artdiamondblog.com – Page 465 – Art Diamond's web log

A Case for Epistemic and Technological Optimism

Source of book image: http://us.penguingroup.com/static/covers/all/5/5/9780670022755H.jpg

Horgan is well-known for writing a pessimistic book about the future of science. For him to write such a positive review of a book that reaches the opposite conclusion, is impressive (both about him and the book he is reviewing).
From Horgan’s review and the reviews on Amazon as of 8/7/11, I view the Deutsch book as potentially important and profound. (I will write more when I have read it.)

(p. 17) . . . Mr. Deutsch knocks my 1996 book, “The End of Science,” for proposing that the glory days of science–especially pure science, the effort to map out and understand reality–may be over. Mr. Deutsch equates my thesis with “dogmatism, stagnation and tyranny,” all of which, for the record, I oppose. But he makes the case for infinite progress with such passion, imagination and quirky brilliance that I couldn’t help enjoying his argument. More often than not I found myself agreeing with him–or at least hoping that he is right.
. . .
If we acknowledge our imperfections, Mr. Deutsch observes, then, paradoxically, there is no problem that we cannot tackle. Death, for instance. Or the apparent incompatibility between the two pillars of modern physics, quantum theory and general relativity. Or global warming, which Mr. Deutsch believes we can overcome through innovation rather than drastic cutbacks in consumption. He gores the sacred cow of “sustainability”: Societies are healthiest, he declares, not when they achieve equilibrium but when they are rapidly evolving.

For the full review, see:
JOHN HORGAN. “BOOKSHELF; To Err Is Progress; How to foster the growth of scientific knowledge: accept that it is limited no matter how definitive it may seem.” The Wall Street Journal (Weds., JULY 20, 2011): A17.
(Note: ellipses added.)

Source information on book under review:
Deutsch, David. The Beginning of Infinity: Explanations That Transform the World. New York: Viking Adult, 2011.

Chinese Government High-Speed Trains Are Financial “Black Holes”

(p. A11) BEIJING-A high-speed train from Beijing is scheduled to glide into Shanghai’s Hongqiao railway station on Thursday after its inaugural run, an event meant to showcase China’s technological prowess but one that lately has become part of a national debate about the pitfalls of megainvestment projects.
. . .
Detractors focus on corruption and safety problems that have lately tarnished the project’s image. Pricey tickets, they say, underscore China’s already huge rich-poor gap–and doom the trains to run half-empty, straining the national budget for years to come.
. . .
“Physically, they are good assets,” says Ding Yuan, an accounting professor at China Europe International Business School in Shanghai. “Financially, they are all black holes.”
More broadly, the high-speed rail problems underscore the shortcomings of a growth strategy that depends ever more heavily on investment in projects whose economic payoffs are uncertain.
. . .
Railways Minister Liu Zhijun proselytized for high-speed rail, telling leaders from Hubei province in January that they needed to “seize the rare opportunity to accelerate the development of the railway,” according to a Railways Ministry report.
. . .
Government spending on rail projects ballooned from 155 billion yuan in 2006 ($24 billion) to a budgeted 745 billion yuan ($115 billion) in 2011, according to state-run Xinhua news agency. The ministry’s debt ballooned to about 5% of GDP in the first quarter of 2011 from about 2% in 2007.
The project’s flaws became painfully clear in February, when Mr. Liu was fired amid allegations that he embezzled around $30 million. Although government investigators didn’t cite criticisms of the railway project, Mr. Liu’s successor, Sheng Guangzu, has scaled back plans to focus on projects already under construction, rather than expansion. Railway consultants say work has been suspended on new lines, including Hubei projects the fired minister was pushing.

For the full story, see:
BRIAN SPEGELE and BOB DAVIS. “High-Speed Train Links Beijing, Shanghai; Cornerstone of China’s Rail Expansion Illustrates Megaprojects’ Speed Bumps.” The Wall Street Journal (Weds., JUNE 29, 2011): A11.
(Note: ellipses added.)

