and car parts, why not whole cars. Well China did try to extend into our auto market by selling us the Coda electric sedan on the West coast for only a model year from 2012 to 2013, and selling a dismal 117 units. Quality wasn’t where it should have been for the cost of $40k, and initially scheduled to be launched back in 2010 was held back two years due to lack of developmental time for durability. For the first US market launch of a Chinese made car that designed in 2004 on an older Mitsubishi platform, and an electric car right off the bat, no bite and little positive impression.

 Now for real, let’s say China markets a car brand for the US that passes Federal Motor Vehicle Safety Standards (FMVSS) and fuel economy/emissions standards, they should start with basic affordable cars that people want to buy. It’s a no brainer that the US market for car sales is a huge market on its own, and even other European companies are envisioning a return back to grab a small slice of the market pie. For one, Americans might draw some skepticism to a Chinese car but the idea of buying a compact or even midsized sedan with loads of options for less than $15-20k is a tantalizing prospect and would buy them up like they did the Yugo. The Yugo did alright for staying in the market from 1985 to 1992, selling 142k units. If you can sell ten thousand cars like how Scion began in 2003, you’ll make a good enough foothold in the market, unless you’re Daihatsu. Sorry Daihatsu, maybe a subject for another day.

 What are you going to expect with your Chinese car when you get it. I would expect body panels that don’t align well as they should have, “orange peel” paint finish, interior plastics that look like they won’t last long, sheet metal that might go rusty in a couple years, seat fabric that might rip in not much time, fit and finish overall is generally an afterthought. Again, you’re paying to get pissed off like buying a $3990 Yugo sold new in 1986 (if you could ever find one that sold for that low back then), but remember that you’re buying a set of wheels that’ll get you by for the time being. Much like how people expected Hyundai Excels to be just garbage piles, still preformed the duty of a basic if not agricultural car.  But that would be a worst expectation of what a Chinese car could be. Who knows, maybe if the Chinese are that serious about the US market, they’ll build a separate assembly line like the Zastava factory who built the Yugo for the USDM. Here’s a scary thought, we all know how much of a mixed bag the Yugo was in the US, and to think the ones that made it here were built better on another assembly line meant for our market, I can’t imagine what the Yugoslavian market Yugos were like.

 Much like every cheap and affordable car that introduces itself to our market, expect it to have little to no resale value to speak of, however you’re not really expecting to sell this car if you were looking at buying one. In your situation, you’re buying your first car for the first time or needing a second car, something to get you rolling for the time being. Whether if you’re in college or in highschool, or down on your luck with an older car that kept falling apart. The idea that you could buy a Chinese car for peanuts is something that’ll get the job done, and not care much about what you’re driving. You’re not expecting mind bending performance or luxury, you know what you’re getting into if you do, and the more you accept this the better. I mean no Toyota Corolla was ever sporty in the 70’s, it was the car you bought after the Ford Falcon finally rusted away and you needed to buy something fast so you can still go to night class. And if there were Chinese cars in the market here to buy, I’d buy one to drive it into the ground to either save up for a better car or just to buy another if one wasn’t enough. In the world of millennials sometimes having no credit or shit credit could transpire into a hairy situation of sticking with a rusty 90’s Nissan Sentra affectionately named “Liam Nissan” that eats too much oil or asking your aunt to buy her equally rusty Plymouth Breeze with empty cigarette packs scattered around. You’d rather buy a Chevy Cruze however you’re afraid that one for $10k and 83K miles might end up needing routine maintenance that you couldn’t afford to pull off on the spot and any new Kia Rio found on a dealer lot is still thousands over the mythical minimum sticker price. Hell, if a Chinese car was too expensive brand new, wait a year and you could even get one for sub $6-8k prices, maybe even less.

 Honestly I’m really surprised that the Chinese haven’t entered our market yet, they have entered the European zone and been a huge mainstay in Russia (I guess Ladas aren’t cheap enough for them) for years now. They can range from cheap to really adequate modes of transportation, even something to own for more than you really require of it. The Chinese have been making Audi’s, BMW’s, and Buick’s with huge demands because they have been grand sellers in terms of luxury, and they tend to be of quality similar to their genuine originals. Whatever the Chinese do throw out us someday, we’ll gladly be in open arms for cheaper alternatives to newer, or really used cars. Plus, we Americans love to rip on unknown shitboxes, then in 15 years’ time we are buying them by the thousands. Who would guess in 1966 that Toyota would be producing quality luxury sporty cars under the Lexus brand. In 1995 when Kia would one day be producing a car like the Stinger that is chasing around other RWD sport sedans. In 1992 the Yugo going on to better things….oh wait we ran out of Yugoslavia by then. Mhmmmm we never really did get the Tata Nano here in the states (who remembered when that came out, $3000 car that had a fire problem), even though that there was an interest for a short while. In 1970 Americans wouldn’t expect Datsuns to be called “Datsun by Nissan” in 1984 and just Nissan by 1985. Import brands change and morph in the fluid of time, and many are still here. I wouldn’t be surprised if a Chinese brand turns out to be a good seller in 5-10 years time much like how the other imports started out.

 And apparently on a quick google search, it seems that the Chinese auto company GAC has an interest in joining the US market in late 2019. Under the local Chinese brand name….Trumpchi. They are serious, and honestly their vehicles don’t look that bad either. In fact they would fit right in with this country. They are figuring out a newer name to use in North America. No one is certain how reliable a new Chinese car will be in the states, but if it’s cheap don’t expect it to last forever.

 If you made it this far, hurray! If you like my rambling, you’d like what I’d have in store in the future. If you don’t, well, I’m still going to write it down anyways. :D

 Keep zooming!

#DustinDaHusky autos ramblings Chinese cars furry

[conservativemalarkey]

why do conservatives whine about taxes being theft and get shook when others talk about rent being theft?

OK. The short version: they understand the social contract differently from liberals and leftists. Liberals tend to see the social contract in terms of what people can do for each other. Conservatives tend to see it in terms of what people can’t do to each other.

Long version: 

The social contract, for anyone who hasn’t hit World History and/or Philosophy 1001 yet, is a theory about the origins of government. Basically: in the ‘natural’ state of things, people are free to do whatever they want, including hurting or killing each other. Most people figure out pretty quickly that this is not a good way to live, and come together to form a society. In society, you give away some of your rights and recieve responsibilities- but you also recieve some rights and privileges for being a member of society.* It’s like each citizen signs an unspoken contract when they become an adult: “I promise I’ll do xyz, and in return I get xyz.”

People left of centre tend to see this contract as a list of things people will do for each other. “I promise to help support people who can’t support themselves, speak for people who have no voice, and build up a strong community; in exchange, I’ll have the help of other people in the community if I’m ever in trouble.” Taxes fit perfectly into this model- you put a little money into the pot and use it on whatever the community needs, everyone benefits from the results. 

This seems self-evident, in a ‘why would anyone see this differently’ kind of way. But conservatives don’t tend to think like this. 

Conservatives often don’t trust people they don’t know. This is partly because they’re authoritarians and anyone they don’t know is probably not in proper submission to the right authorities, and partly because conservatives have often inherited a history of persecution-- from distant ancestors getting their heads beat in by other kinds of Christian for being the wrong religion, or, more depressingly, because they’re poor and/or elderly and/or disabled and/or are ‘hicks’ and thus have the wrong culture to be taken seriously by mainstream America. They’ve got a fortress mentality going on. Some of it is justified; a lot of it ain’t. 

So conservatives often just want to be left alone. They do not want people they don’t trust up in their business. Most of them would like to live in the State of Nature where you don’t have any civil society beyond your family and, maybe, your local church or a very small hometown you defend from attackers.**  But they (correctly) intuit that living in the State of Nature sucks.

So the philosophy behind conservative thinking on what government should do is that it should mostly be a justice system- an arbiter of crimes and punishments- and not much else. The military exists to police the world outside America and punish other countries who do something wrong. The police and fire department exist to keep you safe from other people and acts of god. Other than that, everyone needs to trust in themselves. 

Government, in this model, exists to protect you from other people- not to help build up a community. You want your communities as disconnected from the outside world as possible, if you’re thinking like a conservative, because you don’t know who you can trust in the outside world, but you know who you can and can’t trust in your community.***

Income taxes, in this version of the social contract, are theft- they are taking money away from you and giving it to strangers. Because of years of conservative propaganda, most conservatives think the biggest chunk of government spending goes to welfare, and specifically welfare for black people so that Democrats can cynically buy their votes. They do not want their money to be spent this way, and are about as angry about this as we are about the military-industrial complex, even though it’s demonstrably untrue. And ... while a lot of money in the form of welfare goes to people in the sticks, they’re not seeing a lot of the other benefits of taxes, because the American government’s system of handing out money is screwed up. 

Rent, on the other hand, is a contract you enter into of your own free will, and conservative propaganda says it’s good because capitalism is good. Also-- a lot of the time, rent in small conservative towns is pretty cheap, because no one wants the land it’s on. For example, a studio apartment in Chicago is, on average, around $900 a month; in Kokomo, Indiana, that will get you 3 bedrooms.  The costs of living out in the sticks are mostly ‘having a car’ and ‘getting food and other essentials’, not ‘rent’. So rent isn’t nearly as big of a concern for conservatives in the sticks- besides, it’s just part of the cost of living, that’s the way life has always been. Conservatives really believe that you have to work to survive, and if you think otherwise, you’re either stupid, lazy, or both. 

So yeah, that’s why they get shook. In their heads, you’re basically saying “the way you think society should be is wrong on a fundamental level”, with a side of “I’m going to rip you off and then tell you you should be grateful because I’m ‘helping’, even though you’re seeing no benefit from it” and “I deserve to get to lie around and do nothing while you work for a living, because someone’s got to work for a living for the world to keep going”. 

*There’s some dispute, particularly on the Far Left, over whether this is accurate, because social contract theory tends to assume that everyone is a rational actor working out of enlightened self-interest and all that Enlightenment stuff that the Far Left hates. Being a filthy liberal, I think it’s a decent framework for this kind of discussion, if only in a spherical-cows-in-a-vacuum kind of way.

**As a side note, I think this is why zombie apocalypse stuff is SO POPULAR with a certain kind of conservative guy, especially when it comes with a side of racism. It’s the fantasy of being back in the State of Nature and getting to be a BADASS!!!!!1!! and not get your ass kicked by the Mob.

*** Of course, this ironically leads to higher rates of abuse.  

(Side note: I don’t personally understand the logic behind ‘rent is theft’- other than maybe ‘any transaction you can’t avoid in a capitalist economy is theft’, which, I disagree but I can see where you’re coming from. Personally, I’ve rented most of my life and the thing that I’m paying most of my money for is ‘having my utility bills covered’ and ‘having someone on-call to let my dumb ass inside or get the tree roots out of my toilet’. But hey, we don’t have to agree on everything.)

#conservative malarkey #general malarkey #economics #rent #taxes #anti-tax malarkey #sosungalittleclodofclay

[onpossiblestories-blog]

on caretizenship & doing the laundry.

“A society organised around the shared needs of human bodies would be a very different society from the one we know now.” ~ Katrine Marcal, Who Cooked Adam Smith’s Dinner?

What do you think citizenship should entail? It’s a big question, right? (Political) philosophers have picked over its entrails for millennia, and I think are yet to come to agreement. People have fought and died for the right to have it, and only since the second half of the 20th century with the decolonization, civil rights, gay liberation, and feminist movements has it begun to extend to humans beyond the ideal Man (ie) white, European, middle-or-upper-class.

However in the last decade, there has been an onslaught of neoliberal reforms: making jobs more flexible and less secure in search of profit leading to the rise of a precarious class; the transition from a welfare state (where all citizens are entitled to benefits and support) to a workfare one (where some benefits are reliant on one-size-fits-all back to work schemes or mandatory unpaid labour); the dwindling availability of affordable, let alone social, housing. The post-war ideal of citizenship is being replaced by one in which the individual is entirely responsible for themselves, in spite of the fact that structural injustice makes certain lives into perilous obstacle courses. The citizen is responsible for making their own way, for finding a job even if there are none to be had, for making money and standing on their own two feet. The designation of citizen is one to be grateful for: it marks a person out as belonging to the geographic area in which they reside, it is quickly turning into a privilege and not a right as the recent case of the Jamaica 50 highlights. Is this really the kind of citizenship we want to stand by?

In amongst this mess, scholar Maribel Casas-Cortes (2019) documents a creative alternative way of belonging which was developed by Spanish feminist activists. Termed “cuida/dania” — in translation “caretizenship” — it’s about centring social relations of care, building solidarity and support between all people whilst paying attention to the effect of privilege hierarchies, and basing belonging in the small and everyday rather than on the scale of the nation-state. She locates it in the specific example of “Precarious Offices”, which were set up by feminist groups to provide information and support for those left out of traditional union organising. I think this idea could (and already does) extend well beyond the traditionally political and activist, and I’m going to explore another site in which caretizenship is enacted — through my voluntary work on the night shift at a London homeless shelter.

It is 4am, and I am folding someone’s washing. The other washing and drying machines chunter gently around me, and the laundry door is hanging half-open. I’m drinking ridiculous amounts of tea to try and stay awake, but it’s not really working so I’ve decided to keep busy with all the chores that need doing. It’s mostly the laundry at this time of night, but later I’ll deal with dinner’s leftovers, lay out breakfast for the early risers, and organise the crate of Pret a Manger’s surplus food we get delivered for people to take for lunch.

Doing the laundry is an entirely ordinary part of everyday life; social anthropologist Sarah Pink writes about it extensively, but most of her work is about laundry in the space of the home. What happens when it’s not in the home, done by the person who owns it in a launderette, or performed as part of the capitalist exchange economy? Since the figure of the launderess largely went away in this country with the invention of washing machines, I think that laundry has become quite an intimate task too. This could also be tied up with the increasing individualisation of Western society. Perhaps I say this from my particular position as a white, middle-class woman but I was taught by society that other people aren’t supposed to see you as a messy, vulnerable, dependent body — they aren’t supposed to see what goes on behind the scenes unless they’re a friend or a family member. As an individual, it is expected that you present a polished façade to the world and get on with being a good, working citizen.

At the shelter, the façade necessarily has to crack. Laundry as a social relation begins to involve more people. Guests aren’t actually allowed in the laundry because of health and safety and protocol, so they have to hand us their dirty clothes in a bag and we put on loads of washing throughout the night. Though you don’t think about it when you’re getting on with it, doing a stranger’s laundry is an act of care and trust on both sides — this manifests itself, for example, when some female guests request that only a female volunteer does their washing. In a wider sense it matters too. You handle people’s underwear, their smelly socks. You get up close and personal with this reality that other people have messy bodies like yours. You fold their clean stuff neatly into a bag, and put armfuls of warm, dry towels back on the shelves; you care. You have to.

Caretizenship, in my head, is like this. It’s about working at the small scale, building connections with people who are not your friends, doing what you can to make someone’s day better. It’s about listening to our fellow humans and their stories when they want to talk. It’s about, for once, not being yourself or an individual, but being a node in a network of support and trust that extends beyond the ones you might build out of choice. Because when the traditional ideal of citizenship crumbles and the state actively works to fracture communities rather than support them, caretizenship (especially across demographic divides) is what we need to start enacting.

For me, right now, being a caretizen is doing the laundry at four in the morning and greeting everyone with a smile. What does it look like for you?

written by eliza

#citizenship #caretizenship #social justice #laundry #volunteering #academia #society #community

[stopkingobama]

Is the Fed deadly, lifesaving, or just useless?

Image: CC0

To read (and agree with) Danielle DiMartino Booth’s Fed Up is to believe that the Fed centrally plans nearly every economic outcome, and that the problem with our central bank today isn’t its intervention in the economy as much as those in its employ are the wrong people to intervene in the natural workings of the marketplace. Advertised as yet another anti-Fed book, the real goal of the book is to make you believe it is the most indispensable institution in government today.

If we ignore Booth’s weak economic analysis, her overstating of the Fed’s power by a mile, and her awe-inspiring self-regard whereby she regularly sees into the future in ways that would humble the world’s greatest investors, we can’t ignore that she learned all the wrong lessons from her time as a researcher at the Dallas Fed. Booth thinks the Fed is necessary, but only if people like her are running it.

A scary thought indeed.

“Damn Ron Paul,” writes Booth. “The congressman’s 2009 book End the Fed called the bank corrupt and unconstitutional and urged its abolition. Though Paul made some good points, America is not a banana republic. It needs a strong and independent central bank.”

She speaks as a former researcher at the Dallas Fed, and Fed Up is her Cliff’s Notes history of the central bank, an economic argument in between, and a memoir of her time on both Wall Street and in the bank’s employ.

Booth doesn’t succeed in making a case that the Fed is necessary. Precisely because we’re not a banana republic, we don’t need a central bank acting as lender of last resort to insolvent banks (solvent ones don’t need the Fed), regulator of the banking system (if Fed officials could reliably detect future trouble spots they wouldn’t work at the central bank), or as planner of an overnight borrowing rate that is a price like any other.

Though I’ve argued that the belief that the Fed is the source of myriad U.S. economic ills doesn’t stand up to basic scrutiny, neither does Booth’s argument that its existence is good for the economy, or that it’s necessary.

The Fed Is Useless

Much more than the Fed’s critics and supporters would like us to believe, the Fed quite simply isn’t that relevant. It deals with massively overregulated and antiquated banks that represent a small – and declining (15%) – percentage of total credit in the U.S. economy, not to mention that banks are easily the least dynamic source of credit for what is the most dynamic economy in the world.

As for the popular notion that the Fed creates credit, let’s be serious. The pursuit of credit isn’t the pursuit of dollars created by the Fed as much as it’s the pursuit of real resources like trucks, tractors, computers, desks, chairs, buildings, labor, etc. The Fed can’t create, increase, or shrink what borrowers of dollars are in need of as much as it can distort the direction of credit.

Booth thinks that the Fed is “the most important, powerful institution in the world,” but spends much of the book pointing to the incompetence of the economists in the middle and at the top of the central bank. Ok, but incompetence combined with world-leading power would logically signal a “banana republic” U.S. economy, as opposed to the world’s largest. If the Fed mattered and were as powerful as Booth presumes, the U.S. economy wouldn’t matter. But it does.

Booth’s story succeeds insofar as she provides nice tidbits of information throughout, but it’s overly self-regarding as a memoir, weak as a document meant to provide economic analysis, and then it makes grand statements throughout that are never proven. A book that is at times entertaining is unlikely to change the central-banking discussion one way or the other.

Economic Growth Does Not Cause Inflation

This analysis comes from a writer who wholeheartedly agrees with Booth that the Fed’s economists are impressive in their witlessness. We’re talking about economists who believe, despite voluminous evidence, that economic growth causes inflation. Booth references former British chancellor of the exchequer Geoffrey Howe’s brilliant assertion that an economist is a “man who knows 364 ways of making love but doesn’t know any women” to make her point that the economists in the Fed’s employ have lots of theories; theories bereft of practical reality.

She adds that Fed economists aren’t ever fired. So true. The Fed is a full employment act for insight-bereft individuals with PhDs next to their name, but that’s where she should stop. The problem is that Booth believes the Fed would make sense were its staffers more in touch with reality (presumably like her), if they’d ever worked in the private sector (as she has), if they ever watched CNBC (as she does with great regularity), and if copies of the Financial Times didn’t sit unread inside the walls of the central bank.

Again, she’s right about the incompetence at the Fed, but her belief that the right people could make the Fed useful amounts to a fatal conceit that doesn’t stand up to scrutiny any more than Paul’s view that the Fed is behind much of what weakens the U.S. economically. Why would anyone take seriously that which channels its influence through that which is dying (the U.S. banking system)? Booth has no answer, but in fairness to her, there’s no book and little media attention if she acknowledges that the Fed’s always overstated importance is in rapid decline.

As mentioned previously, Booth doesn’t lack in the self-regard department. Fed Up, while ostensibly a short story about America’s central bank in the 21st century, is very much Booth’s personal story. And as the author of her own story, Booth manages to always position herself on the right side of history; the seer extraordinaire whose vision and common sense causes her to see ‘around the corner’ in ways that would make her the envy of the world’s most skilled investors.

Why Is She Always Right?

While working on Wall Street from the late 90s to the early part of the 2000s, when excitement about internet stocks reached its peak, Booth writes that “I didn’t encourage my clients to ride the NASDAQ wave and never steered them into stuff that would have torpedoed their assets.” When presented with the option to purchase “unregulated” (Booth attacks the idea of deregulation as unwise throughout the book) CDOs for clients in January of 2001, the always ahead of the curve Booth, able to see the difference between “money good” and lousy debt security tranches within the CDOs, asked “Who would buy this crap?”

After leaving Wall Street for the Dallas Morning News, Booth reports that then Dallas Fed President Richard Fisher, seemingly wowed by her reporting, called to tell her “You should be writing for the Wall Street Journal. You could be a Jon Hilsenrath or Greg Ip.”  About the rush into housing in the 2000s, the always future-seeing Booth notes that “by August 2003, I was truly alarmed.” Fast forward to 2006, Booth references “two back-to-back columns I wrote in March 2006 about escalating systemic risk make it appear that I had psychic powers.”

With the Dallas Fed’s research head Harvey Rosenblum plainly blown away by Booth’s vision, her logical next step would be to join the Fed itself. As Booth describes it, Rosenblum “was reading my stories and saying, ‘My God, what if she’s right?’” Of course, Booth, ever eager to save a world blind to what was obvious to her, decided to “serve my country” by taking a job at the Fed’s Dallas branch in research.

