Covid Loan Programs Passed by Congress Were “Comically Easy to Scam”

In a WSJ op-ed, I tell how a fraudster received a $42,200 Covid-19 Economic Injury Disaster Loan in my name for an alleged “Arthur M.D. Potato Farm.” As discussed in the NYT passages quoted below, there was also massive fraud in other related Congress-funded Small Business Administration Covid boondoggle programs. The NYT article blames the Trump Administration, but in my struggle to clear up the potato farm fraud case, a S.B.A. official told me that the Congress in 2020 put enormous pressure on the S.B.A. to get the money out the door as quickly as possible. The House of Representatives, which takes the lead in spending legislation, was controlled by the Democratic Party.

In the passages quoted below, “P.P.P.” means “Paycheck Protection Program” and “E.I.D.L.” means “Economic Injury Disaster Loan.”

(p. B4) An emergency relief program hastily rolled out in the early days of the pandemic had such poor fraud protections that it improperly doled out nearly $4.5 billion to self-employed people who said they had additional workers — even those who made wildly implausible claims, like having one million employees.

The $20 billion program, called the Economic Injury Disaster Loan Advance, offered small businesses immediate grants of up to $10,000 in the months after the pandemic shuttered much of the economy. But hundreds of thousands of the grants it made were inflated because there was no system to catch applications with “flawed or illogical information,” Hannibal Ware, the Small Business Administration’s inspector general, wrote in a report released on Thursday [Oct. 7, 2021].

. . .

. . . the S.B.A. skipped an obvious safeguard: It did not require sole proprietors claiming to have employees to enter their Employer Identification Number, instead allowing them to use their Social Security numbers.

. . .

Some of the claims were outright absurd. Hundreds of applicants received the maximum grants after saying that they employed more than 500 workers, a number that would generally make them ineligible for the small business program. Fifteen said they had one million employees — a figure that would put them in league with Amazon and Walmart.

The Small Business Administration “never requested additional information from these sole proprietors to verify the number of employees cited on their grant applications before approving and disbursing the grants,” Mr. Ware said in his report.

. . .

. . . a Bloomberg article last year described how almost comically easy it was to scam the system. It cited how-to videos that circulated on YouTube with titles like “$10k SBA Loans & GRANTS Got The STREETS Going CRAZY!”

. . .

The Justice Department has already prosecuted hundreds of cases involving fraudulent claims across the government’s $1 trillion small business pandemic relief programs, reclaiming more than $600 million.

But that is only a sliver of the amount lost to bogus claims. A March memo by the House Select Subcommittee on the Coronavirus Crisis identified an estimated $84 billion in suspected fraud in the P.P.P. and E.I.D.L. programs after the Trump administration “refused to implement basic controls.”

Mr. Ware told a House committee in April [2021] that his office had opened more than 400 cases involving the agency’s assorted relief programs.

“Fraud investigations will be a decades-long effort,” he said.

For the full story see:

Stacy Cowley. “S.B.A. Paid $4.5 Billion on Bogus Grant Claims.” The New York Times (Friday, October 8, 2021 [sic]): B4.

(Note: ellipses, bracketed date, and bracketed year, added.)

(Note: the online version of the story has the date Oct. 7, 2021 [sic], and has the title “S.B.A. Overpaid $4.5 Billion on ‘Illogical’ Small Business Grant Claims.”)

Dogs Pass a Smell Test–Locating Ancient Buried Human Remains

(p. D1) On a sunny summer day in Croatia several years ago, an archaeologist and two dog handlers watched as two dogs, one after another, slowly worked their way across the rocky top of a wind-scoured ridge overlooking the Adriatic Sea.

. . .

Panda, a Belgian Malinois with a “sensitive nose,” according to her handler, Andrea Pintar, had begun exploring the circular leftovers of a tomb when she suddenly froze, her nose pointed toward a stone burial chest. This was her signal that she had located the scent of human remains.

Ms. Pintar said the hair on her arms rose. “I was skeptical, and I was like, ‘She is kidding me,’” she recalled thinking about her dog that day.

Archaeologists had found fragments of human bone and teeth in the chest, but these had been removed months earlier for analysis and radiocarbon dating. All that was left was a bit of dirt, the stone slabs of the tomb and the cracked limestone of the ridge.

. . .

(p. D6) . . . the experiment in Croatia marked the start of one of the most careful inquiries yet carried out of an unusual archaeological method. If such dogs could successfully locate the burial sites of mass executions, dating from World War II through the conflicts in the Balkans in the 1990s, might they be effective in helping archaeologists find truly ancient burials?

. . .

