Bits & Pieces (How Thursday Evening Should Have Ended)

Posted on October 6, 2011 by Kevin S. Willis

All right, I’m doing this one before the Wednesday one goes live. Yes, I’m getting ahead of myself. But there’s a reason for it:

How Toy Story III should have ended. Seriously, it should have.

One of my favorite movies as a kid was Superman: The Movie. And this is how it should have ended:

My favorite trilogy of movies may be Back to the Future (more on that in a moment), but The Lord of the Rings is practically a tie. I love those movies. And this is how the single 45 minute LoTR movie should have ended:

Remember what I said about Back to the Future? I also adore the first two Terminator movies (T3 and T:S both sucked). So, why don’t you make like a tree, and get out of here?
— KW

—Michigoose

Filed under: Uncategorized | 13 Comments »

The Decline and Fall of Violence

Posted on October 6, 2011 by Kevin S. Willis

Apropos of the previous post on torture, I might briefly point you at this piece on Marketplace, featuring the Freakonomics guys, Steven Dubner and Steven Levitt. He briefly discusses the drop in violent crime over the past 20 years, but also touches on (too briefly for me) what a peaceful utopia we live in now–and have lived in throughout the 20th century–compared to most of the rest of human history.

http://www.freakonomics.com/2011/10/04/the-decline-and-fall-of-violence/

Or just go straight to the Podcast by clicking here.

I loved the anecdote from Pepys’ diary, where Pepys observes a general being drawn and quartered before going out to a pub and having some oysters.

Don’t miss the Q&A with Steven Pinker, author of the book The Better Angels of our Nature, which inspired this particular piece.

Briefly, the reason crime is down in the past 20 years: more people in prison, the decline of crack cocaine, and the legalization of abortion. Discuss.

Also, pertaining to our discussion the other day about the limits of common sense, they touch on the fact that crime has fallen in concert with a rise and poverty and our bad economy and that, in fact, that’s almost always what happens.

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Questions about Torture

Posted on October 6, 2011 by nsullivan12

A great deal of the debate about torture focuses, understandably, on whether torture, or enhanced interrogation, or what one will, is legal. Apart questions about legality, the practice of torture raises a number of interesting questions.

Do We Know Very Much About Torture?
As far as I know, we don’t know a great deal about torture. I don’t doubt that there are studies, but I find it hard to believe that there is, at present, good reliable research on torture. Given ethical concerns, I don’t see how experiments could be conducted to try to determine the effectiveness, or lack of effectiveness, of torture.
And that seems to leave us with a host of questions for which we don’t appear to have answers.
Is it reasonable to expect that torture will yield actionable intelligence? Do people often lie under torture? Do people try to mislead interrogators who are torturing them?
Without more information on torture, information which I suspect, we do not have, it’s very difficult to see how a strong case for or against it could be made on the basis of the quality of the information interrogators are likely to extract.

Who Will Torture?
If torture is employed, someone will have to do it. Who? Ethical concerns would, I assume, rule out doctors. Should soldiers do it, CIA employees? Why these persons and not others? How should these people be trained? What kind of programs, if any, need to be set up to produce persons best able to extract information by using torture?

Should Law Enforcement Torture?
Assuming that torture is beneficial, should law enforcement be permitted to use it? If torture is beneficial, then why not allow law enforcement to employ that tool? If law enforcement ought not to be given that tool, then why should others be allowed to employ that tool?

How Should Innocent People Who are Tortured Be Compensated?
If torture is employed, innocent and non-innocent people will be tortured just as innocent and non-innocent people will be put to death if the death penalty is employed. How should the innocent, people who were mistaken for enemy combatants, for example, be compensated?

Does Torture Give the Enemy an Incentive to Fight to the Death?
Traditionally, fear of torture at the hands of the enemy is often a reason to avoid capture at all costs, even at the costs of one’s own life. Fear of torture may give an individual an incentive to fight to the death or to take his or her own life. That is not, arguably, a particularly attractive proposition. Enemy combatants who have a reasonable expectation that they will be treated well if they are taken prisoner may not fight as viciously and may be more willing to surrender. Assuming that an enemy less inclined to fight as viciously as possible and more willing to surrender is desirable would torture be detrimental to that goal?