And as readers can probably imagine, her departure from the Dallas Morning News naturally led to an “avalanche of e-mails from readers” praising her vision that “was humbling.” Even a former critic, the “Linoleum Lady,” had to admit that Booth was right about housing, but figure the world beyond Dallas awaited her insights since she, quite unlike anyone at the Fed (and most investors apparently, too), could see that “the worst financial crisis since the Great Depression was about to break over their heads…”

She Was Not Alone

About all this, no doubt Booth could produce the columns and diary entries revealing her uneasiness. But then she was hardly alone in the 2000s. Most any investor or columnist could point to all manner of client letters and opinion pieces (including this writer) indicating something amiss; the difference is that most don’t position themselves as seers in the way that Booth does. The bigger problem is that her economic analysis doesn’t stand up to what she claims to have known before those around her.

Figure that the Great Depression, despite the protests of Ben Bernanke and Booth (Booth writes of the Fed’s “mishandling of that tragic period”), was not financial. Lest we forget, the Fed’s rather slim mandate as of the 1930s was as lender of last resort to solvent banks with quality assets in need of near-term cash. The problem is that solvent banks in the 30s were just that.

If the Fed had acted in support of insolvent banks, it would have caused a greater “financial crisis” for the central bank by propping up what should have logically been allowed to fail. The banking system is weaker in modern times precisely because the Fed’s mandate changed to reflect the truth that solvent banks don’t need the Fed. It exists to aid those institutions that market lenders have properly left for dead.

The Fed’s non-action in the 30s was correct. The Fed couldn’t have boosted “money supply” in weakened areas even on its very best day. Money, and the resources exchangeable for money, always migrates to where there’s productivity and migrates away from where productivity is undetectable. No amount of Fed meddling can change that. Booth is peddling a commonly accepted, but logically false history about the Fed during the Great Depression.

Failure Is a Feature

Booth’s implicit assertion that the eventual failure of mortgage loans and banks caused a crisis is misguided. Failure is a feature of any capitalist system, not a bug. This goes for financial institutions as well. Despite what economists would like us to believe, banks and investment banks are hardly unique or sacred. They can fail and should be allowed to fail with the health of both sectors very much in mind.

A lack of failure, on the other hand, would be real economic “crisis” as it would signal horrid stagnation. Absent the allowance of errors that cause poor stewards of limited resources to be relieved of their ability to misuse them, life would be marked by unrelenting drudgery. Failure is as essential to progress as success is, simply because the former ensures that misallocated capital will be redirected in short order to a higher use.

Absent the intervention of central banks and governments in 2008 to blunt the impact of what was healthy, there quite simply is no crisis. The crises of the 30s and ’08 weren’t financial as much as they were a creation of government getting in the way of what was necessary for the U.S. economy to rebound.

Economies gain strength from periods of weakness, and the Great Depression, like the slow-growth aftermath of 2008, was a creation of government intervention. Recessions signal the boom on the way, but in both instances, legislators and central bankers (in ’08, not the 30s) wasted resources taken from the private sector to block the cleansing necessary for a raging rebound.

The problem is that Booth is convinced that bank failure is what caused 2008, as opposed to it being an effect of previous policy error. Her solution is more regulation. While she never supports her assertion midway through Fed Up that “shadow banking is what caused the financial crisis of 2008,” her vague and oft-stated solution is more government oversight. Seemingly lost on the author is that “shadow banking” is a logical effect of a financial and banking sector suffocated by the very regulation she deems wise.

Regulation Can’t Work

Booth wants to bring back a “modern-day version of the Glass-Steagall Act” given her view that regulators should “leave the gambling to the investment banks, and call it a day.” An empty proposal if there ever was one. If we ignore how much such a regulation would weaken U.S. banks forced to compete in a global economy with banks not shackled by what makes no sense, we can’t ignore that it wasn’t investment banking practices that caused banking’s troubles in the 2000s.

By her own admission, a rush of housing debt was the problem, but banks have always been a part of the housing loan market. Furthermore, and as banking history makes very clear, allegedly vanilla lending has time after time proven the industry’s Achilles Heel. Goodness, inside sources at the Fed have told me that the central bank has bailed out Citigroup alone five times in the last twenty-five years. The solution is more failure in a free marketplace, as opposed to symbolic moves like a modern Glass-Steagall that wouldn’t even be symbolic when we consider how it would suffocate banks already struggling to compete in a world of low margins.

Regarding the slow-growth rush into housing that preceded the eventual correction, Booth asserts that Alan Greenspan’s Fed “blew another bubble” with a low Fed funds rate that led to a housing boom. In Booth’s defense, her analysis is broadly shared by most in the economics commentariat despite it being easy to disprove.

What Caused the Boom?

Indeed, a read of Sebastian Mallaby’s mostly weak and misanalyzed biography of Greenspan reveals that interest rates from the Fed were a sideshow when it came to the 21st-century housing boom. Booth felt she was bringing unique knowledge to the Greenspan Fed about what it was doing, but as Mallaby makes clear, Greenspan had seen this housing boom movie before in the 1970s, and it had nothing to do with the Fed’s target rate meant to influence the cost of overnight lending.

Mallaby writes that when Greenspan returned from the Gerald Ford administration to his Townsend-Greenspan economic consultancy in 1977, employee Kathryn Eickhoff “had been telling clients that a hot housing market was driving consumer spending: people were taking out second mortgages on their homes and using the proceeds to remodel their kitchens or purchase new cars, turbocharging the economy.” So while Eickhoff’s belief that housing consumption could drive economic growth was as wrongheaded in the 1970s as it was in the 2000s, her research is yet another reminder that the Fed’s low-rate policies had little to do with the housing boom of more recent vintage. We know this because the Fed’s funds rate was soaring in the 70s.

Interesting about all this is that when initially told of what his employee had been reporting to clients, the empiricist in Greenspan grumbled that Eickhoff failed to “get the data” to prove her argument. Greenspan proceeded to gather up the numbers only to admit to Eickhoff that she “had absolutely no idea of the size of this phenomenon.” We’ve once again seen the housing froth movie of the 2000s before; albeit in the 1970s when the Fed was aggressively hiking rates.

Gilder’s Take

Indeed, further on in his re-telling of the late 70s that Greenspan plainly saw, Mallaby writes that despite the fact that “the Fed had just increased the short-term interest rate to 9 percent….mortgages were still easy to come by and house prices were booming.”  Mallaby adds on the same page that “One decade earlier [in the 60s], new mortgage creation had seldom exceeded $15 billion per year. Now six times that quantity was normal.” Later on, Mallaby noted that “home prices had nearly tripled during the 1970s.”

The money quote regularly used by this reviewer to reveal conventional wisdom about the Fed and housing vitality as wanting comes care of George Gilder. Observing the 70s housing boom alongside a soaring Fed funds rate much as Greenspan did in his 1981 book Wealth and Poverty, Gilder wrote “What happened was that citizens speculated on their homes…Not only did their houses tend to rise in value about 20 percent faster than the price index, but with their small equity exposure they could gain higher percentage returns than all the but the most phenomenally lucky shareholders.”

The 70s reveal popular arguments about the Fed’s role in the slow-growth housing rush of the 2000s as wildly false. Not only does consumption of housing shrink economic growth (the latter the principal flaw in the Townsend-Greenspan thesis which said housing consumption was a stimulant), it soars for reasons unrelated to the central bank’s rate target. Getting into specifics, hard assets do well during periods of currency weakness. The U.S. Treasury devalued the dollar in both the 70s and 2000s. So while the Fed employed interest rate policies in the 2000s that were the exact opposite of how it operated in the 70s, the result was the same. The Fed was and is largely a sideshow when it comes to housing health (or lack thereof) despite what we’re frequently told.

Volcker Revisionism

All of which brings us to the dollar question. Historically inflation has been viewed as a devaluation of any currency; gold often used (or stable fiat currencies) as the objective measure of the currency’s decline. About this, it’s commonly believed that the Fed controls the dollar’s exchange rate. So while towards the book’s end Booth embraces the false notion that economic growth and rising incomes cause inflation (“You cannot force inflation higher if incomes aren’t rising”), earlier she properly alludes to it as a monetary, dollar concept. Booth writes that Paul Volcker is “widely regarded as one of the best Fed Chairman in history because he vanquished double-digit inflation (created by Burns [Fed Chairman Arthur]) during the 1980s.”  The problem here is that history doesn’t support her admittedly popular contention. Indeed, as Burns’ diaries reveal rather plainly, he begged President Nixon and his top advisers to not sever the dollar’s link to gold; the latter an implicit devaluation that gave us the 1970s inflation wrongly associated with Burns.

Taking this further, Volcker took over at the Fed in 1979, only to begin a failed three-year monetarist experiment whereby an always inept Fed would presume to plan economic growth by virtue of it vainly trying to plan “money supply.” Volcker’s timing is instructive simply because the dollar price of gold sat at roughly $260 when he began his alleged “tight money” experiment only for the dollar to plummet; gold hitting a then all-time high of $875 in January of 1980.

More than Fed critics and supporters would ever like to admit, and beyond the fact that the dollar’s exchange value is not a Fed function, history is clear that currency devaluation, stability, or rising currency values are more than anything a political concept. Figure that the Fed opened its doors in 1913, and the dollar generally held its value until 1933 when FDR, against the protests of Fed Chairman Eugene Meyer, devalued the dollar from the 1/20th of a gold ounce to 1/33rd. Meyer resigned over FDR’s decision.

Nixon, as mentioned, devalued the dollar in 1971 despite the protests of Burns. Ronald Reagan ran on a strong dollar, and perhaps surprising to some, Bill Clinton’s Treasury was the most pro-dollar of any since the greenback was floated in ’71. The dollar sank in value in the 2000s (thus a housing boom that mirrored the one that took place in the weak-dollar 70s), but this didn’t reflect a change in Fed policy (Greenspan was still running the show) as much as the Bush administration made plain its preference for a weak dollar.

Debasing the Money

Nowadays Fed officials wrongly define inflation as too much growth, but if analyzed by its traditional definition of currency devaluation, the Fed’s inflation role since 1913 is greatly oversold. All that, plus there were substantial devaluations of the dollar in the 19th century despite the lack of a central bank. The dollar is once again a political concept, and the existence of a central bank is not required for it to be debased.

What about quantitative easing (QE) and a zero funds rate from the Fed? Booth takes the latter literally and suggests that in pushing the overnight borrowing rate down to zero, the Fed magically gave us “cheap money.” Supposedly this was especially great for “Wall Street” despite the fact that staffing in finance is still below 1990s levels; levels artificially higher today than they otherwise would be thanks to a surge in compliance officers within suffocated financial institutions.

Wall Street has historically prospered precisely because credit is never cheap in the real world. Booth fancies herself as in touch with reality, so the “cheap money” commentary signaled to this reviewer the excess influence of an editor eager to create an ‘us vs. them’ memoir. Again, in the real world credit is always difficult to attain.

In Hollywood, even the best movie producers have their requests for credit to make films turned down 90 percent of the time. In Silicon Valley credit is so expensive that start-up visionaries must give up a big portion of their business to venture capitalists in order to attain credit, only for them to give up even more of the business in the form of stock options to lure quality employees.

On Wall Street, investment bankers are paid well precisely because credit is so hard to find for even blue chip businesses. Goodness, even Apple, the most valuable company in the world, pays 3 percent to borrow. “Cheap money” is a fun concept, but it’s not real. This reviewer believes Booth intuitively knows the latter is true.

Is the Fed Fueling the Boom?

And perhaps unsurprisingly given her fairly conventional critique of the Fed, Booth promotes the popular notion that modern Fed policies “have fueled skyrocketing valuations across the full spectrum of asset classes.” Despite her correct analysis of a central bank populated by the inept, she asserts that monetary engineering by these same incompetents tricked the most sophisticated investors in the world (according to Booth, the common investor is out of the market thanks to the ‘little guy’ having been tricked too many times) into an “increasingly desperate search for yield.” Booth ultimately concludes that “As long as the Fed kept its QE machine up and running, the markets were pleased.” In Booth’s defense yet again, what she writes about the markets is what is regularly asserted. But is it true? A basic analysis says no.

According to Booth, thanks to quantitative easing “investors would party, under the assumption that the Fed had their backs.” Somehow a collection of witless economists channeling the Fed’s influence through anachronistic banks could stimulate an impressive, 200%+ rally? Let’s unpack this.

If what Booth writes is true, why is the Japanese stock market still half of what it was in the late 1980s despite at least eleven doses of QE by the Bank of Japan (BOJ) ever since? Booth might reply that low-interest rates made the U.S. rally inevitable, but Japan’s story stands in the way of what makes little sense in the first place. Figure that the BOJ was at zero for years and years, Japanese rates across the yield curve were much lower than they were in the U.S., but with no corresponding equity rally. Ok, but with rates on Treasuries and high-grade corporates so low, doesn’t logic dictate a rush into equities and a “desperate search for yield”?

It’s a nice theory, but if true then it’s also true that there would have been a correction in Treasuries and high-grade corporates to reflect a rotation out of low-yielding bonds and into stocks. But it never occurred; the major correction occurred years into the rally, and after the election of Donald Trump. But wasn’t the Fed printing trillions that had to find a home? There’s debate about the latter, but even if true, for $4 trillion to enter the stock market, $4 trillion must exit by definition. For every buyer there’s a seller, so for every QE optimistic buyer to express that optimism, a QE skeptic must be able to express an equal amount of pessimism.

But the main truth that Booth’s commonly stated argument ignores is that just as economies gain essential strength from periods of weakness when bad ideas, bad habits, bad investments and bad businesses are cleansed from the economy on the way to a rebound, so is this true with equity markets. It’s when markets are correcting that investors are starving bad and marginal companies of investment, only to direct precious resources to better companies.

In short, even if Booth’s widely shared theory is true, it only serves to remind us that by acting at all the Fed robbed us of what would have been a much bigger market rally had it simply done nothing. Of course, the QE/market theory isn’t true, and even Booth alludes to it. As she notes on p. 160 of Fed Up, “The Fed was following the Bank of Japan into territory that, so far, hadn’t worked for them.”

Well, of course it didn’t. Not only is the power of central banks vastly overrated, even if they could artificially create equity rallies the damage would be fairly immediate owing to massive amounts of precious capital remaining lodged in the hands of the imprudent. Investors would correct what is economically harmful in short order.

Not Entirely Without Merit

So while there’s much to criticize about Fed Up, Booth tells an interesting story. Her writing is entertaining, if at times a little (“I felt a knot as big as one of my Italian grandmother’s meatballs lodged in my gut”) over the top and profane. Readers will find lots of good information if they’re willing to look.

For instance, the “$10 bill has the shortest life span, surviving only a little over 4.5 years before it must be replaced.” $100 bills, according to Booth, last over 15 years, while coins stay in circulation for decades.

Booth has unearthed a letter “published in the Times of London on March 30, 1981, signed by 364 prominent economists, [which] predicted that Margaret Thatcher’s stringent fiscal policies would be disastrous.”! This reader will be using that gem for years and years!

While each resists the notion that they were bailed out, Booth notes that Morgan Stanley and Goldman Sachs both regularly borrowed from the Fed from March of 2008 to March of 2009. It seems Morgan Stanley borrowed overnight 212 times, while Goldman did so 84 times for a total of $600 billion.

Yellen the Ridiculous

And then her various quotes from Janet Yellen are positively priceless. There are too many to list, but in 2007 Yellen, the allegedly great forecaster, said, “I think the prospects for a really serious housing collapse that spreads to consumer spending have diminished substantially.”

Booth rightly has little respect for Yellen, and about the Fed Chairman, she also unearths the sad truth that Yellen and her husband (Nobel Laureate George Akerlof) generally agree on everything economic. This alone is terrifying for anyone who has ever read the 2015 book Akerlof co-authored with Robert Shiller, Phishing for Phools. It would be hard to find a greater modern indictment of the economics profession than this insight-free, most worthless of books.

Can the Fed Unfreeze the Frozen?

Of course, all of this speaks to the broad truth glossed over by Booth that, while the Fed is once again staffed with economists who aren’t in any way troubled by common sense, they don’t have that much power. If they did, the U.S. economy would be a basket case. But Booth is convinced that the U.S. economy is a basket case despite the fact that more of the world’s plenty is directed to the U.S. than any other country.

That the latter is true, that the businesses of the world fight aggressively to attain U.S. market share, calls into question Booth’s Trumpian argument about carnage, but she spends the early part of the book vainly painting a picture of Dickensian American suffering that’s belied by the incessant desire of the world’s poorest to get to the United States. For Booth to be correct about American economic agony, the rest of the world must be stupid. This is doubtful. But that’s her take. Her economic analysis does Fed Up no favors.

According to Booth, the Fed has the U.S. economy “frozen in motion.” Really? The Fed that deals with banks which by her own admission are being worked around by the “shadow banking” system? If frozen in motion, why does the world continue to ship us so much? Booth can suggest “cheap money,” but according to her, only Wall Street has access to the Fed’s “cheap money.”

Booth writes that the Fed’s “high interest rates in the 1980s killed” Erie, PA’s “steel and auto industries.” Ok, but in the first third of the 20th century, New York City and Los Angeles ranked 1st and 4th in the U.S. as manufacturing locales. They’re not anymore, but are they both poor like Erie? Did the Fed have it in solely for the formerly robust Pennsylvania town, or are Erie’s troubles unrelated to the Fed and more a function of a town that didn’t evolve as others did?

Booth laments the situation of millennials apparently made worse by the Fed and writes that “Nearly half of males and 36 percent of females age eighteen to thirty-four live with their parents, the highest level since the 1940s.” Interesting stuff, but last this reviewer read, every major hotel chain is starting up all new brands to appeal to millennial tastes. Are the hotel companies blind to the economic chances of the millennials in ways that Booth isn’t?

The Fed once again deals with banks, but banks are increasingly losing market share in the mortgage market. Despite this truth, Booth claims that Fed machinations are “killing the move-up housing market.” Long-term investment? According to Booth, the all-powerful Fed has “pulled the plug.” The latter might interest investors in Silicon Valley who regularly back start-ups that history says have a 90 percent chance of failure.

The Fed Can’t Manage Anything

All of her economic analysis speaks to the biggest problem with Fed Up: nearly every word written by her about the central bank reveals a presumption that it’s the Fed’s job to manage the economy. But it’s not. Thank goodness it’s not. And Booth knows why. The economists at the Fed wouldn’t have a clue about how to manage anything, but the greater point is that no human, or collection of humans, could manage the economy. That this includes the plainly talented and world-wise Booth should in no way be construed as an insult to the author.

Still, as mentioned at this review’s beginning, Booth doesn’t call for ending what serves no useful purpose. Booth thinks the Fed necessary. Because she does, her reform solution is that the Fed should get a spending increase from Congress in order to “Hire brilliant people” (presumably like her) to run it. In proposing this, Booth reveals that she learned less than she thinks during her time at the Fed.

By her analysis the Fed’s problem is that there aren’t enough people from the real world in its employ, but as former trader Nick Kokonas (firmly entrenched in the real world as an owner of numerous restaurants helmed by master chef Grant Achatz) explained about trading in a 2012 book he co-authored with Achatz (Life, On the Line), “If you are good, 49 percent of your decisions will be wrong. Even if you are great, something just short of a majority will be losers.”

Kokonas helpfully revealed that even the truly talented err with great frequency. This basic truth has seemingly eluded Booth on the way to the mistaken belief that what makes no sense can be fixed through reforms of her liking. No. Contrary to what Booth believes, the Fed’s problem isn’t about personnel as much as the fact interventions in the natural workings of the marketplace never work.

Better Off Without

It’s likely true that Booth can run circles around Fed economists when it comes to common sense, but as a human being, she’s still fallible. So is everyone. In the real world, we’re wrong all the time. What it comes down to is that the Fed’s problem is not the people as much as the problem is intervention itself by the humans who staff the central bank. Though the Fed’s power is thankfully overstated, what Booth misses is that we don’t need the Fed at all. We’d be better off without it, but somehow that lesson didn’t sink in during her decade on the inside.

Early in Fed Up, but just after she’d begun working at the Dallas Fed, Booth expressed surprise about Wall Street fascination with the Federal Reserve. She asked herself “Did they know people on the FOMC were mere mortals?” That’s how she might have been advised to end her book. These people are mortals, highly fallible ones at that. But so is Danielle DiMartino Booth mortal. Reform of the Fed won’t alter this reality, and it won’t alter the truth that no matter who is in charge, the Fed’s existence will never add to the economy, but it may sometimes bring damage to it.

John Tamny

John Tamny is a Forbes contributor, editor of RealClearMarkets, a senior fellow in economics at Reason, and a senior economic adviser to Toreador Research & Trading. He’s the author of the 2016 book Who Needs the Fed? (Encounter), along with Popular Economics (Regnery Publishing, 2015).

This article was originally published on FEE.org. Read the original article.

#Big Government #Federal Reserve #Regulations

[omglr]

your media is lying to you, my media is not... a 2 hour circle jerk.

You're now chatting with a random stranger. Say hi!

You both like climate change.

You: howdy

Stranger: hey

You: so, climate change eh?

You: pretty shitty

Stranger: do you believe this?

You: yeah

You: you?

Stranger: i dont

You: oh, ok

You: why not?

Stranger: in the 80's they talked about a ice time coming. climate change is just a way to make people open up their wallets and make more money

You: you might also consider that climate denial is also a way to line the pockets of people who are in power and don't want change

Stranger: no since most people in power support climate change. except countries like china and trump

You: China believes in Climate change though

Stranger: if they did they would take action. if they truly believed

You: https://newrepublic.com/article/155136/what-china-bad-response-climate-crisis

You: they have been

Stranger: they dont take action at all they build more factory's. China is not going with this climate change flow. if they really believed they would take drastic actions. actions speak louder then words

You: lol, ok

Stranger: just because the media tells this about china doesnt mean its true you know

You: mmmmm, well where do you get your media from?

You: like, if you can't trust sources of information, how are you forming your world view?

Stranger: i from my world view to listen to anyone and read every news. then it's easy to compare. if like you only visit one news site your doing it all wrong. and since i started doing this i can see through the lies

Stranger: many news website for example have a political agenda. after all even news people are voters and believe something. they are not neutral

You: so all the scientific journals that say climate change is real, humans are behind it and if we don't take action we'll all die are just propaganda?