Krugman’s Ultimate Keynesian Solution to Economic Crisis: Pretend Space Aliens Are Invading

I was watching economists Kenneth Rogoff and Paul Krugman being interviewed by Fareed Xakaria on the CNN show “Fareed Zakaria GPS” in the late morning on Sunday, August 14, 2011. I started laughing when I heard Krugman suggest that a perfectly acceptable Keynesian solution to the economic crisis would be for scientists to pretend that space aliens were invading earth. (We then would pull together and get everyone employed.)
What we actually need is less government deception and less government intervention, so that entrepreneurs can go back to creating new products, new businesses, and new jobs.
Here is a transcript of the relevant part of the interview:

Ken Rogoff: Infrastructure spending, if it were well-spent, that’s great. I’m all for that. I’d borrow for that, assuming we’re not paying Boston Big Dig kind of prices for the infrastructure.

Fareed Zakaria: But even if you were, wouldn’t John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that’s fine, they’re being productively employed, they’ll pay taxes, so maybe Boston’s Big Dig was just fine after all.
Paul Krugman: Think about World War II, right? That was actually negative social product spending, and yet it brought us out.
I mean, probably because you want to put these things together, if we say, “Look, we could use some inflation.” Ken and I are both saying that, which is, of course, anathema to a lot of people in Washington but is, in fact, what basic logic says.
It’s very hard to get inflation in a depressed economy. But if you had a program of government spending plus an expansionary policy by the Fed, you could get that. So, if you think about using all of these things together, you could accomplish a great deal.
If we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren’t any aliens, we’d be better –
Ken Rogoff: And we need Orson Welles, is what you’re saying.
Paul Krugman: No, there was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time…we need it in order to get some fiscal stimulus.

Source of embedded clip and transcipt: “GPS this Sunday: Krugman calls for space aliens to fix U.S. economy?” posted August 12, 2011, 2:09 PM; aired Sunday, August 14, 2011. URL: http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/

(Note: bold in original; the ellipsis in the final paragraph is in the original CNN transcript. Here is a transcipt of the final paragraph without the ellipsis: “KRUGMAN: No, there was a “Twilight Zone” episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don’t need it, we need it in order to get some fiscal stimulus.” The source of this transcript is the News Busters blog at:
http://www.newsbusters.org/blogs/noel-sheppard/2011/08/14/paul-krugman-calls-space-aliens-attack-earth-requiring-massive-defens#ixzz1V1xydNu6 )
(Note: Commenting on the CNN blog entry, “Wild Bill” suggested that the source for Krugman’s policy advice was not an episode in the “Twilight Zone” series, as Krugman had said, but the “Architects of Fear” episode that aired in 1963 on the “Outer Limits” series. In spite of this error, “Wild Bill” maintains that the “dude is still a flippin’ genius.”)

Inventor of Mason Jar Died Poor, Alone and Forgotten

(p. 74) In 1859 an American named John Landis Mason solved the challenge that the Frenchman François (or Nicolas) Appert had not quite mastered the better part of a century before. Mason patented the threaded glass jar with a metal screw-on lid. This provided a perfect seal and made it possible to preserve all kinds of foods that would previously spoil. The Mason jar became a huge hit everywhere, though Mason himself scarcely benefited from it. He sold the rights in it for a modest sum, then turned his attention to other inventions – a folding life raft, a case for keeping cigars fresh, a selfdraining soap dish – that he assumed would make him rich, but his other inventions not only weren’t successful, they weren’t even very good. As one after another failed, Mason withdrew into a semidemented poverty. He died alone and forgotten in a New York City tenement house in 1902.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

Consumption Is More Equal Than Income

Source of graph: online version of the NYT commentary quoted and cited below.

Income inequality is widely derided. But inequality in consumption is more meaningful than inequality in income. The wonderful graph above, and the commentary quoted below, show that consumption per person is much more equal than the usually-used income per household.
(Click on the graph to pop up a larger version that is easier to read.)