Would Torture Discourage Enemies?
Would torturing prisoners discourage individuals from taking up arms or cause them to act in a less vicious manner? Would individuals interested in doing harm refrain from doing so, or do less harm, if they knew that upon being captured they could expect to be treated harshly?

Filed under: Uncategorized | 30 Comments »

It’s a Carnival

Posted on October 6, 2011 by lmsinca

I’m sure you’ve all been waiting for a post about “Occupy Wall Street” (jk). I’ve inserted a link here and there and have been looking for the best launching pad to begin a post of my own. I’ve read lots of comments making fun of the protesters or telling them to grow up, get a job, put down the pipe, you know, all the usual. That seems to be the reaction of some people on both sides of the aisle but I don’t think it’s very useful in understanding what’s going on. As these groups grow and spread out across the nation, assuming they do, I think it behooves us to understand what’s behind it and what, if anything, they’re trying to accomplish. I heard a young grad student speak to a local reporter last weekend here in LA and she said something that I’ve been thinking about ever since, which I loosely paraphrase as, we’re talking to each other and listening to each other. We don’t know if anyone else is listening or not and right now we don’t care. I thought that was really interesting for some reason and then this morning Matt Stoller authored a piece that explained what she meant without hearing her say it.

What do the people at #OccupyWallStreet actually want? What are their demands? For many people, this is THE question.

So let me answer it. What they want… is to do exactly what they are doing. They want to occupy Wall Street. They have built a campsite full of life, where power is exercised according to their voices. It’s a small space, it’s a relatively modest group of people at any one time, and the resources they command are few. But they are practicing the politics of place, the politics of building a truly public space. They are explicitly rejecting the politics of narrow media, the politics of the shopping mall. To understand #OccupyWallStreet, you have to get that it is not a media object or a march. It is first and foremost, a church of dissent, a space made sacred by a community. But like Medieval churches, it is also now the physical center of that community. It has become many things. Public square. Carnival. Place to get news. Daycare center. Health care center. Concert venue. Library. Performance space. School.

Few people, though an increasing number daily, have actually taken the time to go through a general assembly, to listen to what the people at #OccupyWallStreet actually want. General assemblies are the consensus-oriented group conversations at the heart of the occupations, where endlessly repeating the speaking of others is the painstaking and frustrating way that the group comes to make decisions.

There’s no electronic amplification allowed in Zuccotti Square. So the organizers have figured out an organic microphone system. A speaker says a half a sentence, everyone in earshot repeats, until the whole park can hear that half a sentence. Then the speaker says another half a sentence.

I felt completely included as part of a community forum even though I had not been a speaker. But what I realized is that the act of listening, embedded in the active reflecting of what the speaker was saying, created a far richer conversational space. Actually reflecting back to one another what someone just said is a technique used by therapists, and by pandering politicians. There is nothing so euphoric in a community sense as truly feeling heard. That’s what the general assembly was about, not a democracy in the sense of voting, but a democracy in the sense of truly respecting the humanity of everyone in the forum. It took work. It took patience. But it created a communal sense of power.

The premise of their politics is that #OccupyWallStreet isn’t designed to fit into your TV or newspaper. Nothing human really is, which is why our politics is so utterly deformed. It’s why they don’t want to be “on message” – what kind of human society can truly be reduced to a slogan? I’m not sure I agree with their political premise. But in the carnival they have created, in the liveliness and beauty and art and fun and utter humanity of it all, they make a damn good case.

Filed under: democracy, Occupy Wall Street | Tagged: , | 42 Comments »

Thursday Thinking – Monty Hall’s Dilemma

Posted on October 6, 2011 by ScottC

Imagine you find yourself transported back in time to the 1970’s and an appearance on Monty Hall’s Let’s Make a Deal, and Monty has just selected you as a contestant. He shows you three doors and assures you that the day’s grand prize is sitting behind one of those doors. If you pick the correct door, the prize is yours. After you pick door number 1, Monty then opens door number 3 to reveal nothing behind it. He then offers you another choice…stick with your original door or switch choices to door number 2. What should you do?

(from Mike)
I hope Scott doesn’t mind my adding to his post. Here’s a link where you can play the game yourself, with both Scott’s and Mark’s scenarios (whether Monty knows where the prize is or not).