Stranger: well, they asked like a couple hundred scientist about this climate change. many scientist disagree but were not taken in this enquete! many people dont know this. this is how they got their 80% thing which is false

You: is the United Nations trust worthy?

https://www.un.org/en/climatechange/science.shtml

Stranger: no lol. United nations and trust. if you trust them your long way from home

You: just asking

Stranger: no offense tho

You: it seems like your mind is made up

Stranger: well no first i was like hmm climate change let me read in. and when i did and think for myself and heard from all sides i knew this is bullshit

You: does the occurrence of 4 or 5 type five hurricanes each summer suggest there is a problem?

Stranger: no. you know why a hurricane comes?

You: why?

Stranger: The earth has its own temperature device like a inner clock to cool itself down. hurricane do this they cool down the inner core of the earth. over the centuries tons and tons of hurricanes been there. they point it out now in the media to make you scared and you fall for it

You: ok, cool, so the earth has ways to solve climate change on its own

You: do you think we'll survive the earths mechanisms?

Stranger: the earth has its own way to deal with when the inner core gets too hot yes. like our body can do this too when we have a fever

Stranger: yes i do think

You: well, its sounds great

Stranger: it does. i dont fall for people anymore who trying make me afraid all to make more money cause thats what its about in the end

You: i mean, i would love to have such an out look based on wishful thinking

Stranger: i can recommend it to everyone to see trhu the lies

You: so if climate change activists teamed up with anti-capitalist movement would you be more interested?

Stranger: few years ago they said there is a hole in the horizon, remember? nothing you hear about this anymore. it wass to make you scared. now its climate change. way way before was they said there is coming a ice time

Stranger: no

You: the o-zone?

Stranger: yes

You: yeah, i guess they said, consumers should stop buying hairspray and aerosole products

Stranger: yeah exactly they made us afraid with this o-zonde story. before that in the 80' they said ice time and now its climate change

You: and then they said... well shit these uv rays could cause problems down the way

Stranger: yeah and we are still here

You: and we are facing problems with a hot ass earth

Stranger: nah

You: like hurricaines

Stranger: its raining here lol

You: like the plankton in the ocean dying

You: like forest fires

You: like the polar caps melting

Stranger: did you know that many years ago in egypt there was water and jungle where now is dessert?

You: yeah, dude, it happened due to deforestation

Stranger: forest fires like the one in brasile have been every year before you were born. you hear it now cause it aids their agenda

Stranger: it happened yes but not because us humans

You: https://en.wikipedia.org/wiki/Great_Green_Wall

Stranger: you shouldn't believe wikipedia literally everyone can add something in. this is what i mean think for yourself dont believe everything on the web you read

You: lol

Stranger: i can go wikipedia now and change things

Stranger: its that easy

You: i understand how it works

You: it does have a community based vetting process

Stranger: well then you know many people add wrong information to make you believe the things

Stranger: i readed a lot on wikipedia stuff that were inaccurate so i stopped using it

You: ok, but, you understand the Green wall is a real project the African union is working on right?

Stranger: could be. there are so many climate and green projects i lost count

Stranger: i separate my trash because i know plastic is bad for our nature. cause this you can see and its proven. so i do this. but not because climate change

You: good job

Stranger: i own a bike instead of car cause i know its dirty air and better for health. now for example angela merkel from germany went to united nations meeting in three separated airplanes with staff

Stranger: all hypocrites

Stranger: they know they sell a lie

Stranger: barrack obama bought a house in the middle of the ocean surrounded by sea

Stranger: prince harry gave climate speech day after took private airplane wich is double dirty

You: donald trump built walls around his ocean side property to prevent rising water from fuckin them up

Stranger: donald trump doesnt believe in climate change. barrack obama does! now why he bought house with land if he was so afraid the sea gonna rise. he knows its a lie the left-party sells people and everyone fooled

You: https://www.scientificamerican.com/article/exxon-knew-about-climate-change-almost-40-years-ago/

You: this is a pretty interesting article

Stranger: But what do you make of that? Angela Merkel in three separates airplanes. Prince Harry after climate speech in private dirty airplane. Leaonardo dicrapio uses his private jet more then we will ever fly. what you say to this? these people who wanna sell you climate change

You: shrug??? rich people got places to be

Stranger: so thats your excuse?

You: we can/should hold them accountable

Stranger: they are rich people who need to go places so then its okay?

Stranger: they want you to pay taxes over airplanes but they can fly often in private jets. lol wake up

You: idk man, i guess we should invest in better trains?

Stranger: no. we should start with out leaders and celebrities who sell you and i climate scare stories. and then use private jets a lot and use it more then we ever will fly. they are big hypocrites

Stranger: instead of blaming the people we should start with them

You: mmmm, they are just people though

Stranger: but they use their power and influence to make you scared and pay taxes

You: we should probably blame companies who pay less taxes then they should and exploit their workers and the environment

Stranger: isn't it hyprocite that you have own private jet and use it much in a year, and i mean really much. but then say to everyone climate change is coming we should add fly taxes and you should pay more insurance

You: like, i'm litterally too poor to pay taxes, but i am happy to suggest that rich people pay more taxes

Stranger: here exactly you are too poor to pay taxes and still they want you to pay more!! but themselves they keep living their wealthy life

You: yeah man, so you are into anti-capitalism after all?

Stranger: now what i say instead of pumping all this money into waste projects for climate change. give it back to the people. so people like you have lower taxes and better healthcare and more income so the economy grows

You: lol, oh nevermind

Stranger: aslong you cant even pay taxes why the hell you support them plans they even wanna you pay more taxes its insane

You: what? i make like 25 grand a year and pay no taxes, cause i am floating on the poverty line, but yeah, Jeff Bezos should pay taxes, probably 95% of his wealth should be seized and put to use on infrastructure and sustainable living projects to improve the life of the average and poor person

Stranger: yeah well that's not gonna happen. rich people stay rich.

You: but yeah, climate action is just a scheme to make money, and change is bad

Stranger: the system is not made to make rich people poor

You: does that not bother you?

Stranger: ofc it does. it bothers me that there are millionaires who buy golden cars and some people cant even afford healthcare. it's sick! but thats how the system works. rich people stay rich and poor stays poor

You: so... if there was a movement that helped mobilize people to change that would you be interested?

Stranger: people are waking up slowly, not many people but more then 10 years ago. they started think for themselves and see through this big lies. if there was a movement i believed in i supported them ofc.

Stranger: look how many people buy this climate bullshit. its insane how easy people get fooled

Stranger: if you tell a lie long enough, eventually it becomes the truth

You: well i don't know man, I believe in climate change, but i also believe in raising class consciousness and kicking rich peoples asses, i think tackling them together makes a lot of sense...

Stranger: well those rich people you wanna tackle made up this climate change, to make more money out of you!

You: so, you know, you continue to believe what Exxon wanted you to believe in the 1980s

You: i'lll keep do what i'm doing

Stranger: if you wanna kick the rich people then stop buying their bullshit. that simple

You: idk man, rich people also want to gut the social safety net programs in my country and kill the environmental protections we put in place too, that doesn't sound like a great idea

You: like, i get that it seems weird that Matt Damon is using his platform to talk about climate change when he won't stop using planes to get places to talk about it

Stranger: Do you know this Greta? This child climate activist?

You: yeah?

Stranger: well this Greta her manager works for the company of george soros. world riches man! dont you see it? its all a big lie

You: uh.... lol

Stranger: you can google this

Stranger: fact check it

Stranger: its true

You: she also famously sailed to new york on a sail boat

Stranger: this greta is a child en they use her because children make people weak and soft and you buy the lies

You: her message is, "listen to scientists and stop betting against my generations future"

Stranger: her message is what they told her to say

You: lol, ok man

Stranger: it is not a coincidence that her manager works for george soros. it is not a coincidence. that should already show you something

You: again, your message is what exxon wants you to say

You: like you are doing this work pro-bono

Stranger: what work?

You: spreading the message that inaction is the right thing to do

Stranger: didnt you hear me? i told to take action against the lies!

You: shrug

Stranger: and lol i have a bike, separate trash, never flied, eat biologic. so dont come to me saying i dont take action. i do more then enough but what i dont do is fall for lies

You: i am gonna take action to prevent extinction

Stranger: lol

Stranger: we wil survie this wake up

You: ok, cool

You: we will

Stranger: you got fooled and believe in lies. think for yourself

You: I am down for the human race surviving

You: again, we can both say think for yourself over and over

Stranger: aslong as we humans think for ourself and listen God's word we will survive and we will stay strong

You: ok dude

You: :) i beleive in us

Stranger: why dude. thats so negative lol

You: we can do this

You: oh sorry, just a regional affect

Stranger: i think you and i think about many things the same only with all respect you fall for the lies and i woke up

You: well man, i think you and i think about many things the same only with all respect you fall for the lies and i woke up

You: agreed

Stranger: well no. cause you follow the climate change lies. so no i dont agree at all.

Stranger: you havent woke up you believe in media news that climate change is killing us

Stranger: how many times have this same media told that donald trump is gonna get removed through the years lol

Stranger: they sell lies

You: lol

You: perhaps the states is an oligarchy?

Stranger: and is copying my message exactly to the last word thinking for yourself or repeating what i said? like you repeating what the media says

You: i am just saying, "i know you are but what am i?" and its childish, but the point that i think you believe lies too, and they are convenient to rich people staying in power and hurting poor people whether its by poor people dying by climate change or poor people dying by poverty

You: like, to me class warfare is intertwined

Stranger: if you think rich people dont stay in power then idk who falls her for the lies

You: i am hoping they won't in the future, but we'll see

Stranger: they will lol. its a disney story to believe else

You: is that a typo, or an awesome metaphor?

Stranger: both

You: lol

You: its great

Stranger: over the centuries rich people stayed rich. and poor stayed poor. not the future gonna change this

Stranger: doennt mean i wish to see it different but be realistic is also the key

Stranger: in my dream world nobody is poor. this never gonna happen its not realistic

You: welp, i mean, if we all die via climate meltdown, it will be a classless planet

Stranger: we dont die of climate. we rather die of greed and warfare and overpopulation

You: mmm... the treat of over-population is also a myth spread by rich eugenicists and could easily be solved if we dissolved capitalism in favour of food and resource distribution networks

You: but yeah, greed and warfare for sure

Stranger: lol no. overpopulation is real i see it in my own country

You: where do you live?

Stranger: the netherlands. we dont have enough houses! land is full. now 17 million... in 2050 there are 20 millions

Stranger: i can see it effect already here so i know its real

You: what? there are 20 millon people in my city

Stranger: holland is very small country. we have 17 million now. and in 2050 20 million

Stranger: but now already not enough houses

You: ok man, so maybe people will migrate or build houses/buildings/skyscrapers?

You: there is enough land to spread out on elsewhere

Stranger: migrate? thats not a solution cause sooner or later other lands are full aswell

Stranger: lol no

Stranger: have you ever been in europe

You: yeah

Stranger: you lived here or just visited

You: visited for multiple months

Stranger: yeah. well if you live here long time. you see things different. same thing as if i would go live there with you that i see things different

Stranger: the land is full. immigration is a killer

You: still the origin of "the treat of over-population" comes from eugenicists

Stranger: the origin of the immigration comes from wars in middle-east made up by governments sponsoring terrorist cells to overthrow governments in middle-east for either money or oil. those people flee and come here and stay here

Stranger: every month people comes here by 1000

Stranger: but media keeps it silence

Stranger: cause media is not neutral

You: yeah, man.... like, the media is probably in cahoots with 'big oil'?

Stranger: no the media is founded and sponsored by left-people. thinking immigration is good and should continu. so any negative news regarding it wont be in the news

Stranger: people who dont see this are truly blind

You: lol, its possible that rich people are co-opting leftist narratives to get you to have compassion for displaced immigrants so that they can continue to exploit the resources in these other countries

Stranger: Well, Holland is in Europe controlled by Europe Union. Europe Union sees and wants immigration as the world should be mixed. thats what they believe in. they make the laws for us. the left-media are people who think alike, hence why never any negative news regarding immigration is here. police have been told to keep down reports about immigration people who steal, rob, rape to not make them look bad and to make everyone believe it is good

You: also, if climate change is real, the people who are gonna get effected earliest are brown folks near the equator, so not having compasion for them is convenient, kinda why lots of right wing folks are leaning into white-nationalism in north america

Stranger: immigration here doesnt happen cause climate change i already pointed out

You: yeah.... it happens here,

Stranger: i believe when you say that. you know you country better then i do. but trust me also if i tell you this about my country

Stranger: there are many racist also out there sadly

You: yeah its awful

Stranger: it is. racist is so low-key. and narrow-minded

You: lots of cruelty in the world and misplaced anger

Stranger: but its easy to call someone a racist so they dont have to discuss the actual problem

Stranger: here everyone calls you racist quickly

Stranger: so they dont have to discuss the actual problem i just told you

You: well dude, we've been chatting for like an hour and a half, i should probably go make a sandwich or go for a walk

You: its been a good convo though

Stranger: and vote trump

You: lol, no i doubt i would do that

Stranger: hahha i thought you say that

You: i am also canadian

Stranger: ahhhhhhh

Stranger: nice

Stranger: but your prime minister sucks

Stranger: crybaby

You: gonna vote for the NDP

Stranger: whats that lol

You: it's the new democrats party, they are left of the liberals who are in power now

You: likely due to this racist black face fiasco the liberals will lose and either the conservatives and their super regressive racist agenda will win, or the NDP

You: ndp has lots of good socialist policies

Stranger: yeah its insane that you cant dress up as a black person on a party for halloween lol

You: mmmm, i mean, yeah its racist

Stranger: no its not. its a halloween party lol

You: i think blackface is more common in scandanavia?

Stranger: im really sick of these racist callers crybaby's. they ruin all the fun and always yell "racist"

You: like... their is some kinda chimney sweep character?

You: does that sound familiar or is that somewhere else?

Stranger: hey it's a halloween party you can dress like my grandma it should be possible. people get insulted way way too fast if you ask me

Stranger: yeah sound familiar

You: like, he was dressed up as aladdin, he could have done that with out painting himself black

You: that's sorta the issue

Stranger: i'm anti-racists. they are low people. but come on dressing up on halloween being called racist lol

Stranger: aladdin is black after all or dark. nobody gives a shit only the crybaby's

Stranger: if aladdin was white you would hear NOBODY about this

You: like, the aladdin in the disney cartoon was light skinned dude voiced by a white guy

You: had he worn the same outfit, but not painted his face and body black, that would have been different

Stranger: aladdin was tanned color, not dark but like tanned dark if you can say this. but whatever. if you cant dress up like black aladdin and people cry over this THAT shows exactly what is wrong with those people. always yelling racist while this guy isn't even racist at all lol

You: like, idk, its perhaps a north american issue cause of our slavery and vaudville history

Stranger: yeah people just like to yell racist and cry. its really sick. its says more about them if you ask me

Stranger: if someone dress up like a white cartoon i dont give a shit nor other white people

Stranger: black people stay playing victim

You: i mean, its annoying cause the conservative who are actively working against people of colour are using it to cry racist and win control

You: like, so that's the part that annoys me the most is that we are gonna end up with a much more actively racist government

You: but anyway.... its a whole thing

Stranger: working against someone based ONLY because their skin color is so sad! judging someone on their skincolor is sad! But dressing up like a dark disney figure using bit too much dark makeup and people get angry.... those angry people are sad

Stranger: there are bigger work problems like a aladdin costume lol

Stranger: then a ****

Stranger: but nowadays you cant say any joke about black people or jews or you are called racist

Stranger: its insane

You: i feel like you are baiting me to call you racists by pointing out these actions you mentioned are infact racist actions

Stranger: i have a friend who is jew and a friend who is black and we joke about this things and we are good friends. thats how its suppose to be not taking everything so serious

Stranger: you can call me racist lol i dont give a f*** i know what i am and what i am not

You: its possible they don't feel like they have the social capital to tell you it annoys them and that friendship with bigoted people is better than being alone because of feelings of low self-worth (cause by accepting racism)

Stranger: no they make same jokes and last time we laughed with tears about a joke my jew friend made

Stranger: we understand humor

You: ok, well, you know your scene

Stranger: yeah. unfortunately most people are fast insulted and cry fast. but not taking everything so serious and being able to make jokes should be possible its even healthy

You: ok bud, i really do have to go, you take care!

Stranger: you too

You: thanks

You have disconnected.

[toomanysinks]

Timing and why we’re all VCs

Timing is the single most valuable skill of the modern economy, but I would argue its’s the least understood and also the least practiced.

Capitalism is fundamentally about timing, since market competition is about finding opportunities before others. When should you start a company? What company should you start? When should a VC invest? When should you join a company? When should you switch industries? When should you back a candidate for public office?

Every single one of our professional decisions is about timing, and yet, we do so little to practice and perfect it. Most employees only make 3-4 major career decisions in their lifetimes — hardly enough feedback for this skill to mature. Anyone who has worked in a large company further knows that timing a product launch or a new marketing strategy has more to do with internal politics than reading market forces.

Most of us want to make more money and accelerate our careers, but the truth is that these opportunities are few and far between. Most jobs have limited growth potential. Most startups die. Most VCs don’t make money. Most political candidates fail to get elected. The difference between success and failure sometimes has to do with hard work and tenacity, but far more often with the strategy of timing.

It’s obvious that we can be too late to these decisions of course. We can miss the round of financing, we can start a company a year or two behind someone else and lose the first-mover advantage. But we can also be way too early, ahead of the market and losing out on alternative opportunities that might have been more valuable.

Now, some perceive that “timing” is synonymous with “luck.” There is some truth there, in the sense that life is random and sometimes — completely unintentionally — people stumble upon a treasure chest of gold.

Don’t be distracted by that, because there are also people who just seem to have timing nailed. There are engineers (I know because I have seen their recruiter profiles) who have joined three unicorns in a row in the first handful of employees. There are VCs who get a string of wins that is far from chance. There are CEOs that always seem to guide their companies to the right place at the right time and drive their stock valuations up.

We talked a lot about why we can’t build infrastructure in America yesterday. One of the challenges is simply timing: so many things have to happen at once for these projects to get off the ground, and most governors and mayors lack the timing skills required to get them over the finish line.

How can you practice timing? Start writing down predictions about people, companies, and markets. Check in with the companies you talked with a few years ago — how are they doing? Ditto people you met a while back. Start evaluating your predictions: were they correct? Were they too early or too late?

More importantly, start cultivating networks of friends who have a sense of pulse on the frontiers of the economy. That could mean someone at the edge of a new science (quantum computing or AI) or someone who gets marketing to new demographics, or someone who tracks new regulatory and legal changes. Find a peer group of people who get timing and practice it as a craft.

Between TechCrunch today and my former roles in venture capital, I’ve had the opportunity to practice timing a lot. I have a list of companies that I would have backed, and some have turned into unicorns while others have ended up on the ash heap of history. I’ve predicted some trends well, while flubbed others. I’ve been way too early (a huge bias for me), and sometimes stupidly late.

But all along, I am practicing that timing muscle. It’s the only way forward in capitalism, and it’s worth every investment you can make.

Mithril Capital, management fees, and VC strategic drift

Peter Kim via Getty Images

Theodore Schleifer at Recode reported a rare deep dive into the internal intrigue at a prominent VC firm, in this case Mithril Capital. From the article:

Mithril had its best moment yet last week when a portfolio company, Auris Health, sold to Johnson & Johnson for more than $3 billion — returning at least $500 million to the fund.

All appears well. But behind the scenes, a far different story has been unfolding.

The late-stage investment firm has been a slow-burning mess for the past several months, angering current and former employees, limited partners, and, crucially, [Peter] Thiel himself, sources say.

Among the issues is the firm’s huge management fee … and I guess lack of expenses?

The firm is likely collecting as much as $20 million a year in management fees, sources familiar with the figures say.

We don’t know exactly how much the firm spends, but people close to Mithril say they can’t imagine that the firm, given its staff size, is spending more than half of that on operational expenses. [Mithril Capital founder Ajay] Royan’s salary, like that of other venture capitalists, is not publicly disclosed.

One limited partner called the fees, given the size of Mithril’s staff, “outrageous.”

What? I don’t understand this line of reasoning at all. The firm negotiates a fairly standard agreement with its limited partners, and then the LPs are pissed because the firm isn’t spending the money on massive staff and large, expensive offices? The whole point of delegating investment decisions to a GP is to empower them to organize their firm to win deals and get stuff done. If — and it’s a big if of course — they can do that on the cheap, then why should an LP care at all? Burn the management fee in a fireplace if it makes the deals happen.

Ajay Royan told Bloomberg in 2017 that Mithril does not “charge excessive fees.” But he was not exactly known for being thrifty with management money. Former employees describe Friday catered lunches where costs could run over $100 per person, and Royan was known internally for a “book ordering problem” — a former employee said that “unbelievable amounts of books” would be delivered each week to the office by Amazon to maintain the firm’s extensive library.

Pro tip: take on the mantle of book editor for a major tech publication, and the publishers will mail you books for free. We get at least a dozen at the TC offices every week, which is why we write about books so often around here these days. Alas, no $100 catered lunches.

The wider story here though appears to be one of a firm completely strategically adrift. Mithril is struggling to compete against ferocious competition in the growth-stage equity market. The best deals are obvious to dozens of firms, and the ones that are less obvious have huge risks attached to them that make it hard to write the big checks required.

“[Royan] literally did not want to compete. If there was a process or bidding war or something resembling a competition, he would just walk,” the employee said. “And he would just say, ‘I don’t want to outbid.’”

Mithril is hardly the only VC firm that is strategically adrift. Every time I go back to SF, this seems to be the norm these days among venture capitalists. There is a huge amount of money sloshing around, and very few deals that are in that sweet spot between obvious and highly risky. Startups either get three dozen term sheets or none at all, since every firm is walking around with the same frameworks and metrics in their head.