(p. 14) It’s true that the share of national income going to the richest 20 percent of households rose from 43.6 percent in 1975 to 49.6 percent in 2006, the most recent year for which the Bureau of Labor Statistics has complete data. Meanwhile, families in the lowest fifth saw their piece of the pie fall from 4.3 percent to 3.3 percent.

Income statistics, however, don’t tell the whole story of Americans’ living standards. Looking at a far more direct measure of American families’ economic status — household consumption — indicates that the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society.

For the full commentary, see:
Cox, W. Michael, and Richard Alm. “You Are What You Spend.” The New York Times, Week in Review (Sun., February 10, 2008): 14.

Chinese Local Governments Hold Bad Infrastructure Debt

(p. C14) There is no such thing as a free stimulus.
At first sight, China’s response to the financial crisis looked cheap. A fiscal deficit totaling 3.1% of gross domestic product in 2009 and 2.6% in 2010 compares with 12.7% and 10.6% in the U.S. The reality is that it was considerably more expensive than that.
China’s response to the crisis came primarily from bank loans rather than central government debt. With many of those loans now threatening to turn bad, the cost may still end up on the government’s balance sheet.
The heart of the problem is debt taken on by local government financing vehicles in the course of two years of huge infrastructure investment. These are entities created and backed by local governments to get around legal constraints on their borrowing. No one knows how much debt they have.

For the full story, see:
TOM ORLIK. “Post-Stimulus: Who Pays for China’s Bad Loans?” The Wall Street Journal (Thurs., June 23, 2011): C14.

“The Government Wants to Decide What We Eat”

“A rule against selling food with added vitamins and minerals, like canned pudding, prompted the removal of several popular products from Abigail’s, a shop in Copenhagen.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A6) COPENHAGEN — For the last seven years, Marianne Orum has owned a narrow store in a charming street in the heart of this Danish capital.

A sign advertises “British and South African Food and Drink.”
The shelves are lined with products familiar to most Americans, like Betty Crocker Pancake Mix, but also more exotic items, like Heinz’s Taste of Home Delightful Spotted Dick Pudding in cans, and bottles of Harviestoun Old Engine Oil porter.
But in January Ms. Orum got a phone call from government food inspectors. Tipped off by a competitor, they told her she was selling products that were fortified with vitamins or minerals, and such products require government approval, which she did not have, so she would have to take them off the shelves.
The culprits were Ovaltine; a shredded wheat cereal called Shreddies; a malt drink called Horlicks; and Marmite, the curiously popular yeast byproduct that functions in England as a sandwich spread, snack or base for a soup (just add boiling water), and is sometimes known as tar-in-the-jar.
“That’s four products in one go,” said Ms. Orum, clearly angered. “That’s a lot for a small company.”
Application for approval, she said, costs almost $1,700 per product, and time for approval can run up to six months or more; the fee is not refunded if the product is rejected.
“It’s a strange thing, this attitude in Denmark,” she said, in a tone of exasperation. “The government wants to decide what we eat and not.”

For the full story, see:
JOHN TAGLIABUE. “COPENHAGEN JOURNAL; Extra Vitamins? A Great Idea, Except in Denmark.” The New York Times (Fri., June 17, 2011): A6.
(Note: the online version of the story was dated June 16, 2011.)

In Britain Ice Is Often Dispensed “as if It Were on Prescription”

(p. 73) In England, Wenham ice was more talked about than used. A few businesses took regular deliveries, but hardly any households (other than the royal one) did. By the 1850s not only was most ice sold in Britain not from Wenham, it wasn’t from America at all. The Norwegians – not a people one normally associates with sharp practices – changed the name of Lake Oppegaard, near Oslo, to Lake Wenham so that they could tap into the lucrative market. By the 1850s most ice sold in Britain was in fact Norwegian, though it has to be said that ice never really caught on with the British. Even now, it is still often dispensed there as if it were on prescription. The real market, it turned out, was in America itself.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

Fannie Mae Execs “Resorted to Ad Hominem Attacks” When They Vilified the “Economic Pencil Brains”

Source of book image: online version of the NYT review quoted and cited below.