That “test run” was the beginning of a careful study on whether human-remains detection dogs could be an asset to archaeologists. Setting up a controlled study was difficult. Dr. Glavaš had to learn the scientific literature, such as scent theory, far outside the standard confines of archaeology; the same was true for Ms. Pintar and the field of archaeology.

. . .

“I think dogs are really capable of this, but I think it’s a logistical challenge,” said Adee Schoon, a scent-detection-animal expert from the Netherlands who was not involved in the study. “It’s not something you can replicate again and again. It’s hard to train.”

And, as Dr. Schoon noted, dogs are “great anomaly detectors.” Something as subtle as recently disturbed soil can elicit a false alert from a dog that is not rigorously trained.

Nonetheless, the team returned to the necropolis for the first controlled tests in September 2015, and again a full year later. Both times, they used all four of Ms. Pintar and Mr. Nikolić’s cadaver dogs: Panda, Mali, a third Belgian Malinois and a German shepherd. They worked them on both known and double-blind searches, in areas where nobody knew if tombs were located.

The dogs located four tombs new to the archaeologists. Dr. Glavaš had suspected that a fifth site might hold a burial chest, and the dogs’ alerts, combined with excavation, proved her suspicion correct.

In September 2019, the Journal of Archaeological Method and Theory published the results of their study: “This research has demonstrated that HRD dogs are able to detect very small amounts of specific human decomposition odor as well as to indicate to considerably older burials than previously assumed,” Dr. Glavaš and Ms. Pintar wrote.

Dr. Schoon, who researches and helps create protocols to train scent-detection animals worldwide, said the Iron Age necropolis study was nicely designed and “really controlled.”

. . .

Cadaver dogs are also helping archaeologists at some especially challenging sites. Mike Russo and Jeff Shanks, archaeologists with the National Park Service’s Southeast Archeological Center, had created at least 14 test holes near a promising site in northwest Florida that had been flattened during an earlier era of less diligent archaeology. They found nothing.

“We knew where it should be, but when we went there, there was absolutely no mound,” Mr. Russo said.

They then asked Suzi Goodhope, a longtime cadaver-dog handler in Florida, to bring her experienced detection dog, Shiraz, a Belgian Malinois, to the site in 2013. Shiraz and Ms. Goodhope worked the flat, brushy area for a long time. Then, Shiraz sat. Once.

“I was pretty skeptical,” Mr. Shanks said.

Nonetheless, the archaeologists dug. And dug. They went down nearly three feet — and there they found a human toe bone more than 1,300 years old.

Passing sniff tests

What is the future of using human-remains detection dogs as a noninvasive tool in archaeology?

Some archaeologists, forensic anthropologists, geologists, scientists — and even H.R.D. dog handlers who know how challenging the work is — say they have great potential. But challenges abound.

Although researchers are learning ever more about the canine olfactory system, they are still trying to pinpoint what volatile organic compounds in human remains are significant to trained dogs.

. . .

Detection dogs also must be trained for archaeology with more consistency. Often humans are the limiting factor. Sometimes, Dr. Schoon said, she can almost see a dog thinking, “Is that all you want me to do? I can do much more!”

For the full story see:

Cat Warren. “Sniffing Out New (Old) Digs.” The New York Times (Tuesday, May 19, 2020 [sic]): D1 & D6.

(Note: ellipses added.)

(Note: the online version of the story was updated May 25, 2020 [sic], and has the title “When Cadaver Dogs Pick Up a Scent, Archaeologists Find Where to Dig.”)

The academic article documenting that dogs are able use their hypercapable noses to smell ancient human remains is:

Glavaš, Vedrana, and Andrea Pintar. “Human Remains Detection Dogs as a New Prospecting Method in Archaeology.” Journal of Archaeological Method and Theory 26, no. 3 (Sept. 2019): 1106-24.

Rationality-Defender Stigler Saw Voting as Irrational, but Did It Anyway

Nobel Prize winner George Stigler contributed to the Public Choice literature and was a staunch defender of rationality. One example would be his paper with Gary Becker, “De Gustibus Non Est Disputandum.” One popular, much discussed conclusion of some public choice theorists is that it is irrational to vote. The argument goes that the marginal effect of one vote is almost always miniscule, so the expected benefit to the voter is equally miniscule. On the other hand, the time and effort it takes to vote are always more than miniscule. So the expected costs of voting exceed the expected benefits. Ergo it is irrational to vote. When I was a graduate student, taking courses in philosophy and economics, and for a couple of years as a post-doctoral fellow, I frequently stopped by the office of the Journal of Political Economy where Stigler was an editor. I believe it was there that I heard Stigler, definitely on an election day, say “Here I go to do something irrational.”