It’s so rare to actually hear a VC strategy that isn’t generic capital, that has some differentiation on sourcing, and picking, and growing businesses beyond the “we invest in great companies.” VCs don’t like strategy because it means making choices, and making choices means saying no to certain things, and those things might be the next Facebook. So they do everything, all the time, which really means they do nothing. And so we get book ordering problems and expensive lunches and weirdly angry LPs. What a boring mess.

Quality tech news from around the web

Written by Arman Tabatabai

Carl Larson Photography via Getty Images

South California is also seeing declining seed investment

Today, the Los Angeles Economic Development Corporation (LAEDC) published its updated economic forecast for LA and the Southern California region. One interesting note in the report is an observed slow down in early-stage venture investing. The report highlighted that while growth-stage investments in CA were hitting record highs, total deal count and seed investing — both in terms of total seed dollars and seed deal count — were at their lowest points since 2012.

The data points in LA, Southern CA, and the rest of the state seem to follow the trend of declining seed rounds seen in the rest of the country. While the topic is one we’ve previously discussed and one which has heated up in recent weeks with commentary from Marc Suster, Fred Wilson, and others, it’s interesting to see the trend occurring even in more nascent startup markets.

Will “Diet CA-HSR” even get done as feds look to pull back California funding

The federal government announced that it would be pulling back $1 billion in funding that was slated for the California high-speed rail project through 2022, while also pursuing legal action to help recoup the $2.5 billion it has already coughed up. The Federal Railroad Administration is arguing that the state’s updated plan — completing only a route from Bakersfield to Merced — is starkly different from the plan for which the funds were originally allocated. Ouch.

As stock exchanges compete to attract IPOs, unicorns and investors win?

It might be getting easier for companies to go public around the world. With ample late-stage capital keeping more companies staying private for longer, looser rules from the SEC and the Hong Kong Stock Exchange may be on the way to help entice more IPOs.

In the US, the SEC proposed allowing all companies to market themselves to investors before announcing IPOs versus just those that fall under the agency’s “emerging growth” definition. Across the Pacific, Bloomberg reported that Chinese tech companies have been lobbying the HK Exchange for a number of more favorable rules, including allowing companies to maintain extra voting rights and letting major shareholders buy extra stock in the process. With a serious number of Chinese companies opting to list on foreign exchanges last year, the HK Exchange might be feeling pressure to cough up concessions that could help them win local listings — especially if the US moves forward with friendlier rules.

How Japan lost half its citizens with poor data

The Japanese government failed to pay out billions of yen in government benefits for years due to faulty data. If that wasn’t bad enough, Nikkei Asian Review reported yesterday that the government is struggling to even locate roughly half of those who are owed since they don’t have their current addresses on file.

As simple as it may seem, tracking the indebted is actually a tall task since citizens have changed residences, changed names, and since the Japanese government has historically destroyed benefit applications (containing address info) after the period required to maintain them. At this point, it’s unclear whether everyone who is owed will even end up getting paid, with the Japanese government now offering a prime example of how poor data maintenance and not just poor data collection can make a situation go from bad to a whole lot worse.

Can the race to build roads in Southeast Asia avoid development gridlock?

As we harp on our “Why can’t we build anything?” obsession, infrastructure development in Southeast Asia is continuing to heat up and everyone seems to want a piece of the pie. Japan announced plans to further accelerate investment into infrastructure and urban development in the region — where China is also actively engaged — with initial expansion talks focused on Cambodia and the Philippines. At the same time, a newly unveiled government budget in Singapore and the ongoing election in Indonesia have brought infrastructure development strategies into the spotlight, with open debate on how these projects have been and should be funded.

Obsessions

More discussion of megaprojects, infrastructure, and “why can’t we build things”

We are going to be talking India here, focused around the book “Billonnaire Raj” by James Crabtree

We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.

Societal resilience and geoengineering are still top-of-mind

Some more on metrics design and quantification

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to [email protected].

This newsletter is written with the assistance of Arman Tabatabai from New York

source https://techcrunch.com/2019/02/20/timing-and-why-were-all-vcs/

[fmservers]

Timing and why we’re all VCs

Timing is the single most valuable skill of the modern economy, but I would argue its’s the least understood and also the least practiced.

Capitalism is fundamentally about timing, since market competition is about finding opportunities before others. When should you start a company? What company should you start? When should a VC invest? When should you join a company? When should you switch industries? When should you back a candidate for public office?

Every single one of our professional decisions is about timing, and yet, we do so little to practice and perfect it. Most employees only make 3-4 major career decisions in their lifetimes — hardly enough feedback for this skill to mature. Anyone who has worked in a large company further knows that timing a product launch or a new marketing strategy has more to do with internal politics than reading market forces.

Most of us want to make more money and accelerate our careers, but the truth is that these opportunities are few and far between. Most jobs have limited growth potential. Most startups die. Most VCs don’t make money. Most political candidates fail to get elected. The difference between success and failure sometimes has to do with hard work and tenacity, but far more often with the strategy of timing.

It’s obvious that we can be too late to these decisions of course. We can miss the round of financing, we can start a company a year or two behind someone else and lose the first-mover advantage. But we can also be way too early, ahead of the market and losing out on alternative opportunities that might have been more valuable.

Now, some perceive that “timing” is synonymous with “luck.” There is some truth there, in the sense that life is random and sometimes — completely unintentionally — people stumble upon a treasure chest of gold.

Don’t be distracted by that, because there are also people who just seem to have timing nailed. There are engineers (I know because I have seen their recruiter profiles) who have joined three unicorns in a row in the first handful of employees. There are VCs who get a string of wins that is far from chance. There are CEOs that always seem to guide their companies to the right place at the right time and drive their stock valuations up.

We talked a lot about why we can’t build infrastructure in America yesterday. One of the challenges is simply timing: so many things have to happen at once for these projects to get off the ground, and most governors and mayors lack the timing skills required to get them over the finish line.

How can you practice timing? Start writing down predictions about people, companies, and markets. Check in with the companies you talked with a few years ago — how are they doing? Ditto people you met a while back. Start evaluating your predictions: were they correct? Were they too early or too late?

More importantly, start cultivating networks of friends who have a sense of pulse on the frontiers of the economy. That could mean someone at the edge of a new science (quantum computing or AI) or someone who gets marketing to new demographics, or someone who tracks new regulatory and legal changes. Find a peer group of people who get timing and practice it as a craft.

Between TechCrunch today and my former roles in venture capital, I’ve had the opportunity to practice timing a lot. I have a list of companies that I would have backed, and some have turned into unicorns while others have ended up on the ash heap of history. I’ve predicted some trends well, while flubbed others. I’ve been way too early (a huge bias for me), and sometimes stupidly late.

But all along, I am practicing that timing muscle. It’s the only way forward in capitalism, and it’s worth every investment you can make.

Mithril Capital, management fees, and VC strategic drift

Peter Kim via Getty Images

Theodore Schleifer at Recode reported a rare deep dive into the internal intrigue at a prominent VC firm, in this case Mithril Capital. From the article:

Mithril had its best moment yet last week when a portfolio company, Auris Health, sold to Johnson & Johnson for more than $3 billion — returning at least $500 million to the fund.

All appears well. But behind the scenes, a far different story has been unfolding.

The late-stage investment firm has been a slow-burning mess for the past several months, angering current and former employees, limited partners, and, crucially, [Peter] Thiel himself, sources say.

Among the issues is the firm’s huge management fee … and I guess lack of expenses?

The firm is likely collecting as much as $20 million a year in management fees, sources familiar with the figures say.

We don’t know exactly how much the firm spends, but people close to Mithril say they can’t imagine that the firm, given its staff size, is spending more than half of that on operational expenses. [Mithril Capital founder Ajay] Royan’s salary, like that of other venture capitalists, is not publicly disclosed.

One limited partner called the fees, given the size of Mithril’s staff, “outrageous.”

What? I don’t understand this line of reasoning at all. The firm negotiates a fairly standard agreement with its limited partners, and then the LPs are pissed because the firm isn’t spending the money on massive staff and large, expensive offices? The whole point of delegating investment decisions to a GP is to empower them to organize their firm to win deals and get stuff done. If — and it’s a big if of course — they can do that on the cheap, then why should an LP care at all? Burn the management fee in a fireplace if it makes the deals happen.

Ajay Royan told Bloomberg in 2017 that Mithril does not “charge excessive fees.” But he was not exactly known for being thrifty with management money. Former employees describe Friday catered lunches where costs could run over $100 per person, and Royan was known internally for a “book ordering problem” — a former employee said that ���unbelievable amounts of books” would be delivered each week to the office by Amazon to maintain the firm’s extensive library.

Pro tip: take on the mantle of book editor for a major tech publication, and the publishers will mail you books for free. We get at least a dozen at the TC offices every week, which is why we write about books so often around here these days. Alas, no $100 catered lunches.

The wider story here though appears to be one of a firm completely strategically adrift. Mithril is struggling to compete against ferocious competition in the growth-stage equity market. The best deals are obvious to dozens of firms, and the ones that are less obvious have huge risks attached to them that make it hard to write the big checks required.

“[Royan] literally did not want to compete. If there was a process or bidding war or something resembling a competition, he would just walk,” the employee said. “And he would just say, ‘I don’t want to outbid.’”

Mithril is hardly the only VC firm that is strategically adrift. Every time I go back to SF, this seems to be the norm these days among venture capitalists. There is a huge amount of money sloshing around, and very few deals that are in that sweet spot between obvious and highly risky. Startups either get three dozen term sheets or none at all, since every firm is walking around with the same frameworks and metrics in their head.

It’s so rare to actually hear a VC strategy that isn’t generic capital, that has some differentiation on sourcing, and picking, and growing businesses beyond the “we invest in great companies.” VCs don’t like strategy because it means making choices, and making choices means saying no to certain things, and those things might be the next Facebook. So they do everything, all the time, which really means they do nothing. And so we get book ordering problems and expensive lunches and weirdly angry LPs. What a boring mess.

Quality tech news from around the web

Written by Arman Tabatabai

Carl Larson Photography via Getty Images

South California is also seeing declining seed investment

Today, the Los Angeles Economic Development Corporation (LAEDC) published its updated economic forecast for LA and the Southern California region. One interesting note in the report is an observed slow down in early-stage venture investing. The report highlighted that while growth-stage investments in CA were hitting record highs, total deal count and seed investing — both in terms of total seed dollars and seed deal count — were at their lowest points since 2012.

The data points in LA, Southern CA, and the rest of the state seem to follow the trend of declining seed rounds seen in the rest of the country. While the topic is one we’ve previously discussed and one which has heated up in recent weeks with commentary from Marc Suster, Fred Wilson, and others, it’s interesting to see the trend occurring even in more nascent startup markets.

Will “Diet CA-HSR” even get done as feds look to pull back California funding

The federal government announced that it would be pulling back $1 billion in funding that was slated for the California high-speed rail project through 2022, while also pursuing legal action to help recoup the $2.5 billion it has already coughed up. The Federal Railroad Administration is arguing that the state’s updated plan — completing only a route from Bakersfield to Merced — is starkly different from the plan for which the funds were originally allocated. Ouch.

As stock exchanges compete to attract IPOs, unicorns and investors win?

It might be getting easier for companies to go public around the world. With ample late-stage capital keeping more companies staying private for longer, looser rules from the SEC and the Hong Kong Stock Exchange may be on the way to help entice more IPOs.

In the US, the SEC proposed allowing all companies to market themselves to investors before announcing IPOs versus just those that fall under the agency’s “emerging growth” definition. Across the Pacific, Bloomberg reported that Chinese tech companies have been lobbying the HK Exchange for a number of more favorable rules, including allowing companies to maintain extra voting rights and letting major shareholders buy extra stock in the process. With a serious number of Chinese companies opting to list on foreign exchanges last year, the HK Exchange might be feeling pressure to cough up concessions that could help them win local listings — especially if the US moves forward with friendlier rules.

How Japan lost half its citizens with poor data

The Japanese government failed to pay out billions of yen in government benefits for years due to faulty data. If that wasn’t bad enough, Nikkei Asian Review reported yesterday that the government is struggling to even locate roughly half of those who are owed since they don’t have their current addresses on file.

As simple as it may seem, tracking the indebted is actually a tall task since citizens have changed residences, changed names, and since the Japanese government has historically destroyed benefit applications (containing address info) after the period required to maintain them. At this point, it’s unclear whether everyone who is owed will even end up getting paid, with the Japanese government now offering a prime example of how poor data maintenance and not just poor data collection can make a situation go from bad to a whole lot worse.

Can the race to build roads in Southeast Asia avoid development gridlock?

As we harp on our “Why can’t we build anything?” obsession, infrastructure development in Southeast Asia is continuing to heat up and everyone seems to want a piece of the pie. Japan announced plans to further accelerate investment into infrastructure and urban development in the region — where China is also actively engaged — with initial expansion talks focused on Cambodia and the Philippines. At the same time, a newly unveiled government budget in Singapore and the ongoing election in Indonesia have brought infrastructure development strategies into the spotlight, with open debate on how these projects have been and should be funded.

Obsessions

More discussion of megaprojects, infrastructure, and “why can’t we build things”

We are going to be talking India here, focused around the book “Billonnaire Raj” by James Crabtree

We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.

Societal resilience and geoengineering are still top-of-mind

Some more on metrics design and quantification

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to [email protected].

This newsletter is written with the assistance of Arman Tabatabai from New York

Via Arman Tabatabai https://techcrunch.com

#TechCrunch

[heyho-simonrussellbeale]

Lehman on stage: making a drama out of the financial crisis

For 10 years, politicians have been grappling with the collapse of Lehman Brothers. Now, it’s the turn of the theatre

In a tiny store in Montgomery, Alabama stands a man surrounded by bolts of cloth. The floor is creaky and the door handle sticks. The stock is plain: wool, flax, hemp, cotton. “Nothing flashy,” he says. “In Alabama, you don’t work to live. You live to work.” This is 1847 and the man is Henry Lehman. He rises at 5am and works all hours, selling cloth by the inch to pay his debts. This shop is his whole world: just three years after leaving his native Bavaria, he’s making his way. The sign on the door reads “Lehman Brothers”. So how did we get from there to the famous scenes of 2008, when Lehman came crashing to the ground, bringing the global economy to the brink of collapse? For 10 years economists and politicians have fought over the answer as capitalism has faltered and populism soared. Now, it’s the turn of the artists. The Lehman Trilogy, by Italian dramatist Stefano Massini, opens next week at London’s National Theatre, under the direction of Sam Mendes. An epic, searching affair, it brings Lehman and his two brothers back to witness the eventual unravelling of their company. “At the end of it you do feel you have gone on this enormous journey,” says Simon Russell Beale, one of the three actors who portray the founding fraternity. “Alabama at the beginning seems very far away. But we never lose sight of the fact that, even when the three central men are dead and it is late on in the story, they are still around. It makes the moral dilemmas in the story clearer. Basically, what would the three founders think of what happened in 2008?” Finance is not an obvious gift to a playwright, particularly in an age of mind-boggling derivatives. Drama usually lies more in bedsheets than spreadsheets. Shakespeare didn’t have to unpick the subprime mortgage crisis or grapple with collateralised debt obligations. Even as a theatre critic for the Financial Times, the news that a play will tackle the 2008 crash doesn’t quicken the pulse. David Hare’s 2009 verbatim play The Power of Yes assembled opinion on stage from dozens of experts. It did an excellent job in covering the ground — but Hare himself admitted it wasn’t rip-roaring drama. 

And the crash is a crowded cultural field. Books, articles, films, documentaries — dozens of them — have charted the end of Lehman’s. A 2009 film, The Last Days of Lehman Brothers, dramatised the boardroom battles that preceded its demise; Adam McKay’s 2015 film, The Big Short, Charles Ferguson’s 2010 documentary Inside Job, JC Chandor’s 2011 film Margin Call and the 2011 HBO television film Too Big to Fail (based on Andrew Ross Sorkin’s book) all lifted the lid on the rickety financial market in which it was embroiled. The Lehman Trilogy has to do something different to succeed. NT deputy artistic director Ben Power, who has written the English version, says the play has the sweep, scope and ambition to do just that. “It does something more complex and interesting than just tell the story of the lead-up to bankruptcy,” says Power. “It asks, in a very, very big way, ‘How did we get here?’ ” Massini’s drama spools back to when the Lehman Brothers were just that: three impoverished Jewish siblings newly arrived on American soil. The play starts in 1844, as Henry Lehman opens that tiny fabric shop in Alabama, grafting to keep his business on the road. From there it spills forward over three hours, three parts and three generations as a one-room family firm evolves into a huge global concern. We watch as the business shifts into cotton, into credit, into banking. We see the arrival of the railways, the creation of the stock exchange, the advent of film. The company weathers grief, the civil war, the Great Depression — only to implode, spectacularly, in 2008. With each iteration, we see the emergence of modern America and with it modern capitalism. “If you want to make money, you need to find the simple things before they become simple things,” says Philip Lehman in 1887. He could be talking about Apple. “Really it’s about how American finance, how the American capitalist mindset, was created,” says Power. “You keep seeing the country reinvent itself and change itself. And what might be unexpected is that the play celebrates that: it’s quite romantic about it. It’s an American Dream story — a story about an immigrant family who contribute in a really positive way for a very long time to the making of America and the making of the western world.”

The trilogy trains a long lens, then, on the question of how we got here. But what’s really striking about it is its style. It feels like an epic poem, studded with refrains, repetitions and patterns. There’s something myth-like, almost scriptural about it — we’re seeing recent history unfold like a parable. And above all, it’s a family saga — a form as old as storytelling itself — and a classic three-part story of creation, consolidation and loss. It’s about fathers and sons, falling in love, family feuds — all the stuff that drives drama from the ancient Greeks to The Godfather.

“We can see ourselves and our families in these people,” says Power. “The play explores where hubris and ambition meet, at what point the wrong decisions are taken and where the build to 2008 begins. But it does it in a really human way. “I don’t think success for The Lehman Trilogy equals ‘do you fully understand all the financial mechanisms now?’ ” he adds. “It’s interested in the people and the ideas behind the financial models, rather than the systems themselves.” Traditionally empathy has helped finance to find a voice on stage. Writers from Ben Jonson to Henrik Ibsen to Arthur Miller have tackled the human cost of financial affairs — as of course did Shakespeare in The Merchant of Venice. Miller, that great critic of the American Dream, made plain the terrible impact of corporate cover-up in All My Sons, and his masterpiece Death of a Salesman nailed the cost of failure so movingly that on the play’s first night in 1949 businessmen wept openly in the stalls. But more recently dramatists have ventured more directly into the heart of business. Hare’s play used theatre’s role as a public forum to frame the questions people wanted answering. A 2015 immersive piece, World Factory, at the Young Vic, turned theatregoers into economists and made them battle to keep a factory afloat as the markets wobbled. Children’s company Theatre Rites decided it’s never too early to get to grips with economics and staged Bank on It, an interactive piece for five-year-olds, starring a talking filing cabinet.    The play asks very good questions about when did capitalism become, in the eyes of many, a bad idea? Writing about high finance brings its own hazards, of course: the danger of obfuscation; the threat of over-simplification. But theatre can also bring snap and crackle to the business of explaining finance to the layman. David Mamet’s 1983 drama Glengarry Glen Ross talks about a bunch of desperate real-estate agents with a verve that brilliantly sculpts the story. Caryl Churchill’s ferocious satire Serious Money likewise has terrific velocity and a rat-a-tat script that channels the energy and rhythm of the City in the 1980s. Then in 2009, Lucy Prebble’s Enron applied great panache to unpicking the corruption scandal that engulfed the Texan energy giant. Prebble and her director, Rupert Goold, matched exuberant theatricality and clever stagecraft to Enron’s smoke-and-mirrors tactics. In one scene, a character explained an outrageous plan for debt-swallowing shadow companies by stacking boxes inside boxes. More significantly, perhaps, Enron didn’t just criticise. With its wild energy, it sucked you into the madcap story. It conveyed the buzz of innovation and the euphoria of being on a roll and so went some way to explaining not just the scandal itself, but the impulse that drove it. And so to Lehman’s. In the spirit of the real Lehman’s story, the staging of the play relies heavily on the resourcefulness and ingenuity of the actors. The show opens in 2008, in the deserted Lehman’s building, amid the abandoned detritus of a frantic last-minute meeting. From there on it’s up to the cast to spirit up the original brothers and draw us through 164 years of history.

The actors, like the brothers, have to create something from nothing. Where previous international productions have had casts of 20, at the National the whole epic saga will be carried by just three actors: Russell Beale, Ben Miles and Adam Godley. “We keep waiting for the rest of the cast to turn up,” jokes Godley, when I meet them at the end of a rehearsal. As well as the three brothers — Henry, Emanuel and Mayer, respectively — they’ll play all the other characters, metamorphosing into sons, grandsons, neighbours, wives and even, in Godley’s case, a billiard ball. Over 164 years, it’s quite a roll-call. But it’s a tactic that means the three men are on stage throughout — tangible reminders of the original brothers. As the company shifts further and further from its origins, their physical presence should alert us to the distance travelled and make palpable the contrast between those early days trading bolts of cloth and the grand fiasco of the company’s end. “Basically we tell the whole story with just what is there,” explains Russell Beale. “So if we need a paintbrush, we pick up a marker pen, or, if it’s a glass of brandy, we use the jug of water that you’d have in a board room. That’s become very strict. So we don’t use anything else. We don’t change our costumes either.” “It’s a big exercise in minimalism and stripping away,” says Godley. “It’s a very efficient form of storytelling. That’s the delight and the challenge of it. How can you suggest a new character with something really tiny? Maybe just turn up your lapel, wear what you wear slightly differently. It’s doing the most with the least.”