(p. C6) Although the financial crisis of 2008 has left a long trail of casualties, one group has benefited from the cataclysm: financial journalists. Several have already published books shedding light on the unprecedented events that caused investment banks to fail, global stock markets to plummet and borrowers to lose their homes. “Reckless Endangerment,” by Gretchen Morgenson, assistant business and financial editor and a columnist at The New York Times, and the financial analyst Joshua Rosner, is a worthy addition to the genre.
. . .
The book begins in 1994 with President Bill Clinton’s kicking off a public-private partnership to extend homeownership to more Americans. . . .
. . .
. . . the institution to which the authors devote the most ink is Fannie Mae, the government-supported enterprise created in 1938 to make home loans more accessible. And the person they hold most accountable is someone whose role in the “mortgage maelstrom” has until now “escaped scrutiny”: James A. Johnson, Fannie Mae’s chief executive from 1991 to 1998. Mr. Johnson was the “anonymous architect of the public-private homeownership drive that almost destroyed the economy in 2008,” the authors assert. “He was especially adept at manipulating lawmakers, eviscerating regulators and leaving taxpayers with the bill.”
The description of Mr. Johnson’s role is damning — and although the account lacks his perspective, it is thoroughly supported through scores of interviews with academics, government officials and industry executives, some of whom are granted anonymity. While Mr. Johnson didn’t respond to interview requests over five months, according to the authors, they overcome this obstacle with impressive use of public records and secondary sources, carefully attributed in the text or described in a two-page “Notes on Sources.”
. . .
A particular strength of this book is the number of doubters the authors unearthed: the unsung government analysts, public lawyers and private researchers who dared to question policy decisions and stand up to the formidable “housers,” as the true believers in government subsidies for home ownership are called.
The reader has a sickening sense of missed opportunity as these prophets are ignored or, worse, vilified, by those in a position to halt the mania. When a Congressional Budget Office researcher in 1995 reveals the multibillion-dollar extent of the government’s subsidy to Fannie Mae and its brother institution, Freddie Mac (and that one-third of these benefits never reached borrowers), he suggests that “Congress may want to revisit the special relationship.” Unable to assail the merits of his analysis, outraged Fannie Mae executives resorted to ad hominem attacks, calling budget office officials “digit-heads” and “economic pencil brains.”

For the full review, see:
PAM LUECKE. “BOOKS OF THE TIMES; Nation Goes on Its Merry Way to Ruin.” The New York Times (Tues., June 28, 2011): C6.
(Note: the online version of the review was dated June 27, 2011.)
(Note: ellipses added.)

Book being reviewed:
Morgenson, Gretchen, and Joshua Rosner. Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. New York: Times Books, 2011.

Much of U.S. Job Gains Are in Texas

(p. 1A) While the nation’s job growth has limped along since the economic recovery began two years ago, the Lone Star State is enlarging payrolls in Texas-size fashion.

From June 2009 to June 2011 the state added 262,000 jobs, or half the USA’s 524,000 payroll gains, according to the Federal Reserve Bank of Dallas and the Bureau of Labor Statistics. Even by a more conservative estimate that omits states with net job losses, Texas’ advances make up 30% of the 1 million additions in the 34 states with net growth.

For the full story, see:
Paul Davidson. “Need a Job? Move to Texas.” USA Today (Tues., JULY 20, 2011): 1A.
(Note: the online version of the article has the title “Texas bucks national unemployment trend.”)

Theft of Elderly Woman’s Air Conditioner Called “Murder”

Source of the “murder” quote is from:
J.D. Miles, reporter. “Elderly Woman Dies From Heat After A/C Stolen.” Dallas, CBS 11 News, August 5, 2011.
(Note: this report is the source of the “murder” quote which was stated by Mrs. Grissom’s neighbor Caroline Ware.)
(Note: Another version of the report with the “murder” quote has the title: “Texas Heat Wave.” CBS 11 News, August 5, 2011.)

Another report on the incident is:

Source:
Ed Lavandera, reporter. “Woman Dies After Air Conditioner Stolen.” CNN American Morning, August 5, 2011.