Stigler is well-known for his humorous biting comments. These could be tough on others. But this story shows that they also could be directed at himself.

I do not know if anyone has fully solved the paradox of the irrationality of voting. I guess you would have to say something about how the effects of all good people ceasing to vote would be far from marginal and far from good.

I once mentioned to distinguished Public Choice theorist Dwight Lee that a positive result of the personal benefits of voting being miniscule to a voter, is that the voter was freed from voting their personal narrow self-interest, and could vote their conscience about what served the general good. (Maybe something like what Rawls hoped for behind his “veil of ignorance” in A Theory of Justice.) I believe that Dwight told me that he already published a paper that expressed this positive result, but I never took the time to look for that paper.

Refrigeration Preserves Three-Quarters of Food Americans Eat

(p. 10) Consider the improbable fact of the supermarket banana. In “Frostbite,” an exploration of the vast system known as the cold chain, the journalist Nicola Twilley follows the banana through a “seamless network of thermal control.” This series of refrigerated trucks, rail cars, shipping containers and warehouses ends in the ripening room, with its temperature gauges and gas immersion baths, all to meet our demand for ripe tropical fruit in all seasons. “Produce is a labor of love,” a warehouse owner tells her. “I tell people that working here is like a face tattoo — you’ve got to be really sure you want it.”

Twilley is a food and health reporter who has studied cold and refrigeration for many years.

. . .

The home refrigerator is barely a century old. Twilley is shown how simple it is to build one, and then tells us just why it took so long to figure out. Early efforts were bent toward making ice with giant and dangerous machinery; breakthroughs in the use of vacuum pumps and compressors “cut out the middleman” of the ice itself.

. . .

One story leads into another. A technology invented to dry photographic film at Eastman Kodak led first to the extraction of fish oil and, eventually, bagged salad.

. . .

. . .; I found this book hard to put down. The startling statistics — the cold chain preserves almost three-quarters of the food Americans eat; American households open the fridge door an average of 107 times a day — separate tales of unsung scientists. We meet the self-taught engineer Fred Jones, who invented the first mobile mechanical refrigeration unit, expanding the speed and size of the cold chain. Twilley also introduces the physicist Barbara Pratt, who perfected the refrigerated shipping container by traveling the world in one.

For the full review see:

Sallie Tisdale. “Freeze Frame.” The New York Times Book Review (Sunday, August 4, 2024): 9.

(Note: ellipses added.)

(Note: the online version of the review has the date June 24, 2024, and has the title “Have Refrigerators Spoiled Everything?”)

The book under review is:

Twilley, Nicola. Frostbite: How Refrigeration Changed Our Food, Our Planet, and Ourselves. New York: Penguin Press, 2024.

Milton Friedman Bubbled with Energy as He Grabbed His Sunday New York Times

During my first year in graduate school at the University of Chicago, I lived in a dorm for graduate students that had been built with money from John D. Rockefeller. It was next to a several story apartment tower that I had heard was built by Milton Friedman who owned and lived in the top apartment. On Sunday mornings, on more than one occasion, I remember Friedman used to bounce down the hallway of International House and go up to the mail counter, which always had a pile of The Sunday New York Times for sale. He would buy one, and bounce back down the hallway. Friedman was curious, energetic, optimistic, and engaged in the broad world of policy. A libertarian who wants to move the intellectual consensus, benefits from reading The New York Times.

$700 Million Deployed for Harris by an “Elusive” Expert on Randomized Clinical-Trials

“The biggest super PAC in American politics” (p. 1) is spending $700 million on ads to elect Harris, more than the combined expenditures of both the official campaign of Harris and the official campaign of Trump (p. 1). “Leading the group” (p. 19) is an “elusive” PhD named Chauncy McLean, who has “ascended in the party by displaying encyclopedic knowledge of randomized controlled-trials” (p. 19). If Harris wins will that be more due to her overwhelming advantage in funding or more due to the methods used to spend the funds? (Or will the results depend more on how much Americans remember the record of Trump compared to how much they remember the record of Biden-Harris?)

For the full story see:

Theodore Schleifer and Shane Goldmacher. “Super PAC Places $700 Million Bet On Harris’s Bid.” The New York Times, First Section (Sunday, October 20, 2024): 1 & 19.

“Mass Deportation” Is Not in Trump’s Heart, but Is a Warning to Future Illegal Aliens

I am stressed by the image of the “mass deportation” of those who entered the U.S. illegally, but otherwise have been decent hard-working people. My plausible hope is that deep in his heart, Trump does not really mean it or plan it. Why “plausible”? Read the passage quoted below describing Trump’s visit with The Wall Street Journal editorial board.