Sitting in an office in the theatre, the three demonstrate: Godley flicks his collar and becomes another man entirely; Russell Beale shifts the angle of his head and the fold of his hands — suddenly he’s an 18-year-old girl in 19th-century Alabama; Miles illustrates how just the way you sit in a chair — stiff and upright, or more casual and expansive — can tell an audience what century you are in. How did the 2008 financial crisis affect you? Global financial crisis Tell us your story But it’s an unusual piece, they confess, very challenging in its scope and narrative style. “It is nothing like I’ve ever done before and that’s very exciting and intriguing,” says Miles. “It asks very good questions about when did capitalism become, in the eyes of many, a bad idea? When did it turn from a very valid pursuit into something slightly tainted? When did this small family business that grew and grew begin to transform itself into something that none of the original founders had envisaged? And why did it do that?” Will it work out? The show is, appropriately, a bit of a gamble. But if any art form can say something fresh about 2008, surely theatre — live, communal, dialectical — is the one.

#Simon Russell Beale #the lehman trilogy #Ben Miles #adam godley #Sam Mendes #National Theatre #stage #2018 #ben power

[coindex]

How Blockchain Revol

How Blockchain Revolution is Going to Make Global Economy More Fair: Federico Pistono Interview Federico Pistono is a charismatic writer entrepreneur researcher angel investor TV presenter and public speaker who routinely tours around the world lecturing on exponential technologies and their economic impact on society. In 2012 Pistono wrote the book "Robots Will Steal Your Job But That's OK: How to Survive the Economic Collapse and be Happy" which became an international success. Recently he published another book Startup Zero to help his compatriots Italians get a better understanding of the startup culture. In addition Federico has more than a decade of professional experience in different fields that vary from IT Management and human machine interaction to screenwriting and directing. We speak with Federico Pistono about his views on how Blockchain could really change the current global economic model that is unfair how close we came to the AI ruling the world and how could we find our place in the emerging paradigm. CG: How did you get involved in the fintech industry? FP: Computers always fascinated me and systems in general and just learning new things.I have a background in mathematics and computer science so that was double spending and operating research data structures algorithms. Those were things that really interested me at the mathematical level. To then think that those principles could be applied for social change it was kind of a love at first sight of blending these things together. I started programming when I was 12 or 13 and got into Blockchain around 2011 when I read the Bitcoin whitepaper written by Satoshi. At the time I was very interested in the Byzantine generals problem. Then I was one of the first people to get into Ethereum and from then on it just grew more and more. Now I am leading the Blockchain theme at Hyperloop Transportation Technologies which is this new tech thats essentially a supersonic speed travel on a train. So you have an evacuated tube you got a tube you suck out the air you put a capsule inside with about 30 people and then you have got magnetic levitation-passive magnetic levitation its called Indutrack. And you can just move this thing at super high speed- supersonic so more than 1200 km/h. CG: What would you say about the relationship between AI and Blockchain? FP: Regarding AI and Blockchain I would say one of the biggest issues probably is how we decide to structure the algorithm and the incentive mechanisms that we put into the system because in the end you get your reward. AIs today and probably for the foreseeable future are not really intelligent in any sort. They perform narrow tasks and they optimize for specific things that we tell them to do and so we dont know really know how to give them the right constraints. If we just say hey make profit and do this they may find all sorts of ways around to perform that task very well to optimize for that factor. Now we have a system where there is a huge centralization of power centralization of capital centralization of risk and in particular the big players are de-risking everything by hedging the risk on the small guys particularly in developing countries. I think every time that you have a shift in technology or dramatic shift you have the ability to change things by creating a new incentive structure by changing the rules of the game. Right now that is that moment that seismic event that can change the incentive structure and the mechanisms underneath. The Blockchain is a way to do it distributively securely and I think we can do great things but they dont come by themselves we have to actively pursue a specific goal and to agree on how to design these new systems. CG: Are we ready for above-mentioned inventions or do we have to evolve further? FP: I think currently we are not ready for this change. Well first of all the technology isnt ready. We havent figured out still so many things about Blockchain systems. We are still in the very very early stage of the protocols and of the mechanisms that we are building. I mean we dont know how to scale we dont know how to do it securely we dont know how to do it fast enough. We really dont have the game theory behind it; we dont know how all these things are going to be put together. We dont have the social infrastructure and the technological infrastructure. But its a feedback loop its a system of systems so by interacting with the system by allowing ourselves to make mistakes and to do it faster and faster we create resilience in the network. Where a single entity might die or go bust the overall network captures some of that value and then you can increase the value again again and again. Hopefully we can find something thats not just resilient but its anti-fragile so that by stressing the system it becomes stronger- something like your body. When you go to the gym and you do exercise you actually stress your muscles and you break them apart and because you break them apart they become stronger afterwards so thats an anti-fragile system. We should do that for the economic system and also for decision-making and everything. Since we know that we are going to make mistakes- we should design a system that gets better as we make more mistakes because we learn from them instead of just repeating the same shit over and over and not learning from it which is mostly what has been happening recently. CG: Tell us about your books FP: I wrote a few books. First one is called Robots Will Steal Your Job But Thats OK. I wrote it six years ago. Kind of unsuspected time I was told I was a charlatan I didnt have a PhD in economics I wasnt a professor from MIT or Oxford I should just stick to my computer science and not talk about these things how little do you know. Then two to three years later professors from MIT and Oxford have written the papers that say exactly the same things with exactly the same numbers but using different methodologies so they were kind of validating everything that I was saying. Thus I went from a charlatan to an oracle. It was kind of weird but you know same stuff just has caused different reactions from people. Then I wrote another book a fiction book this time called Tale of Two Futures. Its a short sci-fi. It shows two different paths we can take. One where things have taken the decentralized open source model and a more sensible approach on how to use technology to better society and the other is this hyper-capitalistic narrowly focused mindless repetitive work that leads to a dystopian society. The third book I wrote was a book for Italians about how to build startups because in Italy no one knows how to build startups. Very few people know and the few people who do they leave the country and go elsewhere and they never tell anyone back in town. Now they call startups everything like if a pizzeria were a startup. No thats not a startup- a startup is something else! So I wrote this most recent book thats called Startup Zero.0. To kind of give the idea that we are not even step one we are at step zero we should get the basics first and understand them. So I have been doing that a lot of that. I also have a TV show in Italy on national TV its called Codice La vita è digitale it means Code Life is Digital. We have had about two or three mln people watching it every week. First it was just about Blockchain and Bitcoin. We went to BitFury China Japan we interviewed Roger Ver; we had a bunch of people there. I think it was very well done the episode on Blockchain. We did one on IoT smart cities the cognitive revolution artificial intelligence robotics synthetic biology genetic engineering. We are bringing these emerging technologies to the wider audience. Also I am an angel investor. I invest in about 20 companies so far- mostly in Blockchain but also I am moving to the medical sector things that I think will help humanity in one way or another. I try to give my contribution in some way. Now I am spending most of my time doing Hyperloop. CG: What does that mean Blockchain Revolution? How will it change the globe? FP: I think one of the biggest opportunities we have is to use autonomous agents to automate all things that should be automated particularly in bureaucracy and in how systems interoperate. There is no reason why I should go ask a person to verify my identity or to stamp something and wait for months for a paper to come back or fax it somewhere I mean some places still need a fax machine. A lot of this stuff is because you dont trust the computer to verify that transaction or that information that is being conveyed. Now the Blockchain can solve that. Not only can it solve it but it can solve it systematically securely and for anybody. Also its censorship resistant not just the government censoring information but also a company not releasing some of the data that maybe you should own. For example from all the social networks the only one that gives you the contacts is LinkedIn. Everyone else doesnt allow you to export the contacts. They are your contacts! Why shouldnt you be allowed to have your own contacts and information about them? Its crazy but this happens! Think about all the corruption that happens throughout the world- trillions of dollar worth of value and hundreds of millions of people in distress who can be forced into doing things because they have no legal recourse. The Blockchain can help all these people. Before it helps the First World it can help the long tail of the supply chain thats now being held hostage by the owners of capital who have an unfair advantage in that game. They can be less efficient than them but still win just because they have access to cheap capital. That is really unfair. All the risk is on these people who have no power no legal recourse and their lives are miserable because the game is tilted. The game is unfair. Blockchain can allow for that to change but we need to actively pursue that goal because it will not come automatically by itself. I think thats a moral responsibility that we have. I think we have to step up and take that responsibility. Follow us on Facebook

http://ift.tt/2A4OePm

#How Blockchain Revol BitLex.win

[jeremyau]

How does Boston compare to SV and what do MIT and Stanford have to do with it?

How does Boston compare to SV and what do MIT and Stanford have to do with it?

This is an archive of an old Google Buzz conversation on MIT vs. Stanford and Silicon Valley vs. Boston

There’s no reason why the Boston area shouldn’t be as much a hotbed of startups as Silicon Valley is. By contrast, there are lots of reasons why NYC is no good for startups. Nevertheless, Paul Graham gave up on the Boston area, so there must be something that hinders startup formation in the area.

Kevin: This has nothing to do with money, or talents, or what it. All it matters is “entrepreneur density”.

Boston may have the money, the talent, the intelligence, but does it have an entrepreneurial spirit and enough of a density?

Marya: From http://ift.tt/1GmR1B9 “Graham says the reasons are mostly personal, having to do with the impending birth of his child and the desire not to try and be a bi-coastal parent” But then immediately after, we see he says: “Boston just doesn’t have the startup culture that the Valley does. It has more startup culture than anywhere else, but the gap between number 1 and number 2 is huge; nothing makes that clearer than alternating between them.” Here’s an interview: http://ift.tt/1ImzxPA Funny, because Graham seemed partial to the Boston area, earlier: http://ift.tt/14WuEQM http://ift.tt/gihLkN

Rebecca: I think he’s partial because he likes the intellectual side of Boston, enough to make him sad that it doesn’t match SV for startup culture. I know the feeling. I guess I have seen things picking up here recently, enough to make me a little wistful that I have given my intellectual side priority over any entrepreneurial urges I might have, for the time being.

Scoble: I disagree that Boston is #2. Seattle and Tel Aviv are better and even Boulder is better, in my view.

Piaw: Seattle does have a large number of Amazon and Microsoft millionaires funding startups. They just don’t get much press. I wasn’t aware that Boulder is a hot-bed of startup activity.

Rebecca: On the comment “there is no reason Boston shouldn’t be a hotbed of startups…” Culture matters. MIT’s culture is more intellectual than entrepreneurial, and Harvard even more so. I’ll tell you a story: I was hanging out in the MIT computer club in the early nineties, when the web was just starting, and someone suggested that one could claim domain names to make money reselling them. Everyone in the room agreed that was the dumbest idea they had ever heard. It was crazy. Everything was available back then, you know. And everyone in that room kindof knew they were leaving money on the ground. And yet we were part of this club that culturally needed to feel ourselves above wanting to make money that way. Or later, in the late nineties I was hanging around Philip Greenspun, who was writing a book on database backed web development. He was really getting picked on by professors for doing stuff that wasn’t academic enough, that wasn’t generating new ideas. He only barely graduated because he was seen as too entrepreneurial, too commercial, not original enough. Would that have happened at Stanford? I read an interview with Rajiv Motwani where he said he dug up extra disk drives whenever the Google founders asked for them, while they were still grad students. I don’t think that wouldn’t happen at MIT: a professor wouldn’t give a grad student lots of stuff just to build something on their own that they were going to commercialize eventually. They probably would encounter complaints they weren’t doing enough “real science”. There was much resentment of Greenspun for the bandwidth he “stole” from MIT while starting his venture, for instance, and people weren’t shy about telling him. I’m not sure I like this about MIT.

Piaw: One my friends once turned down a full time offer at Netscape (after his internship) to return to graduate school. He said at that time, “I didn’t go to graduate school to get rich.” Years later he said, “I succeeded… at not getting rich.”

Dan: As the friend in question (I interned at Netscape in ‘96 and ‘97), I’m reasonably sure I wouldn’t have gotten very rich by dropping out of grad school. Instead, by sticking with academia, I’ve managed to do reasonably well for myself with consulting on the side, and it’s not like academics are paid peanuts, either.

Now, if I’d blown off academia altogether and joined Netscape in ‘93, which I have to say was a strong temptation, things would have worked out very differently.

Piaw: Well, there’s always going to be another hot startup. :-) That’s what Reed Hastings told me in 1995.

Rebecca: A venture capitalist with Silicon Valley habits (a very singular and strange beast around here) recently set up camp at MIT, and I tried to give him a little “Toto, you’re not in Kansas anymore” speech. That is to say, I was trying to tell him that the habits one got from making money from Stanford students wouldn’t work at MIT. It isn’t that one couldn’t make money investing in MIT students – if one was patient enough, maybe one could make more, maybe a lot more. But it would only work if one understood how utterly different MIT culture is, and did something different out of an understanding of what one was buying. I didn’t do a very good job talking to him, though; maybe I should try again by stepping back and talking more generally about the essential difference of MIT culture. You know, if I did that, maybe the Boston mayor’s office might want to hear this too. Hmmm… you’ve given me an idea.

Marya: Apropos, Philip G just posted about his experience attending a conference on angel investing in Boston: http://ift.tt/2pZbdDg He’s in cranky old man mode, as usual. I imagine him shaking his cane at the conference presenters from the rocking chair on his front porch. Fun quotes: ‘Asked if it wouldn’t make more sense to apply capital in rapidly developing countries such as Brazil and China, the speakers responded that being an angel was more about having fun than getting a good return on investment. (Not sure whose idea of “fun” included sitting in board meetings with frustrated entrepreneurs, but personally I would rather be flying a helicopter or going to the beach.)… ‘Nobody had thought about the question of whether Boston in fact needs more angel investors or venture capital. Nobody could point to an example of a good startup that had been unable to obtain funding. However, there were examples of startups, notably Facebook, that had moved to California because of superior access to capital and other resources out there… ‘Nobody at the conference could answer a macro question: With the US private GDP shrinking, why do we need capital at all?’

Piaw: The GDP question is easily answered. Not all sectors are shrinking. For instance, Silicon Valley is growing dramatically right now. I wouldn’t be able to help people negotiate 30% increases in compensation otherwise (well, more like 50% increases, depending on how you compute). The number of pre-IPO companies that are extremely profitable is also surprisingly high.

And personally, I think that investing in places like China and Brazil is asking for trouble unless you are well attuned to the local culture, so whoever answered the question with “it’s fun” is being an idiot.

The fact that Facebook was asked by Accel to move to Palo Alto should definitely be something Boston area VCs should berate themselves about. But that “forced move” was very good for Facebook. They acquired Jeff Rothschild, Marc Kwiatkowski, Steve Grimm, Paul Bucheit, Sanjeev Singh, and many others by being in Palo Alto that would not have moved to Boston for Facebook no matter what. It’s not clear to me that staying in Boston was an optimal move for Facebook no matter what. At least, not before things got dramatically better in Boston for startups.

Marya: The GDP question is easily answered. Not all sectors are shrinking. For instance, Silicon Valley is growing dramatically right now

I’m guessing medical technology and biotech are still growing. What else?

Someone pointed this out in the comments, and Philip addressed it; he argues that angel investors are unlikely to get a good return on their investment (partial quote): “…we definitely need some sources of capital… But every part of the U.S. financial system, from venture capital right up through investment banks, is sized for an expanding private economy. That means it is oversized for the economy that we have. Which means that the returns to additional capital should be very small….”

He doesn’t provide any supporting evidence, though.

Piaw: Social networks and social gaming is growing dramatically and fast.

Rebecca: Thanks, Marya, for pointing out Philip’s blog post. I think the telling quote from it is this: “What evidence is there that the Boston area has ever been a sustainable place for startups to flourish? When the skills necessary to build a computer were extremely rare, minicomputer makers were successful. As soon as the skills … became more widespread, nearly all of the new companies started up in California, Texas, Seattle, etc. When building a functional Internet application required working at the state of the art, the Boston area was home to a lot of pioneering Internet companies, e.g., Lycos. As soon as it became possible for an average programmer to … work effectively, Boston faded to insignificance.” Philip is saying Boston can only compete when it can leverage skills that only it has. That’s because its ability to handle business and commercialization are so comparatively terrible that when the technological skill becomes commoditized, other cities will do much better.

But it does often get cutting-edge technical insight and skills first – and then completely drops the ball on developing them. I find this frustrating. Now that I think about it, it seems like Boston’s leaders are frustrated by this too. But I think they’re making a mistake trying to remake Boston in Silicon Valley’s image. If we tried to be you, at best we would be a pathetic shadow of you. We could only be successful by being ourselves, but getting better at it.

There is a fundamental problem: the people at the cutting edge aren’t interested in practical things, or they wouldn’t be bothering with the cutting edge. Though it might seem strange to say now, the guy who set up the hundredth web server was quite an impractical intellectual. Who needs a web server when there are only 99 others (and no browsers yet, remember)? We were laughing at him, and he was protesting the worth of this endeavor merely out of a deep intellectual faith that this was the future, no matter how silly it seemed. Over and over I have seen the lonely obsessions of impractical intellectuals become practical in two or three years, become lucrative in five or eight, and become massive industries in seven to twelve years.

So if the nascent idea that will become a huge industry in a dozen years shows up first in Boston, why can’t we take advantage of it? The problem is that the people who hone their skill at nascent ideas that won’t be truly lucrative for half a decade at least, are by definition impractical, too impractical to know how to take advantage of being first. But maybe Boston could become a winner if it could figure out how to pair these people up with practical types who could take advantage of the early warning about the shape of the future, and leverage the competitive advantage of access to skills no-one else has. It would take a very particular kind of practicality, different from the standard SV thing. Maybe I’m wrong, though; maybe the market just doesn’t reward being first, especially if it means being on the bleeding edge of practicality. What do you think?

Piaw: Being 5 or 10 years ahead of your time is terrible. What you want to be is just 18 months or even 12 months ahead of your time, so you have just enough time to build product before the market explodes. My book covers this part as well. :-)

Marya: Rebecca, I don’t know the Boston area well enough to form an opinion. I’ve been here two years, but I’m certainly not in the thick of things (if there is a “thick” to speak of, I haven’t seen it). My guess would be that Boston doesn’t have the population to be a huge center of anything, but that’s a stab in the dark.

Even so, this old survey (2004) says that Boston is #2 in biotech, close behind San Diego: http://ift.tt/2pfVjq7 So why is Boston so successful in biotech if the people here broadly lack an interest in business, or are “impractical”? (Here’s a snippet from the article: “…When the most successful San Diego biotech company, IDEC Pharmaceuticals, merged with Biogen last year to become Biogen Idec (nasdaq: BIIB - news - people ), it officially moved its headquarters to Biogen’s hometown of Cambridge, Mass.” Take that, San Diego!)

When you talk about a certain type of person being “impractical”, I don’t think that’s really the issue. Such people can be very practical when it comes to pursuing their own particular kind of ambition. But their interests may not lie in the commercialization of an idea. Some extremely intelligent, highly skilled people just don’t care about money and commerce, and may even despise them.

Even with all that, I find it hard to believe that the intelligentsia of New England are so much more cerebral than their cousins in Silicon Valley. There’s certainly a puritan ethic in New England, but I don’t think that drives the business culture.

Rebecca: Marya, thanks for pointing out to me I wasn’t being clear (I’m kindof practicing explaining something on you, that I might try to say more formally later, hence the spam of your comment field. I hope you don’t mind.) You question “ why is Boston so successful in biotech if the people here broadly lack an interest in business?” made me realize I’m not talking about people broadly – there are plenty of business people in Boston, as everywhere. I’m talking about a particular kind of person, or even more specifically, a particular kind of relationship. Remember I contrasted the reports of Rajeev Motwani’s treatment of the Google guys with the MIT CS lab’s treatment of Philip? In general, I am saying that a university town like Palo Alto or Cambridge will be a magnet for ultra-ambitious young people who look for help realizing their ambitions, and a group of adults who are looking to attract such young people and enable those ambition, and there is a characteristic relationship between them with (perhaps unspoken) terms and expectations. The idea I’m really dancing around is that these terms & expectations are very different at MIT than (I’ve heard) they are at Stanford. Though there may not be very many people total directly involved in this relationship, it will still determine a great deal of what the city can and can’t accomplish, because it is a combination of the energy of very ambitious young people and the mentorship of experienced adults that makes big things possible.

My impression is that the most ambitious people at Stanford dream of starting the next big internet company, and if they show enough energy and talent, they will impress professors who will then open their Rolodex and tell their network of VC’s “this kid will make you tons of money if you support his work.” The VC’s who know that this professor has been right many times before will trust this judgement. So kids with this kind of dream go to Stanford and work to impress their professors in a particular kind of way, because it puts them on a fast track to a particular kind of success.

The ambitious students most cultivated by professors in Boston have a different kind of dream: they might dream of cracking strong AI, or discovering the essential properties of programming languages that will enable fault-tolerant or parallel programming, or really understanding the calculus of lambda calculus, or revolutionizing personal genomics, or building the foundations of Bladerunner-style synthetic biology. If professors are sufficiently impressed with their student’s energy and talent, they will open their Rolodex of program managers at DARPA (and NSF and NIH), and tell them “what this kid is doing isn’t practical or lucrative now, nor will it be for many years to come, but nonetheless it is critical for the future economic and military competitiveness of the US that this work is supported.” The program managers’ who know that this professor has been right many times before will trust this judgment. In this way, the kid is put on a fast track to success – but it is a very different kind of success than the Stanford kid was looking for, and a different kind of kid who will fight to get onto this track. The meaning of success is very different, much more intellectual and much less practical, at least in the short term.

That’s what I mean when I say “Boston” is less interested in business, more impractical, less entrepreneurial. It isn’t that there aren’t plenty of people here who have these qualities. But the “ecosystem” that gives ultra-ambitious young people the chance to do something singular which could be done no-where else – an ecosystem which that it does have, but in a very different kind of way – doesn’t foster skill at commercialization or an interest in the immediate practical application of technology.