Three Door Monty

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Two Deaths

Posted on October 6, 2011 by Arcanaut

I was just working on a belated post about the killing of al Awlaki. In short, I wanted to add my two cents to any general conversation and say I don’t think the slippery slope argument is really relevant. If a man can be targeted in an area where his activities put him beyond the reach of arrest and legal proceedings, that doesn’t make it automatic that the president can and will start killing people at will on U.S. soil where they actually are subject to arrest. These are wholly different situations. And the second point, one the lawyers here might have something to say about, is that as important as the rule of law and due process are, the law itself is a construct based on our need to have rules that allow us to function together. Judges exist because someone has to say what the law means in a given situation; it’s not transparent. And in situations where there is no legal recourse–including no judges–someone else has to make calls like the one about al Awlaki. We can argue about what the calls should be, but they shouldn’t just be made on an sbsolutist notion of the law itself.

I’m shortening what I meant to say on that because I wanted to put in a note about Steve Jobs and his death. I’ve not heard it mentioned often, if at all, but the technological innovations of the last quarter century, particularly those spearheaded by Jobs, have made the world a far more manageable place for the disabled, the aging, and those with various degrees of infirmity. For people who don’t have what we would consider “normal” access to the world, the virtual world has becomes actual due to these changes. I can think of so many examples, including many quite personal ones, but my favorite concerns my friend Gogi who was born with cerebral palsy and is now in her forties. Two things transformed her life. The first was her electric wheelchair that, combined with ramps and curb cuts, meant she could physically go where she wanted to go on her own. The second was the home computer that meant she could travel the world with a few keystrokes. It was a remarkable change for her. It’s been remarkable for all of us.

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Bits & Pieces (The Wednesday Evening Matrix)

Posted on October 5, 2011 by Kevin S. Willis
Why I like Matrix: Reloaded as much as The Matrix, even though many people do not:
The same scene, only different, somehow. Perhaps it’s Will Ferrel. 

Now, thanks to a student project on YouTube, we bring it full circle. The Muppet Matrix:

That’s it for now. – KW

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A Few Billion Here, A Half A Billion There. . .

Posted on October 5, 2011 by Michigoose

I can’t remember if I’ve ever mentioned on this blog how much I like Matt Taibbi’s work. He’s an excellent investigator and even better writer–it would almost be worth getting a subscription to Rolling Stone just to read his column. Today’s is about the Attorneys General settlement with the big banks and how it’s falling apart. . . which is a good thing (full disclosure: I shamelessly stole the idea for this post from jnc4p, who posted the link over on The Plum Line).

If it does get done, expect a great deal of public debate over whether or not the size of the settlement was sufficient. Did the banks pay enough? Should they have paid ten billion more? Twenty? Even I engaged in a little bit of that some weeks ago.

But if and when that debate takes place, it will actually obscure the real issue, because this settlement is not about getting money from the banks. The deal being contemplated is actually the opposite: a giant bailout.

In fact, any federal foreclosure settlement along the lines of what’s been proposed will amount to a last round of post-2008-crisis bailouts. I talked to one foreclosure activist over the weekend who put it this way: “[The AG settlement] will be a bigger bailout than TARP.”

How? The math actually makes a hell of a lot of sense, when you look at it closely.

I know that Mark and quarterback have both written about their experiences with settlements like these, and how you often are recovering mere pennies on the dollar, but I hadn’t thought about the implications of that until I read this:

[A] private analyst this summer was estimating that just one bank, Bank of America, could face more in damages than the Obama administration and the AGs are now trying to “wrest” from all the major banks, combined, for all their liabilities.

Just a few days ago, news of more such suits came in. An Irish company called Sealink Funding is suing Chase and Bank of America, seeking $4.5 billion combined in connection to losses in mortgage-backed securities sold to them by those banks. Meanwhile, a German bank, Landesbank Baden-Wurttemberg, is suing Chase for an additional $500 million in losses.

These huge amounts – a few billion here, a half a billion there – are coming from single companies, directed at single banks. And think about the Bank of America settlement for $8.5 billion: what’s the usual payoff in a lawsuit settlement? Ten cents on the dollar? Five?

In fact, the settlement amount in that case was just 2% of the face value of the loans when they were securitized ($424 billion), and represented just 4% of the principal still outstanding ($221 billion).

Why do those figures matter? Because the way these securitizations were structured, legally, Bank of America is obligated to buy back any loans that were sold fraudulently at face value – that is part of the legal language in the “pooling and servicing agreements” under which all of these mortgages were pooled.