At this year’s Republican National Convention, Mr. Trump vowed to undertake “the largest deportation operation in the history of our country.” Editorial board member Kyle Peterson asks how large—does Mr. Trump intend to deport aliens who are law-abiding except for their illegal presence in the country, even if they have American spouses and children? Maybe not, Mr. Trump says: “We have a lot of good people in this country, and we have to do something about it, and I’d like to see if we can do it.”

Pressed for specifics, he demurs: “Well, I don’t want to go too much into clarification, because the nicer I become, the more people that come over illegally.” When he was president, “I said, ‘We’re going to separate your family.’ . . . It doesn’t sound nice, but when a family hears they’re going to be separated, you know what they do? They stay where they are, because we couldn’t handle it. . . . But the interest from the heart, yeah, something’s going to be done. . . . I mean, there’s some human questions that get in the way of being perfect, and we have to have the heart, too. OK?”

The implication is that the optimal immigration policy is a happy medium between restriction and openness. That’s certainly true and perhaps a truism. Mr. Trump suggests that he, the bully with a heart of gold, is just the man to strike the balance.

For the full commentary/interview see:

James Taranto. “The Weekend Interview; Trump Tangles With the Journal’s Editors.” The Wall Street Journal (Saturday, October 18, 2024): A13.

(Note: ellipses in original.)

Europeans Tire of Costly and Ineffective Climate Transition Policies

(p. A15) The 2015 Paris Agreement aspired to “reduce the risks and impacts of climate change” by eliminating greenhouse-gas emissions in the latter half of this century. The centerpiece of the strategy was a global transition to low-emission energy systems.

. . .

U.S. and European governments are trying to induce an energy transition by building or expanding organizations and programs favoring particular “clean” technologies, including wind and solar generation, carbon capture, hydrogen production and vehicle electrification. Promoting technological innovation is a worthy endeavor, but such efforts face serious challenges as costs and disruptions grow without tangible progress in reducing local, let alone global, emissions. Retreats from aggressive goals are already under way in Europe, with clear signs of mandate fatigue. The climbdown will be slower in the U.S., where subsidies create constituencies that make it more difficult to reverse course.

. . . It means that today’s ineffective, inefficient, and ill-considered climate-mitigation strategies will be abandoned, making room for a more thoughtful and informed approach to responsibly providing for the world’s energy needs.

For the full commentary see:

Steven E. Koonin. “The ‘Climate Crisis’ Fades Out.” The Wall Street Journal (Tuesday, June 11, 2024): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 10, 2024, and has the same title as the print version.)

Koonin’s commentary, quoted above, is related to his book:

Koonin, Steven E. Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters. Dallas, TX: BenBella Books, 2021.

Charter School Founder Stood Up to “Education Bureaucrats”

The NYT ran an inspiring obituary for Joseph H. Reich last Tuesday. Reich and his wife were pioneers in the Charter School initiative. The obituary quotes them as saying that they were able to afford to send their own children to private school, but poor parents who want better for their children than what is on offer by the government public schools could not afford a similar option. They were quoted as saying “We recoil against this injustice.” They created one of the first charter schools and also donated $10 million for general support of charter schools. The obituary says that they stood up against “vigorous pushback from education bureaucrats.”

For the full obituary see:

Trip Gabriel. “Joseph H. Reich, 89, Pioneer of New York City’s Charter Schools, Dies.” The New York Times (Tuesday, October 15, 2024): A21.

In Walt Disney’s Disneyland Youth Could “Savor the Challenge and Promise of the Future”

(p. 12) President Dwight D. Eisenhower once praised Walt Disney for his “genius as a creator of folklore.” When Disney died in 1966, the line made it into his obituary, evidence of its accuracy. Folklore, defined broadly, is an oral tradition that stretches across generations. It tells people who they are, how they got here and how they should live in the future. The company Disney created appointed itself keeper of these traditions for Americans, spinning up fresh tales and (more often) deftly repackaging old ones to appeal to a new century.

It started with Mickey Mouse, but as his company turns 100, Disney’s legacy — advanced in hundreds of films and shorts and shows, mass-produced tie-in merchandise, marvelous technical advancements, gargantuan theme parks around the world — was the production of a modern shared language, a set of reference points instantly recognizable to almost everyone, and an encouragement to dream out loud about a utopian future. Walt Disney was a man who gazed backward and forward: speaking at the opening of Disneyland in 1955, he proclaimed: “Here age relives fond memories of the past, and here youth may savor the challenge and promise of the future.”  . . .