Maybe there is nothing wrong with that: Boston’s ecosystem just fosters a different kind of achievement. However, I can see it is frustrating to the mayor of Boston, because the young people whose ambitions are enabled by Boston’s ecosystem may be doing work crucial to the economic and military competitiveness of the US in the long term, but they might not help the economy of Boston very much! What often happens in the “long term” is that the work supported by grants in Boston develops to the point it becomes practical and lucrative, and then it gets commercialized in California, Seattle, New York, etc… The program managers at DARPA who funded the work are perfectly happy with this outcome, but I can imagine that the mayor of Boston is not! The kid also might not be 100% happy with this deal, because the success which he is offered isn’t much like SV success – its a fantastic amount of work, rather hermit-like and self-abnegating, which mostly ends up making it possible for other people far away to get very, very rich using the results of his labors. At best he sees only a minuscule slice of the wealth he enabled.

What one might want instead is that the professors in Boston have two sections in their Rolodex. The first section has the names of all the relevant program managers at DARPA, and the professor flips to this section first. The second section has the names of suitable cofounders, and friendly investors, and after the student has slaved away for five to seven years making a technology practical, the professor flips to the second section and sets the student up a second time to be the chief scientist or something like that at an appropriate startup.

And its not like this doesn’t happen. It does happen. But it doesn’t happen as much as it could, and I think the reason why it doesn’t may be that it just takes a lot of work to maintain a really good Rolodex. These professors are busy and they just don’t have enough energy to be the linchpin of a really top-quality ecosystem in two different ways at the same time.

If the mayor of Boston is upset that Boston is economically getting the short end of the stick in this whole deal (which I think it is), a practical thing he could do is give these professors some help in beefing up the second section of their Rolodex, or perhaps try to build another network of mentors which was in the appropriate way Rolodex-enabled. If he took the later route, he should understand that this second network shouldn’t try to be a clone of the similar thing at Stanford (because at best it would only be a pale shadow) but instead be particularly tailored to incorporating the DARPA-project graduates that are unique to Boston’s ecosystem. That way he could make Boston a center of entrepreneurship in a way that was uniquely its own and not merely a wannabe version of something else – which it would inevitably do badly. That’s what I meant when I said Boston should be itself better, rather than trying to be a poor pale copy of Silicon Valley.

Piaw: I like that line of thought Rebecca. Here’s the counter-example: Facebook. Facebook clearly was interested in monetizing something that was very developed, and in fact, had been tried and failed many times because the timing wasn’t right. Yet Facebook had to go to Palo Alto to get funding. So the business culture has to change sufficiently that the people with money are willing to risk it on very high risk ventures like the Facebook that was around 4 years ago.

Having invested my own money in startups, I find that it’s definitely something very challenging. It takes a lot to convince yourself that this risk is worth taking, even if it’s a relatively small portion of your portfolio. To get enough people to build critical mass, you have to have enough success in prior ventures to gain the kind of confidence that lets you fund Facebook where it was 4 years ago. I don’t think I would have been able to fund Google or Facebook at the seed stage, and I’ve lived in the valley and worked at startups my entire career, so if anyone would be comfortable with risk, it should be me.

Dan: Rebecca: a side note on “opening a rolodex for DARPA”. It doesn’t really work quite like that. It’s more like “hey, kid, you should go to grad school” and you write letters of recommendation to get the kid into a top school. You, of course, steer the kid to a research group where you feel he or she will do awesome work, by whatever biased idea of awesomeness.

My own professorial take: if one of my undergrads says “I want to go to grad school”, then I do as above. If he or she says “I want to go work for a cool startup”, then I bust out the VC contacts in my rolodex.

Rebecca: Dan: I know. I was oversimplifying for dramatic effect, just because qualifying it would have made my story longer, and it was already pushing the limits of the reasonable length for a comment. Of course the SV version of the story isn’t that simple either.

I have seen it happen that sufficiently brilliant undergraduates (and even high school students – some amazing prodigies show up at MIT) can get direct support. But realize also I’m really talking about grad students – after all, my comparison is with the relationship between the Google guys and Rajeev Motwani, which happened when they were graduate students. The exercise was to compare the opportunities they encountered with the opportunities similarly brilliant, energetic and ultra-ambitious students at MIT would have access to, and talk about how it would be similar and different. Maybe I shouldn’t have called such people “kids,” but it simplified and shortened my story, which was pushing its length limit anyway. Thanks for the feedback; I’m testing out this story on you, and its useful to know what ways of saying things work and what doesn’t.

Rebecca: Piaw: I understand that investing in startups by individual is very scary. I know some Boston angels (personally more than professionally) and I hear stories about how cautious their angel groups are. I should explain some context: the Boston city government recently announced a big initiative to support startups in Boston, and renovate some land opened up by the Big Dig next to some decaying seaport buildings to create a new Innovation District. I was thinking about what they could do to make that kind of initiative a success rather than a painful embarrassment (which it could easily become). So I was thinking about the investment priorities of city governments, more than individual investors like you.

Cities invest in all sorts of crazy things, like Olympic stadiums, for instance, that lose money horrifyingly … but when you remember that the city collects 6% hotel tax on every extra visitor, and benefits from extra publicity, and collects extra property tax when new people move to the city, it suddenly doesn’t look so bad anymore. Boston is losing out because there is a gap in the funding of technology between when DARPA stops funding something, because it is developed to the point where it is commercializable, and when the cautious Boston angels will start funding something – and other states step into the gap and get rich off of the product of Massachusetts’ tax dollars. That can’t make the local government too happy.

Maybe the Boston city or state government might have an incentive to do something to plug that hole. They might be more tolerant of losing money directly because even a modestly lucrative venture, or one very, very slow to generate big returns, which nonetheless successfully drew talent to the city would make them money in hotel & property tax, publicity etc. etc. – or just not losing the huge investment they have already made in their universities! I briefly worked for someone who was funded by Boston Community Capital, an organization which, I think, divided its energies between developing low income housing and and funding selected startups that were deemed socially redeeming for Boston. When half your portfolio is low-income housing, you might have a different outlook on risk and return! I was hugely impressed by what great investors they were – generous, helpful & patient. Patience is necessary for us because the young prodigies in Boston go into fields whose time horizon is so long – my friends are working on synthetic biology, but it will be a long, long time before you can buy a Bladerunner-style snake!

Again, thanks for the feedback. You are helping me understand what I am not making clear.

Marya: Rebecca, you said The idea I’m really dancing around is that these terms & expectations are very different at MIT than (I’ve heard) they are at Stanford

I read your initial comments as being about general business conditions for startups in Boston. But now I think you’re mainly talking about internet startups or at least startups that are based around work in computer science. You’re saying MIT’s computer science department in particular does a poor job of pointing students in an entrepreneurial direction, because they are too oriented towards academic topics.

Both MIT and Stanford have top computer science and business school rankings. Maybe the problem is that Stanford’s business school is more inclined to “mine” the computer science department than MIT’s?

Doug: Rebecca, your description of MIT vs. Stanford sounds right to me (though I don’t know Stanford well). What’s interesting is that I remember UC Berkeley as being very similar to how you describe MIT: the brightest/most ambitious students at Cal ended up working on BSD or Postgres or The Gimp or Gnutella, rather than going commercial. Well, I haven’t kept up with Berkeley since the mid-90s, but have there been any significant startups there since Berkeley Softworks?

Piaw: Doug: Inktomi. It was very significant for its time.

Dan: John Ousterhout built a company around Tcl. Eric Allman built a company around sendmail. Mike Stonebreaker did Ingres, but that was old news by the time the Internet boom started. Margo Seltzer built a company around Berkeley DB. None of them were Berkeley undergrads, though Seltzer was a grad student. Insik Rhee did a bunch of Internet-ish startup companies, but none of them had the visibility of something like Google or Yahoo.

Rebecca: Dan: I was thinking more about what you said about not involving undergraduates, but instead telling them to go to grad school. Sometimes MIT is in the nice sedate academic mode which steers undergrads to the appropriate research group when they are ready to work on their PhD. But sometimes it isn’t. Let me tell you more about the story of the scene in the computer club concerning installation of the first web server. It was about the 100th web server anywhere, and its maintainer accosted me with an absurd chart “proving” the exponential growth of the web – i.e. a graph going exponentially from 0 to 100ish, which he extrapolated forward in time to over a million – you know the standard completely bogus argument – except this one was exceptionally audacious in its absurdity. Yet he argued for it with such intensity and conviction, as if he was saying that this graph should convince me to drop everything and work on nothing but building the Internet, because it was the only thing that mattered!

I fended him off with the biggest stick I could find: I was determined to get my money’s worth for my education, do my psets, get good grades (I cared back then), and there is no way I would let that be hurt by this insane Internet obsession. But it continued like that. The Internet crowd only grew with time, and they got more insistent that they were working on the only thing that mattered and I should drop everything and join them. That I was an undergraduate did not matter a bit to anyone. Undergrads were involved, grad students were involved, everyone was involved. It wasn’t just a research project; eventually so many different research projects blended together that it became a mass obsession of an entire community, a total “Be Involved or Be Square” kind of thing. I’d love to say that I did get involved. But I didn’t; I simply sat in the office on the couch and did psets, proving theorems and solving the Schrodinger’s equation, and fended them off with the biggest stick I could find. I was determined to get a Real Education, to get my money’s worth at MIT, you know.

My point is that when the MIT ecosystem really does its thing, it is capable of tackling projects that are much bigger than ordinary research projects, because it can get a critical mass of research projects working together, involving enough grad students and also sucking in undergrads and everyone else, so that the community ends up with an emotional energy and cohesion that goes way, way beyond the normal energy of a grad student trying to finish a PhD.

There’s something else too, though I cannot report on this with that much certainty, because was too young to see it all at the time. You might ask: if MIT had this kind of emotional energy focused on something in the 90’s, then what is it doing in a similar way now? And the answer I’d have to say, painfully, is that it is frustrated and miserable about being an empty shell of what it once was.

Why? Because in 2000 Bush got elected and he killed the version of DARPA with which so many professors had had such a long relationship. I didn’t I understand this in the 90’s – like a kid I took the things that were happening around me for granted without seeing the funding that made them possible – but now I see that that the kind of emotional energy expended by the Internet crowd at MIT in the 90’s costs a lot of money, and needs an intelligent force behind it, and that scale of money and planning can only come from the military, not from NSF.

More recently I’ve watched professors who clearly feel it is their birthright to be able to mobilize lots of student to do really large-scale projects, but then they try to find money for it out of NSF, and they spend all their time killing themselves writing grant proposals, never getting enough money to make themselves happy, and complaining about the cowardice of academia, and wishing they could still work with their old friends at DARPA. They aren’t happy because they are merely doing big successful research projects, but a mere research project isn’t enough… when MIT is really MIT it can do more. It is an empty shell of itself when it is merely a collection of merely successful but not cohesive NSF funded research projects. As I was saying, the Boston “ecosystem” has in itself the ability to do something singular, but it is singular in an entirely different way than SV’s thing.

This may seem obscure, a tale of funding woes at a distant university, but perhaps it is something you should be aware of, because maybe it affects your life. The reason you should care is that when MIT was fully funded and really itself, it was building the foundations of the things that are now making you rich.

One might think of the relationship between technology and wealth like a story about potential energy: when you talk about finding a “product/market” fit, its like pushing a big stone up a hill, until you get the “fit” at the top of the hill, and then the stone rolls down and the energy you put into it spins out and generates lots of money. In SV you focus on pushing stones up short hills – like Piaw said, no more than 12-18 months of pushing before the “fit” happens.

But MIT in its golden age could tackle much, much bigger hills – the whole community could focus itself on ten years of nothing but pushing a really big stone up a really big hill. The potential energy that the obsessed Internet Crowd in the 90’s was pushing into the system has been playing out in your life ever since. They got a really big stone over a really big hill and sent it down onto you, and then you pushed it over little bumps on the way down, and made lots of money doing it, and you thought the potential energy you were profiting from came entirely from yourselves. Some of it was, certainly, but not all. Some of it was from us. If we aren’t working on pushing up another such stone, if we can’t send something else over a huge hill to crash into you, then the future might not be like the past for you. Be worried.

So you might ask, how did this story end? If I’m claiming that there was intense emotional energy being poured into developing the Internet at MIT in the 90’s, why didn’t those same people fan out and create the Internet industry in Boston? If we were once such winners, how did we turn into such losers? What happened to this energetic, cohesive group?

I can tell you about this, because after years of fending off the emotional gravitation pull of this obsession, towards the end I began to relent. First I said “No way!” and then I said “No!” and then I said “Maybe Later,” and then I said “OK, Definitely Later”… and then when I finally got around to Later, and (perhaps the standard story of my life) Later turned out to be Too Late. By 2000 I was ready to join the crowd and remake myself as an Internet Person in the MIT style. So I ended up becoming seriously involved just at the time it fell apart. Because 2000ish, almost the beginning of the Internet Era for you, was the end for us.

This weekend I was thinking of how to tell this story, and I was composing it in my head in a comic style, thinking to tell a story of myself as “Parable of Boston Loser” to talk about all my absurd mistakes as a microcosm of the difficulties of a whole city. I can pick on myself, can’t I; no one will get upset at that? The short story is that in 2000ish the Internet crowd had achieved their product/market fit, DARPA popped the champagne – you won guys! Congratulations! Now go forth and commercialize! – and pushed us out of the nest into the big world to tackle the standard tasks of commercializing a technology – the tasks that you guys can do in your sleep. I was there, right of the middle of things, during that transition. I thought to tell you a comic story about the absurdity of my efforts in that direction, and make you laugh at me.

But when I was trying to figure out how to explain what was making it so terribly hard for me, to my great surprise I was suddenly crying really hard. All Saturday night I was thinking about it and crying. I had repressed the memory, decided I didn’t care that much – but really it was too terrible to face. All the things you can do without thinking, for us hurt terribly. The declaration of victory, the “achievement of product/market fit”, the thing you long for more than anything, I – and I think many of the people I knew – experienced as a massive trauma. This is maybe why I’ve reacted so vehemently and spammed your comment field, because I have big repressed personal trauma about all this. I realized I had a much more earnest story to tell than I had previously planned.

For instance, I was reflecting on my previous comment about what cities spend money on, and thinking that I sounded like the biggest jerk ever. Was I seriously suggesting that the city take money that they would have spent on housing for poor black babies and instead spend it on overeducated white kids with plenty of other prodigiously lucrative economic opportunities? Where do I get off suggesting something like that? If I really mean it I have a big, big burden of proof.

So I’ll try to combine my more earnest story with at least a sketch of how I’d tackle this burden of proof (and try to keep it short, to keep the spam factor to a minimum. The javascript is getting slow, so I’ll cut this here and continue.)

Ruchira: Interlude (hope Rebecca continues soon!): Rebecca says “that scale of money and planning can only come from the military, not from NSF.” Indeed, it may be useful to check out this NY Times infographic of the federal budget: http://ift.tt/1CXAgYQ

I’ll cite below some of the 2011 figures from this graphic that were proposed at that time; although these may have changed, the relative magnitudes of one sector versus another are not very different. I’ve mostly listed sectors in decreasing order of budget size for research, except I listed “General science & technology” sector (which includes NSF) before “Health” sector (which includes NIH) since Rebecca had contrasted the military with NSF.

The “Research, development, test, and evaluation” segment of the “National Defense” sector is $76.77B. I guess DARPA, ONR, etc. fit there.

The “General science & technology” sector is down near the lower right. The “National Science Foundation programs” segment gets $7.36B. There’s also another $0.1B for “National Science Foundation and other”. The “Science, exploration, and NASA supporting activities” segment gets $12.78B. (I don’t know to what extent satellite technology that is relevant to the national defense is also involved here, or in the $4.89B “Space operations” segment, or in the $0.18B “NASA Inspector General, education, and other” segment.) The “Department of Energy science programs” segment gets $5.12B. The “Department of Homeland Security science and technology programs” segment gets $1.02B.

In the “Health” sector, the “National Institutes of Health” segment gets $32.09B. The “Disease control, research, and training” segment gets $6.13B (presumably this includes the CDC). There’s also “Other health research and training” at $0.14B and “Diabetes research and other” at $0.095B.

In the “Natural resources and environment sector”, the “National Oceanic and Atmospheric Administration” gets $5.66B. “Regulatory, enforcement, and research programs” gets $3.86B (is this the entire EPA?).

In the “Community and regional development” sector, the “National Infrastructure Innovation and Finance fund” (new this year) gets $4B.

In the “Agriculture” sector, which presumably includes USDA-funded research, “Research and education programs” gets $1.97B, “Research and statistical analysis” gets $0.25B, and “Integrated research, education, and extension programs” gets $0.025B.

In the “Transportation” sector, “Aeronautical research and technology” gets $1.15B, which by the way would be a large (130%) relative increase. (Didn’t MIT find a way of increasing jet fuel efficiency by 75% recently?)

In the “Commerce and housing credit” sector, “Science and technology” gets $0.94B. I find this rather mysterious.

In the “Education, training, employment” sector, “Research and general education aids: Other” gets $1.14B. The “Institute for Education Sciences” gets $0.74B.

In the “Energy” sector, “Nuclear energy R&D” gets $0.82B and “Research and development” gets $0.024B (presumably this is the portion outside the DoE).

In the “Veterans’ benefits and services” sector, “Medical and prosthetic research” gets $0.59B.

In the “Income Security” sector there’s a tiny segment “Children’s research and technical assistance” $0.052B. Not sure what that means.

Rebecca: I’ll start with a non-sequitur which I hope to use to get at the hear of the difference between MIT and Stanford: recently I was at a Marine publicity event and I asked the recruiter what differentiates the Army from the Marines? Since they both train soldiers to fight, why don’t they do it together? He answered vehemently that they must be separate because of one simple attribute in which they are utterly opposed: how they think about the effect they want to have on the life their recruits have after they retire from the service. He characterized the Army as an organization which had two goals: first, to train good soldiers, and second, to give them skills that would get them a good start in the life they would have after they left. If you want to be a Senator, you might get your start in the Army, get connections, get job skills, have “honorable service” on your resume, and generally use it to start your climb up the ladder. The Army aspires to create a legacy of winners who began their career in the Army.

By contrast the Marines, he said, have only one goal: they want to create the very best soldiers, the elite, the soldiers they can trust in the most difficult and dangerous situations to keep the Army guys behind them alive. This elite training, he said, comes with a price. The price you pay is that the training you get does not prepare you for anything at all in the civilian world. You can be the best of the best in the Marines, and then come home and discover that you have no salable civilian job skills, that you are nearly unemployable, that you have to start all over again at the bottom of the ladder. And starting over is a lot harder than starting the first time. It can be a huge trauma. It is legendary that Marines do not come back to civilian life and turn into winners: instead they often self-destruct – the “transition to civilian life” can be violently hard for them.

He said this calmly and without apology. Did I say he was a recruiter? He said vehemently: “I will not try to recruit you! I want to you to understand everything about how painful a price you will pay to be a Marine. I will tell you straight out it probably isn’t for you! The only reason you could possibly want it is because you want more than anything to be a soldier, and not just to be a soldier, but to be in the elite, the best of the best.” He was saying: we don’t help our alumni get started, we set them up to self-destruct, and we will not apologize for it – it is merely the price you pay for training the elite!

This story gets to the heart of what I am trying to say is the essential difference between Stanford and MIT. Stanford is like the Army: for its best students, it has two goals – to make them engineers, and to make them winners after they leave. And MIT is like the Marines: it has only one goal – to make its very best student into the engineering elite, the people about whom they can truthfully tell program managers at DARPA: you can utterly trust these engineers with the future of America’s economic and military competitiveness. There is a strange property to the training you get to enter into that elite, much like the strange property the non-recruiter attributed to the training of the Marines: even though it is extremely rigorous training, once you leave you can find yourself utterly without any salable skills whatever.

The skills you need to acquire to build the infrastructure ten years ahead of the market’s demand for it may have zero intersection with the skills in demand in the commercial world. Not only are you not prepared to be a winner, you may not even be prepared to be basically employable. You leave and start again at the bottom. Worse than the bottom: you may have been trained with habits commercial entities find objectionable (like a visceral unwillingness to push pointers quickly, or a regrettable tendency to fight with the boss before the interview process is even over.) This can be fantastically traumatic. Much as ex-Marines suffer a difficult “transition to civilian life,” the chosen children of MIT suffer a traumatic “transition to commercial life.” And the leaders at MIT do not apologize for this: as the Marine said, it is just the price you pay for training the elite.

This is the general grounds which I might use to appeal to the city officials in Boston. There’s more to explain, but the shape of the idea would be roughly this: much a cities often pay for programs to help ex-Marines transition to civilian life, on the principal that they represent valuable human capital that ought not to be allowed to self-destruct, it might pay off for the city to understand the peculiar predicament of graduates of MIT’s intense DARPA projects, and provide them with help with the “transition to commercial life.” There’s something in it for them! Even though people who know nothing but how to think about the infrastructure of the next decade aren’t generically commercially valuable, if you put them in proximity to normal business people, their perspective would rub off in a useful way. That’s the way that Boston could have catalyzed an Internet industry of its own – not by expecting MIT students to commercialize their work, which (with the possible exception of Philip) they were constitutionally incapable of, but by giving people who wanted to commercialize something but didn’t know what a chance to learn from the accumulated (nearly ten years!) of experience and expertise of the Internet Crowd.

On that note, I wanted to say – funny you should mention Facebook. You think of Mark Zuckerberg as the social networking visionary in Boston, and Boston could have won if they had paid to keep him. I think that strange – Zuckerberg is fundamentally one of you, not one of us. It was right he should leave. But I’ll ask you a question you’ve probably never thought about. Suppose the Internet had not broken into the public consciousness at the time it did; suppose the world had willfully ignored it for a few more years, so the transition from a DARPA-funded research project to a commercial proposition would have happened a few years later. There was an Internet Crowd at MIT constantly asking DARPA to let them build the “next thing,” where “next” is defined as “what the market will discover it wants ten years from now.” So if this crowd had gotten a few more years of government support, what would they have built?