So minus a settlement, Bank of America – one bank — had a potential liability of $424 billion just from its Countrywide holdings! And it got off for $8.5 billion, a major victory.

All of which puts in perspective the preposterously small size of the proposed AG settlement. $20 billion would be a lousy number if we were just talking about Bank of America. But all the big banks combined?

And an aspect of the whole Wall Street fiasco that hadn’t even occurred to me was who bought some of those derivatives (is that the right term, Scott?) CDOs (Michi):

To recap the crime: the banks lent money to firms like Countrywide, who in turn created billions in dicey loans, who then sold them back to the banks, who chopped them up and sold them to, among other things, your state’s worker retirement funds.

So this is bankers from Deutsche and Goldman and Bank of America essentially stealing the retirement nest eggs of firemen, teachers, cops, and other actors, as well as the investment monies of foreigners and hedge fund managers. To repeat: this was Wall Street hotshots stealing money from old ladies.

So now that California’s Attorney General has joined New York’s in deciding to not participate in this settlement, we may see some of these big banks, well, fail. Matt’s conclusion is that if they truly had to come to an equitable settlement it would cost them (in aggregate) a trillion dollars or more. That’s mindboggling!

Filed under: TBTF | Tagged: , | 64 Comments »

Common Sense

Posted on October 5, 2011 by Mike

After wading through the 14th A discussion between Scott, QB, and Mark, lms’ comment about common sense coincidentally reflected one of Prof. Volokh’s posts on VC. So, I thought I’d quote it here, not in response to lms, but just because of my own frustrations with the idea of “common sense.”

I’ve often seen people — usually on my side of the political aisle — praise “common sense,” and condemn those who make fancy arguments that defy common sense. Here’s an example, from a Reason column: 

So why do intelligent people consistently make such a hash of things? Because they are smart enough to talk themselves into anything. Ordinary mortals don’t engage in fancy mental gymnastics to reach conclusions that defy common sense. But intellectuals are particularly prone to this. 

I’ve always been skeptical of such praise of common sense, for two related reasons.
First, common sense often leads us to the wrong results. That’s especially evident in places where the rightness of the right result can be proven, such as mathematics, physics, astronomy, and so on. It often takes some pretty “fancy mental gymnastics” rather than “common sense” to solve problems in those fields. 

And it’s also true in more practical fields, such as economics. I suspect that to many people it’s common sense that if you want the store shelves to always be filled, you need to have someone centrally planning production or distribution; the “invisible hand” can easily be dismissed as “fancy mental gymnastics” by those whose common sense inclines them against that explanation. Likewise, it was probably common sense to many that alcohol kills lots of people, directly and indirectly, and therefore banning it might be good — and it’s still common sense to many that guns kill lots of people, directly and indirectly, and therefore banning them might be good. 

Second, even if your reaction to these matters is, “no, my common sense tells me that the free market is great, and this common sense is correct,” perhaps your common sense is in large measure molded by the “fancy mental gymnastics” of others — Adam Smith, Milton Friedman, and the like. And while your and my common sense may be well-tutored on these particular points, it’s likely that there are many other points, in the policy world and out of it, on which our common sense misleads us. 

Of course, this isn’t to say that common sense always leads us astray even in the policy world. 

Moreover, common sense may often be more helpful in day-to-day personal and business decisions — where we have been tutored by repeated exposure, and by having a strong personal incentive to get those decisions right — than it is with policy or scientific judgments in which we have little experience. And I’ll be the first to admit that intellectuals often get things wrong. But I’m not sure that extolling common sense, and condemning conclusions that defy common sense, is a good rule of thumb for dealing with complicated questions of science, economics, social policy, or foreign policy.-

The comments are somewhat entertaining: Comments

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It’s Demand & Income Inequality (Wed. Open Thread)

Posted on October 5, 2011 by lmsinca

One of my favorite conservatives, Bruce Bartlett, confirms what I’ve been saying for the last year. We’ve seen the economy worsen, from the small business perspective, and slow to a crawl. We talk to between 30 and 40 business owners a day, and don’t forget 78% of small businesses have less than 20 employees, and they all tell us they don’t really give a diddly squat about regulations or taxes right now. They care about the lack of customers. I understand my evidence is anecdotal, and there’s not necessarily a reason to believe me, but now the Bureau of Labor Statistics has verification. I also get it that Republicans and some large businesses care about regulations, especially the energy and health care industries, but could we stop pretending it’s true for small businesses or all large businesses?