Disney told stories of folk heroes (Davy Crockett, Paul Bunyan), princes and princesses, and even, occasionally, a mouse, all while leading the pack on ever-shifting technologies. (He was, among other things, the first major movie producer to make a TV show.) A sense of optimism ruled Disney’s ethos, built on homemade mythologies. The lessons of his stories were simple, uplifting and distinctly American: believe in yourself, believe in your dreams, don’t let anyone make you feel bad for being you, be your own hero and, most of all, don’t be afraid to wish upon a star. Fairy tales and legends are often disquieting, but once cast in a Disney light they became soft and sweet, their darker and less comforting lessons re-engineered to fit the Disney ideal. It was a distinctly postwar vision of the world.

And we ate it up, and we exported it, and we wanted to be part of it, too.

For the full commentary see:

Alissa Wilkinson. “The Wonderful World of Disney?” The New York Times, Arts&Leisure Section (Sunday, December 17, 2023): 12 & 14.

(Note: ellipsis added.)

(Note: the online version of the commentary was updated Dec. 18, 2023, and has the title “Disney Is a Language. Do We Still Speak It?”)

AI Algorithms Lack Intelligence Since They Are “Just Predicting the Next Word in a Text”

(p. B5) Yann LeCun helped give birth to today’s artificial-intelligence boom. But he thinks many experts are exaggerating its power and peril, and he wants people to know it.

. . .

On social media, in speeches and at debates, the college professor and Meta Platforms AI guru has sparred with the boosters and Cassandras who talk up generative AI’s superhuman potential, from Elon Musk to two of LeCun’s fellow pioneers, who share with him the unofficial title of “godfather” of the field. They include Geoffrey Hinton, a friend of nearly 40 years who on Tuesday was awarded a Nobel Prize in physics, and who has warned repeatedly about AI’s existential threats.

. . .

LeCun thinks AI is a powerful tool.

. . .

At the same time, he is convinced that today’s AIs aren’t, in any meaningful sense, intelligent—and that many others in the field, especially at AI startups, are ready to extrapolate its recent development in ways that he finds ridiculous.

If LeCun’s views are right, it spells trouble for some of today’s hottest startups, not to mention the tech giants pouring tens of billions of dollars into AI. Many of them are banking on the idea that today’s large language model-based AIs, like those from OpenAI, are on the near-term path to creating so-called “artificial general intelligence,” or AGI, that broadly exceeds human-level intelligence.

OpenAI’s Sam Altman last month said we could have AGI within “a few thousand days.” Elon Musk has said it could happen by 2026.

LeCun says such talk is likely premature. When a departing OpenAI researcher in May talked up the need to learn how to control ultra-intelligent AI, LeCun pounced. “It seems to me that before ‘urgently figuring out how to control AI systems much smarter than us’ we need to have the beginning of a hint of a design for a system smarter than a house cat,” he replied on X.

He likes the cat metaphor. Felines, after all, have a mental model of the physical world, persistent memory, some reasoning ability and a capacity for planning, he says. None of these qualities are present in today’s “frontier” AIs, including those made by Meta itself.

Léon Bottou, who has known LeCun since 1986, says LeCun is “stubborn in a good way”—that is, willing to listen to others’ views, but single-minded in his pursuit of what he believes is the right approach to building artificial intelligence.

Alexander Rives, a former Ph.D. student of LeCun’s who has since founded an AI startup, says his provocations are well thought out. “He has a history of really being able to see gaps in how the field is thinking about a problem, and pointing that out,” Rives says.

. . .

The large language models, or LLMs, used for ChatGPT and other bots might someday have only a small role in systems with common sense and humanlike abilities, built using an array of other techniques and algorithms.

Today’s models are really just predicting the next word in a text, he says. But they’re so good at this that they fool us. And because of their enormous memory capacity, they can seem to be reasoning, when in fact they’re merely regurgitating information they’ve already been trained on.

“We are used to the idea that people or entities that can express themselves, or manipulate language, are smart—but that’s not true,” says LeCun. “You can manipulate language and not be smart, and that’s basically what LLMs are demonstrating.”

For the full commentary see:

Christopher Mims. “Keywords: This AI Pioneer Thinks AI Is Dumber Than a Pet Cat.” The Wall Street Journal (Saturday, Oct. 12, 2024): B5.

(Note: ellipses added.)

(Note: the online version of the commentary was updated Oct. 11, 2024, and has the title “Keywords: This AI Pioneer Thinks AI Is Dumber Than a Cat.” The sentence starting with “Léon Bottou” appears in the online, but not the print, version. Where there are small differences between the versions, the passages quoted above follow the online version.)