I’m pretty sure it would have been a social networking infrastructure, not like Facebook, really, but more like the Diaspora proposal. I’m not sure, but I remember in ‘98/‘99 that’s what all the emotional energy was pointing toward. It wasn’t technically possible to build yet, but the instant it was that’s what people wanted. I think it strange that everyone is talking about social networking and how it should be designed now; it feels to me like deja vu all over again, and echo from a decade ago. If the city or state had picked up these people after DARPA dropped them, and given them just a little more time, a bit more government support – say by a Mass ARPA – they could have made Boston the home, not of the big social networking company, but of the open social networking infrastructure and and all the expertise and little industries such a thing would have thrown off. And it would have started years and years ago! That’s how Boston could have become a leader by being itself better, rather than trying to be you badly.

Dan: I think you’re perhaps overstating the impact of DARPA. DARPA, by and large, funds two kinds of university activities. First, it funds professors, which pays for post-docs, grad students, and sometimes full-time research staff. Second, DARPA also funds groups that have relatively little to do with academia, such as the BSD effort at Berkeley (although I don’t know for a fact that they had DARPA money, they didn’t do “publish or perish” academic research; they produced Berkeley Unix).

Undergrads at a place like MIT got an impressive immersion in computer science, with a rigor and verve that wasn’t available most other places (although Berkeley basically cloned 6.001, and others did as well). They call it “drinking from a firehose” for a reason. MIT, Berkeley, and other big schools of the late 80’s and early 90’s had more CS students than they knew what to do with, so they cranked up the difficulty of the major and produced very strong students, while others left for easier pursuits.

The key inflection point is how popular culture at the university, and how the faculty, treat their “rock star” students. What are the expectations? At MIT, it’s that you go to grad school, get a PhD, become a researcher. At Stanford, it’s that you run off and get rich.

The decline in DARPA funding (or, more precisely, the micromanagement and short-term thinking) in recent years can perhaps be attributed to the leadership of Tony Tether. He’s now gone, and the “new DARPA” is very much planning to come back in a big way. We’ll see how it goes.

One last point: I don’t buy the Army vs. Marines analogy. MIT vs. Stanford train students similarly, in terms of their preparation to go out and make money, and large numbers of MIT people are quite successfully out there making money. MIT had no lack of companies spin out of research there, notably including Akamai. The differences we’re talking about here are not night vs. day, they’re not Army vs. Marines. They’re more subtle but still significant.

Rebecca: Yes, I’ve been hearing about the “unTethered Darpa.” I should have mentioned that, but left it out to stay (vaguely) short. And yes, I am overstating to make it possible to make a simple statement of what I might be asking for that would be couched in terms a city or state government official might be able to relate to. Maybe that’s irresponsible; that’s why I’m testing it on you first, to give you a chance to yell at me and tell me if you think that’s so.

They are casting about for a narrative of why Boston ceded its role as leaders of the Internet industry to SV, that would point them to something to do about it. So I was talking specifically about the sense in which Boston was once a leader in internet technology and the weaknesses that might have caused it to lose its lead. Paul Graham says that Boston has the weakness in developing industries that it is “too good” at other things, so I wanted to tell a dramatized story specifically about what the other things were and why that would lead to fatal weakness – how being “too strong” in a particular way can also make you weak.

I certainly am overstating, but perhaps I am because I am trying to exert force against another prediliction I find pernicious: the tendency to be eternally vague about the internal emotional logic that makes things happen in the world. If people build a competent, cohesive, energetic community, and then it suddenly fizzles, fails to achieve its potential, and disbands, it might be important to know what weakness caused this surprising outcome so you know how to ask for the help that would keep it from happening the next time.

And to tell the truth, I’m not sure I entirely trust your objection. I’ve wondered why so often I hear such weak, vague narratives about the internal emotional logic that causes things to happen in the world. Vague narratives make you helpless to solve problems! I don’t cling to the right to overstate things, but I do cling to the right to sleuth out the emotional logic of cause and effect that drives the world around me. I feel sometimes that I am fighting some force that wants to thwart me in that goal – and I suspect that that force sometimes originates, not always in rationality, but in in a male tendency to not want to admit to weakness just for the sake of “seeming strong.” A facade of strength can exact a high price in the currency of the real competence of the world, since often the most important action that actually makes the world better is the action of asking for help. I was really impressed with that Marine for being willing to admit to the price he paid, to the trauma he faced. That guy didn’t need to fake strength! So maybe I am holding out the image of him as an example. We have government officials who are actively going out of their way to offer to help us; we have a community that accomplishes many of its greatest achievements because of government support; we shouldn’t squander an opportunity to ask for what might help us. And this narrative might be wrong; that’s why I’m testing it first. I’m open to criticism. But I don’t want to pass by an opportunity, an opening to ask for help from someone who is offering it, merely because I’m too timid to say anything for the fear of overstatement.

Dan: Certainly, Boston’s biggest strength is the huge number of universities in and around the area. Nowhere else in the country comes close. And, unsurprisingly, there are a large number of high-tech companies in and around Boston. Another MIT spin-out I forgot to mention above is iRobot, the Roomba people, which also does a variety of military robots.

To the extent that Boston “lost” the Internet revolution to Silicon Valley, consider the founding of Netscape. A few guys from Illinois and one from Kansas. They could well have gone anywhere. (Simplifying the story, but) they hooked up with a an angel investor (Jim Clark) and he draged them out to the valley where they promptly hired a bunch of ex-SGI talent and hit the road running. Could they have gone to Boston? Sure. But they didn’t.

What seems to be happening is that different cities are developing their own specialties and that’s where people go. Dallas, for example, has carved out a niche in telecom, and all the big players (Nortel, Alcatel, Cisco, etc.) do telecom work there. In Houston, needless to say, it’s all about oilfield engineering. It’s not that there’s any particular Houston tax advantage or city/state funding that brings these companies here. Rather, the whole industry (or, at least the white collar part of it) is in Houston, and many of the big refineries are close nearby (but far enough away that you don’t smell them).

Greater Boston, historically, was where the minicomputer companies were, notably DEC and Data General. Their whole world got nuked by workstations and PCs. DEC is now a vanishing part of HP and DG is now a vanishing part of EMC. The question is what sort of thing the greater Boston area will become a magnet for, in the future, and how you can use whatever leverage you’ve got to help make it happen. Certainly, there’s no lack of smart talent graduating from Boston-area universities. The question is whether you can incentivize them to stay put.

I’d suggest that you could make headway, that way, by getting cheap office space in and around Cambridge (an “incubator”) plus building a local pot of VC money. I don’t think you can decide, in advance, what you want the city’s specialty to be. You pretty much just have to hope that it evolves organically. And, once you see a trend emerging, you might want to take financial steps to reinforce it.

Thomas: BBN (which does DARPA funded research) has long been considered a halfway house between MIT and the real world.

Piaw: It looks like there’s another conversation about this thread over at Hacker News: http://ift.tt/28XFjgR I love conversation fragmentation.

Doug: Conversation fragmentation can be annoying, but do you really want all those Hacker News readers posting on this thread?

Piaw: Why not? Then I don’t have to track things in two places.

Ruchira: hga over at Hacker News says: “Self-selection by applicants is so strong (MIT survived for a dozen year without a professional as the Director), whatever gloss the Office is now putting on the Institute, it’s able to change things only so much. E.g. MIT remains the a place where you don’t graduate without taking (or placing out of) a year of the calculus and classical physics (taught at MIT speed), for all majors.”

Well, the requirements for all majors at Caltech are: two years of calculus, two years of physics (including quantum physics), a year of chemistry, and a year of biology (the biology requirement was added after I went there); freshman chemistry lab and another introductory lab; and a total of four years of humanities and social sciences classes. The main incubator I know of near Caltech is the Idealab. Certainly JPL (the Jet Propulsion Laboratory) as well as Hollywood CGI and animation have drawn from the ranks of Caltech grads. The size of the Caltech freshman class is also much smaller than those at Stanford or MIT.

I don’t know enough to gauge the relative success of Caltech grads at transitioning to local industry, versus Stanford or MIT, does anyone else?

Rebecca: The comments are teaching me what I didn’t make clear, and this is one of the worst ones. When I talked about the “transition to the commercial world” I didn’t mainly mean grads transitioning to industry. I was thinking more about the transition that a project goes through when it achieves product/market fit.

This might not be something that you think of as such a big deal, because when companies embark on projects, they usually start with a fairly specific plan of the market they mean to tackle and what they mean to do if and when the market does adopt their product. There is no difficult transition because they were planning for it all along. After all, that’s the whole point of a company! But a ten year research project has no such plan. The web server enthusiast did not know when the market would adopt his “product” – remember, browsers were still primitive then – nor did he really know what it would look like when they did. Some projects are even longer term than that: a programming language professor said that the expected time from the conception of a new programming language idea to its widespread adoption is thirty years. That’s a good chunk of a lifetime.

When you’ve spent a good bit of your life involved with something as a research project that no-one besides your small crowd cares about, when people do notice, when commercial opportunities show up, when money starts pouring out of the sky, its a huge shock! You haven’t planned for it at all. Have you heard Philip’s story of how he got his first contract for what became ArsDigita? I couldn’t find the story exactly, but it was something like this: he had posted some of the code for his forum software online, and HP called him up and asked him to install and configure it for them. He said “No! I’m busy! Go away!” They said “we’ll pay you $100,000.” He’s in shock: “You’ll give me $100000 for 2 weeks of work?”

He wasn’t exactly planning for money to start raining down out of the sky. When he started doing internet applications, he said, people had told him he was crazy, there was no future in it. I remember when I first started seeing URL’s in ads on the side of buses, and I was just bowled over – all the time my friends had been doing web stuff, I had never really believed they would ever be adopted. URL’s are just so geeky, after all! I mean, seriously, if some wild-eyed nerd told you that in five years people would print “http://“,on the side of a bus, what would you think? I paid attention to what they were doing because they thought it was cool, I thought it was cool, and the fact that I had no real faith anyone else ever would made no difference. So when the world actually did, it was entering a new world that none of us were prepared for, that nobody had planned for, that we had not given any thought to developing skills to be able to deal with. I guess this is a little hard to convey, because it wouldn’t happen in a company. You wouldn’t ever do something just because you thought it was cool, without any faith that anyone would ever agree with you, and then get completely caught by surprise, completely bowled over, when the rest of the world goes crazy about what you thought was your esoteric geeky obsession.

Piaw: I think we were all bowled over by how quickly people started exchanging e-mail addresses, and then web-sites, etc. I was stunned. But it took a really long time for real profits to show up! It took 20 or so search engine companies to start up and fail before someone succeeded!

Rebecca: Of course; you are bringing up what was in fact the big problem. The question was: in what mode is it reasonable to ask the local government for help? And if you are in the situation where $100,000 checks are raining on you out of the sky without you seeming to make the slightest effort to even solicit them, then it seems like only the biggest jerk on the planet would claim to the government that they were Needy and Deserving. Black babies without roofs on their heads are needy and deserving; rich white obnoxious nerds with money raining down on them are not. But remember though Philip doesn’t seem to be expending much effort in his story, he also said in the late 90’s that he had been building web apps for ten years. Who else on the planet in 1999 could show someone a ten year long resume of web app development?

As Piaw said, it isn’t like picking up the potential wealth really was just a matter of holding out your hand as money rained from the sky. Quite the contrary. It wasn’t easy; in fact it was singularly difficult. Sure, Philip talked like it was easy, until you think about how hard it would have been to amass the resume he had in 1999.

When the local government talks about how it wants to attract innovators to Boston, to turn the city into a Hub of Innovation, my knee-jerk reaction is – and what are we, chopped liver? But then I realize that when they say they want to attract innovators, what they really mean is not that they want innovators, but that they want people who can innovate for a reasonable, manageable amount of time, preferably short, and then turn around, quick as quicksilver, and scoop up all the return on investment in that innovation before anyone else can get at it – and give a big cut in taxes to the city and state! Those are the kind of innovators who are attractive! Those are the kind who properly make your Boston the kind of Hub of Innovation the Mayor of Boston wants it to be. Innovators like those in Tech Square or Stata, not so much. We definitely qualify for the Chopped Liver department.

And this hurts. It hurts to think that the Mayor of Boston might be treating us with more respect now if we had been better in ~2000 at turning around, quick as quicksilver, and remaking ourselves into people who could scoop up all, or some, or even a tiny fraction of the return on investment of the innovation at which we were then, in a technical sense, well ahead of anyone else. But remaking yourself is not easy! Especially when you realize that the state from which we were remaking ourselves was sort of like the Marines – a somewhat ascetic state, one that gave you the nerd equivalent of military rations, a tent, maybe a shower every two weeks, and no training in any immediately salable skills whatsoever – but also one that also gave you a community, an identity, a purpose, a sense of who you were that you never expected to change. But all of a sudden we “won,” and all of a sudden there was a tremendous pressure to change. It was like being thrown in the deep end of the pool without swim lessons, and yes we sank, we sank like a stone with barely a dog paddle before making a beeline for the bottom. So we get no respect now. But was this a reasonable thing to expect? What does the mayor of Boston really want? Yes, the sense in which Boston is a Hub of Innovation (for it already is one, it is silly for it to try to become what it already is!) is problematic and not exactly what a Mayor would wish for. I understand his frustration. But I think he would do better to work with his city for what it is, in all its problematic incompetence and glory, than to try to remake it in the image of something else it is not.

Rebecca: On the subject of Problematic Innovators, I was thinking back to the scene in the computer lab where everyone agreed that hoarding domain names was the dumbest idea they had ever heard of. I’m arguing that scooping up return on the investment in innovation was hard, but registering a domain name is the easiest thing in the world. I think they were free back then, even. If I remember right, they started out free, and then Procter & Gamble registered en-mass every name that had even the vaguest entomological relation with the idea of “soap,” at which point the administrators of the system said “Oops!” and instituted registration fees to discourage that kind of behavior – which, of course, would have done little to deter P&G. They really do want to utterly own the concept of soap. (I find it amusing that P&G was the first at bat in the domain name scramble – they are not exactly the world’s image of a cutting-edge tech-savvy company – but when it comes to the problem of marketing soap, they quietly dominate.)

How can I can explain that we were not able to expend even the utterly minimal effort in capturing the return on investment in innovation of registering a free domain name, so as to keep the resulting tax revenues in Massachusetts?

Thinking back on it, I don’t think it was either incapacity, or lack of foresight, or a will to fail in our duty as Boston and Massachusetts taxpayers. It was something else: it was almost a “semper fidelis”-like group spirit that made it seem dishonorable to hoard a domain name that someone else might want, just to profit from it later. Now one might ask, why should you refrain from hoarding it sooner just so that someone else could grab it and hoard it later? That kind of honor doesn’t accomplish anything for anyone!

But you have to realize, this was right at the beginning, when the domain name system was brand new and it wasn’t at all clear it would be adopted. These were the people who were trying to convince the world to accept this system they had designed and whose adoption they fervently desired. In that situation, honor did make a difference. It wouldn’t look good to ask the world to accept a naming system with all the good names already taken. You actually noticed back then when something (like “soap”) got taken – the question wasn’t what was available, the question was what was taken, and by whom. You’d think it wouldn’t hurt too much to take one cool name: recently I heard that someone got a $38 million offer for “cool.com.” That’s a lot of money! – would it have hurt that much to offer the world a system with all the names available except, you know, one cool one? But there was a group spirit that was quite worried that once you started down that slope, who knew where it would lead?

There were other aspects of infrastructure, deeper down, harder to talk about, where this group ethos was even more critical. You can game an infrastructure to make it easier to personally profit from it – but it hurts the infrastructure itself to do that. So there was a vehement group discipline that maintained a will to fight any such urge to diminish the value of the infrastructure for individual profit.

This partly explains why we were not able, when the time came, to turn around, quick as quicksilver, and scoop up the big profits. To do that would have meant changing, not only what we were good at, but what we thought was right.

When I think back, I wonder, why people weren’t more scared? When we chose not to register “cool.com” or similar names, why didn’t we think, life is hard, the future is uncertain, and money does really make a difference in what you can do? I think this group ethic was only possible because there was a certain confidence – the group felt itself party to a deal: in return for being who we are, the government would take care of us, forever. Not until the time when the product achieved sufficient product/market fit that it became appropriate to expect return on investment. Forever.

This story might give a different perspective on why it hurts when the Mayor of Boston announces that he wants to make the city a Hub of Innovation. The innovators he already has are chopped liver? Well, its understandable that he isn’t too pleased with the innovators in this story, because they aren’t exactly a tax base. But that is the diametric opposition of the deal with the government we thought we had.

#entrepreneurship #startup #founders #entrepreneur

[americanlibertypac]

Is the Fed deadly, lifesaving, or just useless?

Image: CC0

To read (and agree with) Danielle DiMartino Booth’s Fed Up is to believe that the Fed centrally plans nearly every economic outcome, and that the problem with our central bank today isn’t its intervention in the economy as much as those in its employ are the wrong people to intervene in the natural workings of the marketplace. Advertised as yet another anti-Fed book, the real goal of the book is to make you believe it is the most indispensable institution in government today.

If we ignore Booth’s weak economic analysis, her overstating of the Fed’s power by a mile, and her awe-inspiring self-regard whereby she regularly sees into the future in ways that would humble the world’s greatest investors, we can’t ignore that she learned all the wrong lessons from her time as a researcher at the Dallas Fed. Booth thinks the Fed is necessary, but only if people like her are running it.

A scary thought indeed.

“Damn Ron Paul,” writes Booth. “The congressman’s 2009 book End the Fed called the bank corrupt and unconstitutional and urged its abolition. Though Paul made some good points, America is not a banana republic. It needs a strong and independent central bank.”

She speaks as a former researcher at the Dallas Fed, and Fed Up is her Cliff’s Notes history of the central bank, an economic argument in between, and a memoir of her time on both Wall Street and in the bank’s employ.

Booth doesn’t succeed in making a case that the Fed is necessary. Precisely because we’re not a banana republic, we don’t need a central bank acting as lender of last resort to insolvent banks (solvent ones don’t need the Fed), regulator of the banking system (if Fed officials could reliably detect future trouble spots they wouldn’t work at the central bank), or as planner of an overnight borrowing rate that is a price like any other.

Though I’ve argued that the belief that the Fed is the source of myriad U.S. economic ills doesn’t stand up to basic scrutiny, neither does Booth’s argument that its existence is good for the economy, or that it’s necessary.

The Fed Is Useless

Much more than the Fed’s critics and supporters would like us to believe, the Fed quite simply isn’t that relevant. It deals with massively overregulated and antiquated banks that represent a small – and declining (15%) – percentage of total credit in the U.S. economy, not to mention that banks are easily the least dynamic source of credit for what is the most dynamic economy in the world.

As for the popular notion that the Fed creates credit, let’s be serious. The pursuit of credit isn’t the pursuit of dollars created by the Fed as much as it’s the pursuit of real resources like trucks, tractors, computers, desks, chairs, buildings, labor, etc. The Fed can’t create, increase, or shrink what borrowers of dollars are in need of as much as it can distort the direction of credit.

Booth thinks that the Fed is “the most important, powerful institution in the world,” but spends much of the book pointing to the incompetence of the economists in the middle and at the top of the central bank. Ok, but incompetence combined with world-leading power would logically signal a “banana republic” U.S. economy, as opposed to the world’s largest. If the Fed mattered and were as powerful as Booth presumes, the U.S. economy wouldn’t matter. But it does.

Booth’s story succeeds insofar as she provides nice tidbits of information throughout, but it’s overly self-regarding as a memoir, weak as a document meant to provide economic analysis, and then it makes grand statements throughout that are never proven. A book that is at times entertaining is unlikely to change the central-banking discussion one way or the other.

Economic Growth Does Not Cause Inflation

This analysis comes from a writer who wholeheartedly agrees with Booth that the Fed’s economists are impressive in their witlessness. We’re talking about economists who believe, despite voluminous evidence, that economic growth causes inflation. Booth references former British chancellor of the exchequer Geoffrey Howe’s brilliant assertion that an economist is a “man who knows 364 ways of making love but doesn’t know any women” to make her point that the economists in the Fed’s employ have lots of theories; theories bereft of practical reality.

She adds that Fed economists aren’t ever fired. So true. The Fed is a full employment act for insight-bereft individuals with PhDs next to their name, but that’s where she should stop. The problem is that Booth believes the Fed would make sense were its staffers more in touch with reality (presumably like her), if they’d ever worked in the private sector (as she has), if they ever watched CNBC (as she does with great regularity), and if copies of the Financial Times didn’t sit unread inside the walls of the central bank.

Again, she’s right about the incompetence at the Fed, but her belief that the right people could make the Fed useful amounts to a fatal conceit that doesn’t stand up to scrutiny any more than Paul’s view that the Fed is behind much of what weakens the U.S. economically. Why would anyone take seriously that which channels its influence through that which is dying (the U.S. banking system)? Booth has no answer, but in fairness to her, there’s no book and little media attention if she acknowledges that the Fed’s always overstated importance is in rapid decline.

As mentioned previously, Booth doesn’t lack in the self-regard department. Fed Up, while ostensibly a short story about America’s central bank in the 21st century, is very much Booth’s personal story. And as the author of her own story, Booth manages to always position herself on the right side of history; the seer extraordinaire whose vision and common sense causes her to see ‘around the corner’ in ways that would make her the envy of the world’s most skilled investors.

Why Is She Always Right?

While working on Wall Street from the late 90s to the early part of the 2000s, when excitement about internet stocks reached its peak, Booth writes that “I didn’t encourage my clients to ride the NASDAQ wave and never steered them into stuff that would have torpedoed their assets.” When presented with the option to purchase “unregulated” (Booth attacks the idea of deregulation as unwise throughout the book) CDOs for clients in January of 2001, the always ahead of the curve Booth, able to see the difference between “money good” and lousy debt security tranches within the CDOs, asked “Who would buy this crap?”