On Aug. 29, the House majority leader, Eric Cantor of Virginia, sent a memorandum to members of the House Republican Conference, telling them to make the repeal of job-destroying regulations the key point in the Republican jobs agenda.
“By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers,” Mr. Cantor said.
Evidence supporting Mr. Cantor’s contention that deregulation would increase unemployment is very weak. For some years, the Bureau of Labor Statistics has had a program that tracks mass layoffs. In 2007, the program was expanded, and businesses were asked their reasons for laying off workers. Among the reasons offered was “government regulations/intervention.” There is only partial data for 2007, but we have data since then through the second quarter of this year.
The table below presents the bureau’s data. As one can see, the number of layoffs nationwide caused by government regulation is minuscule and shows no evidence of getting worse during the Obama administration. Lack of demand for business products and services is vastly more important.

(lmsinca)

I also came across this interesting study yesterday. We’ve looked at so many statistics on income inequality, but I’m not sure anyone really understands why it’s important. I think this study gets to part of it at least. I also believe the “Occupy Wall Street” protests reflect the helplessness people, especially young people, feel in being able to combat it. Oh I know, they’re just a bunch of kids and unemployed people who don’t understand the global economy, but they know what’s happened to them over the last three years and it feels wrong. They’re calling themselves the 99% and that’s for both being unemployed and without benefits and also in the bottom 99%.

For example, the bailouts and stimulus pulled the US economy out of recession but haven’t been enough to fuel a steady recovery. Berg’s research suggests that sky-high income inequality in the United States could be partly to blame. So how important is equality? According to the study, making an economy’s income distribution 10 percent more equitable prolongs its typical growth spell by 50 percent.

Berg and Ostry aren’t the first economists to suggest that income inequality can torpedo the economy. Marriner Eccles, the Depression-era chairman of the Federal Reserve (and an architect of the New Deal), blamed the Great Crash on the nation’s wealth gap. “A giant suction pump had by 1929-1930 drawn into a few hands an increasing portion of currently produced wealth,” Eccles recalled in his memoirs. “In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped.”

Many economists believe a similar process has unfolded over the past decade. Median wages grew too little over the past 30 years to drive the kind of spending necessary to sustain the consumer economy. Instead, increasingly exotic forms of credit filled the gap, as the wealthy offered the middle class alluring credit card deals and variable-interest subprime loans. This allowed rich investors to keep making money and everyone else to feel like they were keeping up—until the whole system imploded.
There is a link to the study here which is in the current issue of Finance & Development, the quarterly magazine of the International Monetary Fund.

(lmsinca)

And last, but not least, it’s the trade deficit stupid. This piece in The Nation is an important one I think. Essentially, we need to get the wealthy investors to quit investing in financial instruments and steer them into long term “making stuff for export and consumption” stuff. There are ways to do that but they probably won’t like it too much because it’s much easier to do what they’re doing now.

But what’s behind it all is the fact that the United States cannot pay its way in the world. And while a smaller country would have expired long ago, we keep stumbling along, getting sicker, losing industrial weight, because the rest of the world has an interest in continuing to hold us upright. 

For Keynes that would be the challenge—not just to bring down but to eliminate it: the whole thing. The failure to do so has real implications for other parts of Keynes’s theory. The answer to our crisis is not to “hire and rewire,” or to have a lot of public works. Let me add, by the way: I’m a labor lawyer; I want the government to spend. I love public works. I’d love a new O’Hare Airport. I’d love a repaving of Lake Shore Drive. And certainly Keynes loved public works. He saw people starving; he had a heart. We have to do something. We can’t wait for the trade deficit to come down. But that’s not the answer—it’s urgent, to be sure, but it’s just a first step. The answer is to get rich people to put their money into real “investments” and not “loans.” It’s to induce the rich in this country to invest “by employing labor on the construction of durable assets.” Call them widgets; call them iPads. Call them anything we can wrap, ship and sell to somebody abroad.“Oh, but he wouldn’t put that ahead of the stimulus.” 

No—but he’d put them together.



Filed under: free trade, income inequality, Keynes, lack of demand, regulations, small business | Tagged: | 10 Comments »

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