After leaving Wall Street for the Dallas Morning News, Booth reports that then Dallas Fed President Richard Fisher, seemingly wowed by her reporting, called to tell her “You should be writing for the Wall Street Journal. You could be a Jon Hilsenrath or Greg Ip.”  About the rush into housing in the 2000s, the always future-seeing Booth notes that “by August 2003, I was truly alarmed.” Fast forward to 2006, Booth references “two back-to-back columns I wrote in March 2006 about escalating systemic risk make it appear that I had psychic powers.”

With the Dallas Fed’s research head Harvey Rosenblum plainly blown away by Booth’s vision, her logical next step would be to join the Fed itself. As Booth describes it, Rosenblum “was reading my stories and saying, ‘My God, what if she’s right?’” Of course, Booth, ever eager to save a world blind to what was obvious to her, decided to “serve my country” by taking a job at the Fed’s Dallas branch in research.

And as readers can probably imagine, her departure from the Dallas Morning News naturally led to an “avalanche of e-mails from readers” praising her vision that “was humbling.” Even a former critic, the “Linoleum Lady,” had to admit that Booth was right about housing, but figure the world beyond Dallas awaited her insights since she, quite unlike anyone at the Fed (and most investors apparently, too), could see that “the worst financial crisis since the Great Depression was about to break over their heads…”

She Was Not Alone

About all this, no doubt Booth could produce the columns and diary entries revealing her uneasiness. But then she was hardly alone in the 2000s. Most any investor or columnist could point to all manner of client letters and opinion pieces (including this writer) indicating something amiss; the difference is that most don’t position themselves as seers in the way that Booth does. The bigger problem is that her economic analysis doesn’t stand up to what she claims to have known before those around her.

Figure that the Great Depression, despite the protests of Ben Bernanke and Booth (Booth writes of the Fed’s “mishandling of that tragic period”), was not financial. Lest we forget, the Fed’s rather slim mandate as of the 1930s was as lender of last resort to solvent banks with quality assets in need of near-term cash. The problem is that solvent banks in the 30s were just that.

If the Fed had acted in support of insolvent banks, it would have caused a greater “financial crisis” for the central bank by propping up what should have logically been allowed to fail. The banking system is weaker in modern times precisely because the Fed’s mandate changed to reflect the truth that solvent banks don’t need the Fed. It exists to aid those institutions that market lenders have properly left for dead.

The Fed’s non-action in the 30s was correct. The Fed couldn’t have boosted “money supply” in weakened areas even on its very best day. Money, and the resources exchangeable for money, always migrates to where there’s productivity and migrates away from where productivity is undetectable. No amount of Fed meddling can change that. Booth is peddling a commonly accepted, but logically false history about the Fed during the Great Depression.

Failure Is a Feature

Booth’s implicit assertion that the eventual failure of mortgage loans and banks caused a crisis is misguided. Failure is a feature of any capitalist system, not a bug. This goes for financial institutions as well. Despite what economists would like us to believe, banks and investment banks are hardly unique or sacred. They can fail and should be allowed to fail with the health of both sectors very much in mind.

A lack of failure, on the other hand, would be real economic “crisis” as it would signal horrid stagnation. Absent the allowance of errors that cause poor stewards of limited resources to be relieved of their ability to misuse them, life would be marked by unrelenting drudgery. Failure is as essential to progress as success is, simply because the former ensures that misallocated capital will be redirected in short order to a higher use.

Absent the intervention of central banks and governments in 2008 to blunt the impact of what was healthy, there quite simply is no crisis. The crises of the 30s and ’08 weren’t financial as much as they were a creation of government getting in the way of what was necessary for the U.S. economy to rebound.

Economies gain strength from periods of weakness, and the Great Depression, like the slow-growth aftermath of 2008, was a creation of government intervention. Recessions signal the boom on the way, but in both instances, legislators and central bankers (in ’08, not the 30s) wasted resources taken from the private sector to block the cleansing necessary for a raging rebound.

The problem is that Booth is convinced that bank failure is what caused 2008, as opposed to it being an effect of previous policy error. Her solution is more regulation. While she never supports her assertion midway through Fed Up that “shadow banking is what caused the financial crisis of 2008,” her vague and oft-stated solution is more government oversight. Seemingly lost on the author is that “shadow banking” is a logical effect of a financial and banking sector suffocated by the very regulation she deems wise.

Regulation Can’t Work

Booth wants to bring back a “modern-day version of the Glass-Steagall Act” given her view that regulators should “leave the gambling to the investment banks, and call it a day.” An empty proposal if there ever was one. If we ignore how much such a regulation would weaken U.S. banks forced to compete in a global economy with banks not shackled by what makes no sense, we can’t ignore that it wasn’t investment banking practices that caused banking’s troubles in the 2000s.

By her own admission, a rush of housing debt was the problem, but banks have always been a part of the housing loan market. Furthermore, and as banking history makes very clear, allegedly vanilla lending has time after time proven the industry’s Achilles Heel. Goodness, inside sources at the Fed have told me that the central bank has bailed out Citigroup alone five times in the last twenty-five years. The solution is more failure in a free marketplace, as opposed to symbolic moves like a modern Glass-Steagall that wouldn’t even be symbolic when we consider how it would suffocate banks already struggling to compete in a world of low margins.

Regarding the slow-growth rush into housing that preceded the eventual correction, Booth asserts that Alan Greenspan’s Fed “blew another bubble” with a low Fed funds rate that led to a housing boom. In Booth’s defense, her analysis is broadly shared by most in the economics commentariat despite it being easy to disprove.

What Caused the Boom?

Indeed, a read of Sebastian Mallaby’s mostly weak and misanalyzed biography of Greenspan reveals that interest rates from the Fed were a sideshow when it came to the 21st-century housing boom. Booth felt she was bringing unique knowledge to the Greenspan Fed about what it was doing, but as Mallaby makes clear, Greenspan had seen this housing boom movie before in the 1970s, and it had nothing to do with the Fed’s target rate meant to influence the cost of overnight lending.

Mallaby writes that when Greenspan returned from the Gerald Ford administration to his Townsend-Greenspan economic consultancy in 1977, employee Kathryn Eickhoff “had been telling clients that a hot housing market was driving consumer spending: people were taking out second mortgages on their homes and using the proceeds to remodel their kitchens or purchase new cars, turbocharging the economy.” So while Eickhoff’s belief that housing consumption could drive economic growth was as wrongheaded in the 1970s as it was in the 2000s, her research is yet another reminder that the Fed’s low-rate policies had little to do with the housing boom of more recent vintage. We know this because the Fed’s funds rate was soaring in the 70s.

Interesting about all this is that when initially told of what his employee had been reporting to clients, the empiricist in Greenspan grumbled that Eickhoff failed to “get the data” to prove her argument. Greenspan proceeded to gather up the numbers only to admit to Eickhoff that she “had absolutely no idea of the size of this phenomenon.” We’ve once again seen the housing froth movie of the 2000s before; albeit in the 1970s when the Fed was aggressively hiking rates.

Gilder’s Take

Indeed, further on in his re-telling of the late 70s that Greenspan plainly saw, Mallaby writes that despite the fact that “the Fed had just increased the short-term interest rate to 9 percent….mortgages were still easy to come by and house prices were booming.”  Mallaby adds on the same page that “One decade earlier [in the 60s], new mortgage creation had seldom exceeded $15 billion per year. Now six times that quantity was normal.” Later on, Mallaby noted that “home prices had nearly tripled during the 1970s.”

The money quote regularly used by this reviewer to reveal conventional wisdom about the Fed and housing vitality as wanting comes care of George Gilder. Observing the 70s housing boom alongside a soaring Fed funds rate much as Greenspan did in his 1981 book Wealth and Poverty, Gilder wrote “What happened was that citizens speculated on their homes…Not only did their houses tend to rise in value about 20 percent faster than the price index, but with their small equity exposure they could gain higher percentage returns than all the but the most phenomenally lucky shareholders.”

The 70s reveal popular arguments about the Fed’s role in the slow-growth housing rush of the 2000s as wildly false. Not only does consumption of housing shrink economic growth (the latter the principal flaw in the Townsend-Greenspan thesis which said housing consumption was a stimulant), it soars for reasons unrelated to the central bank’s rate target. Getting into specifics, hard assets do well during periods of currency weakness. The U.S. Treasury devalued the dollar in both the 70s and 2000s. So while the Fed employed interest rate policies in the 2000s that were the exact opposite of how it operated in the 70s, the result was the same. The Fed was and is largely a sideshow when it comes to housing health (or lack thereof) despite what we’re frequently told.

Volcker Revisionism

All of which brings us to the dollar question. Historically inflation has been viewed as a devaluation of any currency; gold often used (or stable fiat currencies) as the objective measure of the currency’s decline. About this, it’s commonly believed that the Fed controls the dollar’s exchange rate. So while towards the book’s end Booth embraces the false notion that economic growth and rising incomes cause inflation (“You cannot force inflation higher if incomes aren’t rising”), earlier she properly alludes to it as a monetary, dollar concept. Booth writes that Paul Volcker is “widely regarded as one of the best Fed Chairman in history because he vanquished double-digit inflation (created by Burns [Fed Chairman Arthur]) during the 1980s.”  The problem here is that history doesn’t support her admittedly popular contention. Indeed, as Burns’ diaries reveal rather plainly, he begged President Nixon and his top advisers to not sever the dollar’s link to gold; the latter an implicit devaluation that gave us the 1970s inflation wrongly associated with Burns.

Taking this further, Volcker took over at the Fed in 1979, only to begin a failed three-year monetarist experiment whereby an always inept Fed would presume to plan economic growth by virtue of it vainly trying to plan “money supply.” Volcker’s timing is instructive simply because the dollar price of gold sat at roughly $260 when he began his alleged “tight money” experiment only for the dollar to plummet; gold hitting a then all-time high of $875 in January of 1980.

More than Fed critics and supporters would ever like to admit, and beyond the fact that the dollar’s exchange value is not a Fed function, history is clear that currency devaluation, stability, or rising currency values are more than anything a political concept. Figure that the Fed opened its doors in 1913, and the dollar generally held its value until 1933 when FDR, against the protests of Fed Chairman Eugene Meyer, devalued the dollar from the 1/20th of a gold ounce to 1/33rd. Meyer resigned over FDR’s decision.

Nixon, as mentioned, devalued the dollar in 1971 despite the protests of Burns. Ronald Reagan ran on a strong dollar, and perhaps surprising to some, Bill Clinton’s Treasury was the most pro-dollar of any since the greenback was floated in ’71. The dollar sank in value in the 2000s (thus a housing boom that mirrored the one that took place in the weak-dollar 70s), but this didn’t reflect a change in Fed policy (Greenspan was still running the show) as much as the Bush administration made plain its preference for a weak dollar.

Debasing the Money

Nowadays Fed officials wrongly define inflation as too much growth, but if analyzed by its traditional definition of currency devaluation, the Fed’s inflation role since 1913 is greatly oversold. All that, plus there were substantial devaluations of the dollar in the 19th century despite the lack of a central bank. The dollar is once again a political concept, and the existence of a central bank is not required for it to be debased.

What about quantitative easing (QE) and a zero funds rate from the Fed? Booth takes the latter literally and suggests that in pushing the overnight borrowing rate down to zero, the Fed magically gave us “cheap money.” Supposedly this was especially great for “Wall Street” despite the fact that staffing in finance is still below 1990s levels; levels artificially higher today than they otherwise would be thanks to a surge in compliance officers within suffocated financial institutions.

Wall Street has historically prospered precisely because credit is never cheap in the real world. Booth fancies herself as in touch with reality, so the “cheap money” commentary signaled to this reviewer the excess influence of an editor eager to create an ‘us vs. them’ memoir. Again, in the real world credit is always difficult to attain.

In Hollywood, even the best movie producers have their requests for credit to make films turned down 90 percent of the time. In Silicon Valley credit is so expensive that start-up visionaries must give up a big portion of their business to venture capitalists in order to attain credit, only for them to give up even more of the business in the form of stock options to lure quality employees.

On Wall Street, investment bankers are paid well precisely because credit is so hard to find for even blue chip businesses. Goodness, even Apple, the most valuable company in the world, pays 3 percent to borrow. “Cheap money” is a fun concept, but it’s not real. This reviewer believes Booth intuitively knows the latter is true.

Is the Fed Fueling the Boom?

And perhaps unsurprisingly given her fairly conventional critique of the Fed, Booth promotes the popular notion that modern Fed policies “have fueled skyrocketing valuations across the full spectrum of asset classes.” Despite her correct analysis of a central bank populated by the inept, she asserts that monetary engineering by these same incompetents tricked the most sophisticated investors in the world (according to Booth, the common investor is out of the market thanks to the ‘little guy’ having been tricked too many times) into an “increasingly desperate search for yield.” Booth ultimately concludes that “As long as the Fed kept its QE machine up and running, the markets were pleased.” In Booth’s defense yet again, what she writes about the markets is what is regularly asserted. But is it true? A basic analysis says no.

According to Booth, thanks to quantitative easing “investors would party, under the assumption that the Fed had their backs.” Somehow a collection of witless economists channeling the Fed’s influence through anachronistic banks could stimulate an impressive, 200%+ rally? Let’s unpack this.

If what Booth writes is true, why is the Japanese stock market still half of what it was in the late 1980s despite at least eleven doses of QE by the Bank of Japan (BOJ) ever since? Booth might reply that low-interest rates made the U.S. rally inevitable, but Japan’s story stands in the way of what makes little sense in the first place. Figure that the BOJ was at zero for years and years, Japanese rates across the yield curve were much lower than they were in the U.S., but with no corresponding equity rally. Ok, but with rates on Treasuries and high-grade corporates so low, doesn’t logic dictate a rush into equities and a “desperate search for yield”?

It’s a nice theory, but if true then it’s also true that there would have been a correction in Treasuries and high-grade corporates to reflect a rotation out of low-yielding bonds and into stocks. But it never occurred; the major correction occurred years into the rally, and after the election of Donald Trump. But wasn’t the Fed printing trillions that had to find a home? There’s debate about the latter, but even if true, for $4 trillion to enter the stock market, $4 trillion must exit by definition. For every buyer there’s a seller, so for every QE optimistic buyer to express that optimism, a QE skeptic must be able to express an equal amount of pessimism.

But the main truth that Booth’s commonly stated argument ignores is that just as economies gain essential strength from periods of weakness when bad ideas, bad habits, bad investments and bad businesses are cleansed from the economy on the way to a rebound, so is this true with equity markets. It’s when markets are correcting that investors are starving bad and marginal companies of investment, only to direct precious resources to better companies.

In short, even if Booth’s widely shared theory is true, it only serves to remind us that by acting at all the Fed robbed us of what would have been a much bigger market rally had it simply done nothing. Of course, the QE/market theory isn’t true, and even Booth alludes to it. As she notes on p. 160 of Fed Up, “The Fed was following the Bank of Japan into territory that, so far, hadn’t worked for them.”

Well, of course it didn’t. Not only is the power of central banks vastly overrated, even if they could artificially create equity rallies the damage would be fairly immediate owing to massive amounts of precious capital remaining lodged in the hands of the imprudent. Investors would correct what is economically harmful in short order.

Not Entirely Without Merit

So while there’s much to criticize about Fed Up, Booth tells an interesting story. Her writing is entertaining, if at times a little (“I felt a knot as big as one of my Italian grandmother’s meatballs lodged in my gut”) over the top and profane. Readers will find lots of good information if they’re willing to look.

For instance, the “$10 bill has the shortest life span, surviving only a little over 4.5 years before it must be replaced.” $100 bills, according to Booth, last over 15 years, while coins stay in circulation for decades.

Booth has unearthed a letter “published in the Times of London on March 30, 1981, signed by 364 prominent economists, [which] predicted that Margaret Thatcher’s stringent fiscal policies would be disastrous.”! This reader will be using that gem for years and years!

While each resists the notion that they were bailed out, Booth notes that Morgan Stanley and Goldman Sachs both regularly borrowed from the Fed from March of 2008 to March of 2009. It seems Morgan Stanley borrowed overnight 212 times, while Goldman did so 84 times for a total of $600 billion.

Yellen the Ridiculous

And then her various quotes from Janet Yellen are positively priceless. There are too many to list, but in 2007 Yellen, the allegedly great forecaster, said, “I think the prospects for a really serious housing collapse that spreads to consumer spending have diminished substantially.”

Booth rightly has little respect for Yellen, and about the Fed Chairman, she also unearths the sad truth that Yellen and her husband (Nobel Laureate George Akerlof) generally agree on everything economic. This alone is terrifying for anyone who has ever read the 2015 book Akerlof co-authored with Robert Shiller, Phishing for Phools. It would be hard to find a greater modern indictment of the economics profession than this insight-free, most worthless of books.

Can the Fed Unfreeze the Frozen?

Of course, all of this speaks to the broad truth glossed over by Booth that, while the Fed is once again staffed with economists who aren’t in any way troubled by common sense, they don’t have that much power. If they did, the U.S. economy would be a basket case. But Booth is convinced that the U.S. economy is a basket case despite the fact that more of the world’s plenty is directed to the U.S. than any other country.

That the latter is true, that the businesses of the world fight aggressively to attain U.S. market share, calls into question Booth’s Trumpian argument about carnage, but she spends the early part of the book vainly painting a picture of Dickensian American suffering that’s belied by the incessant desire of the world’s poorest to get to the United States. For Booth to be correct about American economic agony, the rest of the world must be stupid. This is doubtful. But that’s her take. Her economic analysis does Fed Up no favors.

According to Booth, the Fed has the U.S. economy “frozen in motion.” Really? The Fed that deals with banks which by her own admission are being worked around by the “shadow banking” system? If frozen in motion, why does the world continue to ship us so much? Booth can suggest “cheap money,” but according to her, only Wall Street has access to the Fed’s “cheap money.”

Booth writes that the Fed’s “high interest rates in the 1980s killed” Erie, PA’s “steel and auto industries.” Ok, but in the first third of the 20th century, New York City and Los Angeles ranked 1st and 4th in the U.S. as manufacturing locales. They’re not anymore, but are they both poor like Erie? Did the Fed have it in solely for the formerly robust Pennsylvania town, or are Erie’s troubles unrelated to the Fed and more a function of a town that didn’t evolve as others did?

Booth laments the situation of millennials apparently made worse by the Fed and writes that “Nearly half of males and 36 percent of females age eighteen to thirty-four live with their parents, the highest level since the 1940s.” Interesting stuff, but last this reviewer read, every major hotel chain is starting up all new brands to appeal to millennial tastes. Are the hotel companies blind to the economic chances of the millennials in ways that Booth isn’t?

The Fed once again deals with banks, but banks are increasingly losing market share in the mortgage market. Despite this truth, Booth claims that Fed machinations are “killing the move-up housing market.” Long-term investment? According to Booth, the all-powerful Fed has “pulled the plug.” The latter might interest investors in Silicon Valley who regularly back start-ups that history says have a 90 percent chance of failure.

The Fed Can’t Manage Anything

All of her economic analysis speaks to the biggest problem with Fed Up: nearly every word written by her about the central bank reveals a presumption that it’s the Fed’s job to manage the economy. But it’s not. Thank goodness it’s not. And Booth knows why. The economists at the Fed wouldn’t have a clue about how to manage anything, but the greater point is that no human, or collection of humans, could manage the economy. That this includes the plainly talented and world-wise Booth should in no way be construed as an insult to the author.

Still, as mentioned at this review’s beginning, Booth doesn’t call for ending what serves no useful purpose. Booth thinks the Fed necessary. Because she does, her reform solution is that the Fed should get a spending increase from Congress in order to “Hire brilliant people” (presumably like her) to run it. In proposing this, Booth reveals that she learned less than she thinks during her time at the Fed.

By her analysis the Fed’s problem is that there aren’t enough people from the real world in its employ, but as former trader Nick Kokonas (firmly entrenched in the real world as an owner of numerous restaurants helmed by master chef Grant Achatz) explained about trading in a 2012 book he co-authored with Achatz (Life, On the Line), “If you are good, 49 percent of your decisions will be wrong. Even if you are great, something just short of a majority will be losers.”

Kokonas helpfully revealed that even the truly talented err with great frequency. This basic truth has seemingly eluded Booth on the way to the mistaken belief that what makes no sense can be fixed through reforms of her liking. No. Contrary to what Booth believes, the Fed’s problem isn’t about personnel as much as the fact interventions in the natural workings of the marketplace never work.

Better Off Without

It’s likely true that Booth can run circles around Fed economists when it comes to common sense, but as a human being, she’s still fallible. So is everyone. In the real world, we’re wrong all the time. What it comes down to is that the Fed’s problem is not the people as much as the problem is intervention itself by the humans who staff the central bank. Though the Fed’s power is thankfully overstated, what Booth misses is that we don’t need the Fed at all. We’d be better off without it, but somehow that lesson didn’t sink in during her decade on the inside.

Early in Fed Up, but just after she’d begun working at the Dallas Fed, Booth expressed surprise about Wall Street fascination with the Federal Reserve. She asked herself “Did they know people on the FOMC were mere mortals?” That’s how she might have been advised to end her book. These people are mortals, highly fallible ones at that. But so is Danielle DiMartino Booth mortal. Reform of the Fed won’t alter this reality, and it won’t alter the truth that no matter who is in charge, the Fed’s existence will never add to the economy, but it may sometimes bring damage to it.

John Tamny

John Tamny is a Forbes contributor, editor of RealClearMarkets, a senior fellow in economics at Reason, and a senior economic adviser to Toreador Research & Trading. He’s the author of the 2016 book Who Needs the Fed? (Encounter), along with Popular Economics (Regnery Publishing, 2015).

This article was originally published on FEE.org. Read the original article.

#Big Government #Federal Reserve #Regulations